Archive for category: Pet Market

Next, we’ll turn our attention to Pets and Supplies. We’ll see some differences from Pet Food as the spending in the Supplies segment is more discretionary in nature. There are other factors too. Many supplies categories have become commoditized so pricing changes (CPI) can strongly impact Consumers’ buying behavior in this segment. Supplies’ Spending can also be affected by the spending behavior in other segments, especially Food. Consumers often trade $ between segments. In 2015 Consumers spent $5.4B more on Pet Food. They helped pay for this by spending $2.1B less on supplies. In 2016, things turned around as Consumers value shopped for premium foods but spent $0.94B more on Supplies. 2017 was different. It was a year of across the board value. Consumers reacted and spent significantly more in 3 industry segments, including Supplies – +$2.74B, a 17.3% increase.

Let’s see which groups were most responsible for the bulk of Pet Supplies spending in 2017 and the $2.74B lift. The first chart details the biggest pet supplies spenders for each of 10 demographic categories. It shows their share of CU’s, share of pet Supplies spending and their spending performance (Share of spending/share of CU’s). Although their share of the Pet Supplies $ may be different from their share of the Total Pet $ or Food, all of the big spending groups are the same. The categories are presented in the order that reflects their share of Total Pet Spending. This highlights the differences in importance. All 10 of the big groups have over a 60% market share. Pet Food had only 7. We’re also back to 6 groups with performance of over 120%. Pet Food had only 5 as Education dropped out. Higher Education correlates with higher income and income is more important in supplies spending. In Pet Supplies spending, Homeowners and Married couples had a big gain in share and the 35>64-yr olds entered the 120+% performance club for the first time. The Everyone Works group had a big drop in share as the # of Earners in a CU became less important. Also, of note, Suburbanites have a significantly larger share of spending on Supplies than they do for Food.

1. Race/Ethnic – White, not Hispanic (84.2%) down from (85.5%) This large group accounts for the vast majority of spending in every segment. Their performance rating was stable at 122.9%, but this category fell from #3 to #4 in terms of importance in Supplies Spending. The loss in rank was due to a big share gain by Homeowners. Minority groups account for 31.5% of all CUs but spend only 15.8% of Supplies $. This is primarily due to lower income for Hispanics and African Americans and a lower rate of pet ownership in African American and Asian American CUs.
2. # in CU – 2+ people (82.8%) up from (81.2%) Their overall Supplies performance of 116.1% is relatively high because singles perform so poorly. 2 People CUs dominate share and have the highest performance. However, performance in 2+ CUs only falls below 100% with 5+ people and even then, it is 97.4%. In Supplies spending, it “just takes two.”
3. Housing – Homeowners (79.4%) up from (74.9%) Homeownership is a major factor in pet ownership and spending in all industry segments. In 2017 it had a major gain in share of Supplies $ and its 126.2% performance, moved it up to 3^rd place from 5th in terms of importance for increased Pet Supplies spending. All Homeowners spent more while Renters spent less. However, the bulk of the spending lift – $2.1B (77%) came from Homeowners with a mortgage.
4. Income Over $50K (71.3%) up from (69.3%) With a performance rating of 138.8%, CU income is the single most important factor in increased Pet Supplies Spending. The increased discretionary nature of much of Supplies spending pushes the performance level slightly higher than that of Pet Food. However, it is still significantly below the Service Segments. Higher Income still generally generates Higher Pet Supply Spending.
5. Occupation – All Wage & Salary Earners (63.4%) down from (63.8%) – The market share and performance of this group, 103.8%, remained relatively stable. The spending is still skewed towards the higher income, white collar workers. Also, the low performance shows that a lot of spending is done by the Self-employed and Retirees
6. Age – 35>64 (64.1%) down from (64.2%) Traditionally, Supplies Spending skews more towards the younger groups. The 35>64 group maintained their dominance even though their market share remained flat. Supplies Spending was up in all age groups, but it was primarily driven by the 55>64-yr olds. The number of CUs in the 35>64 group fell by 800,000, all in the 35>54 age range. However, their individual CU Spending on Supplies had a strong increase. The result of this was that their performance level increased to 120.0% and they joined the 120% club in 6th place.     
7. Education – Associates Degree or Higher (65.6%) up from (63.1%) Unlike Food, Higher Education actually gained market share. Income generally increases with education and we see the impact of this in Supplies. Their performance level rose slightly rose slightly from 122.0 to 122.2%. but they fell from 4^th to 5^th in importance for generating greater Supplies spending. This drop in rank was also due to the spectacular spending year by Homeowners.
8. CU Composition – Married Couples (64.2%) up from (59.9%) Married couples are a big share of $ and perform at 120+% in all segments. They gained significantly in Supplies Spending share, as all segments spent more, especially Couples Only. Their performance grew spectacularly from 123.2% to 129.7% and they remain 2^nd in importance.
9. # Earners – “Everyone Works” (62.5%) down from (67.0%) In this group, all adults in the CU are employed. Income is important in Supplies Spending, but like Food, the number of Earners has grown markedly less important. Their performance is 109.1%, down from 116.4%. This is still higher than Food but it reflects a great year by 2+ people CUs with only 1 earner. That group. along with retirees, spend a lot of money on Supplies – 37.5% of Total $.
10. Area – Suburban (63.0%) up from (62.0%) Suburban CUs are the biggest spenders in every segment. They held their ground in Supplies. A relatively high performance of 113.3% reflects the lower share of Supplies $ in Central Cities.

The biggest spending groups for Pet Supplies are the same as Total Pet and Pet Food. However, the discretionary nature of Supplies causes spending to be more impacted by income than Food. Groups associated with higher income, like Education and # Earners, have higher performance than in Food. Homeownership and Marriage had the most growth in Supplies $. Having 6 groups with 120+% performance also indicates greater disparity between segments.

Now, we’ll look at 2017’s best and worst performing Pet Supplies spending segments in each category.

Almost all of the best and worst performers are those that we would expect. In Pet Supplies spending, there are only 2 that are different from 2016. That is the least change of any segment, 5 fewer than Pet Food and 1 less than for Total Pet. As we move deeper into the data, we will start to see even more differences between the Industry Segments. Changes from 2016 are “boxed”. We should note:

• Income matters in Supplies spending.
  • The 227.2% Performance by the $200K> group is 27.4% better than their performance in Food.
  • 7 of the 11 winners for best performance had the highest income of any segment in the category. Three came in 2^nd – White, not Hispanics, Self-employed and West. 2 Person CU’s were 4^th but are more focused on pets.
  • In Categories associated with Income, including # Earners, Occupation and Higher Education, the disparity between the best and worst performers grew in 2017. Any gains that were made occurred in the middle ground.
• CU Composition – This year’s winner is Married Couples with the oldest child over 18. They finished in a virtual tie with the Oldest Child 6>17. This reflects the strong year that was enjoyed by the entire 35>64-yr age range. Singles are once again last and their performance fell significantly from 65.4% to 60%.
• # in CU –In 2017 the performance of 2 to 4 people CUs was very close. 5+ underperformed slightly at 97.4% and then we have…Singles. It just takes 2.

It’s time to “Show you the money”. Here are segments with the biggest $ changes in Pet Supplies Spending.

In 2017 Supplies Spending was up $2.74B, continuing the lift which began in the second half of 2016. There are only 3 repeats – 2 winners and 1 loser. 4 segments switched from last to first or vice versa. 1 Earner, 2+ people CUs was a surprise winner, but the biggest news came from just looking at the overall chart. In 9 of 11 Demographic Categories every segment increased spending on Supplies. Admittedly, some increases were small, but an increase is an increase. This shows just how widespread the big lift in Supplies $  was in the overall market. Here are the specifics:

• Housing – In 2017, Homeowners spent more. Renters spent less. In 2016 all segments spent more.
  • Winner – Homeowner w/Mtge – Supplies: $10.01B; Up $2.11B (+26.7%)
    • 2016: Homeowner w/o Mtge
  • Loser – Renter – Supplies: $3.83B; Down $0.15B (-3.7%)
    • 2016: Homeowner w/Mtge
  • Comment – Homeowners with a mortgage flipped from last to first. In 2016 they accounted for 49.6% of Supplies $. In 2017 that grew to 53.9% as they produced 78% of the increase.
• Race/Ethnic – The White, Non-Hispanics share of Supplies spending is 84.2%, but only 75.5% of the lift.
  • Winner – White, Not Hispanic – Supplies: $15.65B; Up $2.07B (+15.2%)
    • 2016: White, Not Hispanic
  • Loser – African Americans – Supplies: $0.71B; Up $0.15B (+26.9%)
    • 2016: Hispanic
  • Comment – African Americans came in last but had a 26.9% increase. Of all the minority groups, Hispanics had the lowest percentage of increase (+20.5%). Supply Spending is very slowly becoming more equal. However, we should note that White, not Hispanics finally broke their spending record of $14.8B. That record was set in…2014.
• # in CU – It’s simple. All groups registered an increase, but 2 People CUs led the way.
  • Winner – 2 People – Supplies Spending: $7.71B; Up $1.59B (+25.9%)
    • 2016: 3 People
  • Loser– 3 People – Supplies Spending: $3.13B; Up $0.01B (+0.4%)
    • 2016: 5+ People
  • Comment: In addition to 3 People CUs, Single people also underperformed with only a 4.1% increase. The key CU numbers in 2017 were 2, 4 and 5 or more.
• # Earners – 1 Earner, 2+ CUs rebounded after a decrease in 2016 to post the biggest increase.
  • Winner – 1 Earner, 2+ CU – Supplies: $4.30B; Up $1.57B (+57.5%)
    • 2016: 2 Earners
  • Loser – No Earner, Single – Supplies: $1.21B; Up $0.05B (+4.3%)
    • 2016: 1 Earner, Single
  • Comment – Income is a factor, but the # of Earners was less important in 2017. All CUs, from No Earners to 3 or more Earners, spent more on Pet Supplies. 2 Earner CU’s came in 2^nd , up $0.75B (+11.1%) All other segments had increases below 10%. In 2017, 1 Earner- 2+CUs was the biggest driver (57%) behind the $2.74B lift.
• Occupation – The widespread growth gets even better. In 2016, 1 group spent less. In 2017, all groups spent more.
  • Winner – Mgrs. & Professionals – Supplies: $6.29B; Up $1.39B (+28.4%)
    • 2016: Retired
  • Loser – Tech, Sales, Clerical– Supplies: $2.49B; Up $0.03B (+1.2%)
    • 2016: Self-employed
  • Comment – Managers & Professionals replaced Self-employed as the highest income group and moved back on top of Supplies Spending. They have now registered 3 straight years of increased Supplies Spending. Blue Collar workers also increased Supplies spending – +9.4%. Nothing like Food, but still an increase. No segment $ trading.
• Education – All groups were up, but BA/BS Degrees led the way.
  • Winner – BA/BS Degree – Supplies: $5.51B; Up $1.30B (+30.9%)
    • 2016: Adv College Degree
  • Loser – High School Grad – Supplies: $2.37B; Up $0.08B (+3.7%)
    • 2016: < HS Grad
  • Comment – The Advanced Degree group was a strong 2^nd, up $0.81B (+21.7%). Like the Blue-Collar group, HS Grads w/some College also bought more Supplies, up $0.34B (+11.7%). So, they too had no $ trading for Food.
• CU Composition – Married Couples Only finished on top, but only 1 segment spent less.
  • Winner – Married, Couple Only – Supplies: $5.58B; Up $1.20B (+27.4%)
    • 2016: Married, oldest child 6>17
  • Loser – Unmarried, 2+ Adults – Supplies: $2.63B; Down $0.11B (-4.0%)
    • 2016: Married, oldest child >18
  • Comment – CUs with children, Married or Single Parents, spent $1.11B more on Supplies. This is 40.5% of the total increase and a radically different pattern from the Food, Service and Veterinary segments.
• Area Type – Suburbs Over 2500 population flipped from last to first, but all areas spent more.
  • Winner – Suburbs >2500 – Supplies: $8.19B; Up $1.12B (+27.8%)
    • 2016: Central City
  • Loser – Rural – Supplies: $1.53B; Up $0.35B (+29.9%)
    • 2016: Suburbs >2500
  • Comment – Rural areas finished last with a 29.9% increase. Their big lift in Food didn’t hurt Supplies’ spending.
• Income – Last year 3 income groups spent less on Supplies. This year all groups spent more.
  • Winner – $150 to $199K – Supplies: $2.14B; Up $0.89B (+71.2%)
    • 2016: $200K>
  • Loser – <$30K – Supplies: $2.69B; Up $0.09B (+3.4%)
    • 2016: $150 to $199K
  • Comment – The winner is no surprise, but the lift was fairly balanced. The $40>69K group was up $0.72B (+23%).
• Age – The 55>64-yr Olds led the way in Supplies just like they did in Food, but all groups spent more.
  • Winner – 55>64 yrs – Supplies Spending: $4.17B; Up $0.82B (+24.3%)
    • 2016: 35>44 yrs
  • Loser – <25 yrs – Supplies Spending: $0.67B; Up $0.14B (+27.4%)
    • 2016: 25>34 yrs
  • Comment: The spending increase was very evenly spread across the age groups with only one group not registering a double-digit percentage increase. The 65>74-year olds were the only group not included in this club as they only spent 8.9% more. By the way, the 75+ group led the way with +31.9%. The <25 group was 2^nd, +27%.
• Region – All groups spent more and the winner and loser are both the same as 2016.
  • Winner – Northeast – Supplies Spending: $3.75B; Up $0.78B (+26.4%)
    • 2016: Northeast
  • Loser – Midwest – Supplies Spending: $3.60B; Up $0.57B (+18.8%)
    • 2016: Midwest
  • Comment – The Northeast is up $1.39B in 2 years and the Midwest flipped from down -$0.30B to up $0.57B

We’ve now seen the winners and losers in terms of increase/decrease in Pet Supplies Spending $ for 11 Demographic Categories. Overall, 2017 was a year of widespread strong growth. The first indication of this was that 9 of 11 categories had no segments that spent less on Supplies. We also saw many of the traditionally strong performers rise to the top again. There was only 1 surprise winner, 1 Earner – 2+ CUs. There were some really big winners – 5 segments generated at least half of the Total $2.74B. However, not every good performer can be “the” winner and some of these “hidden” segments should be recognized for their outstanding performance. They don’t win an award, but they deserve…

HONORABLE MENTION

The numbers from these segments certainly merit their recognition for Honorable Mention. They also provide further evidence of just how widespread and deep the lift in Supplies’ spending was – Single Parents, 4 People CUs, Retirees, even lower middle-income CUs – $40 to $69K. America spent more on Supplies in 2017. There is another fact that irrefutably shows this. Of 99 individual demographic segments, only 6 had a decrease in Supplies spending. That means that 94% spent more. The problem was limiting this list to 6.

Summary

While Pet Food spending has shown a definite pattern, Pet Supplies have been on a roller coaster ride since 2009. Many Supplies categories have become commoditized and react strongly to changes in the CPI. Prices go up and spending goes down…and vice versa. Supplies spending has also been reactive to big spending changes in Food. Consumers spend more to upgrade their Food, so they spend less on Supplies – trading dollars. We saw this in 2015. Then in 2016 the situation reversed. Consumers value shopped for Food, so they spent some of the “saved” money to increase their spending on Supplies.

That brought us to 2017. It turns out that 2017 was to be significantly different. Both Supplies and Food prices deflated. At the same time the inflation rate in both of the Services segments dropped to lows not seen in recent years or in the case of Veterinary, not seen ever before. Value was the “word” and it was available across the market. One of the first things that we noted was the strong evidence that the upgrade to super premium significantly penetrated the consumer market with major lifts from unexpected demographics like Blue-Collar Workers, HS Grads w/some College, 1 Earner- 2+ CUs and lower middle-income groups. This could have negatively impacted Supplies Spending. However, it didn’t. Supplies’ spending increased in these segments, but it also was very strong in the groups that we have come to expect to be the leaders – Homeowners w/Mtge, Managers & Professionals, College Grads and Married Couples. With an increase in 94% of all segments, there was good news everywhere. We returned to a new “normal”, which far exceeded the old.

Among the demographic categories in which a consumer has some control, Higher Income, Marriage, Homeownership and Higher Education are still the biggest factors in increased Supplies spending. Homeownership and Marriage both increased significantly in importance and influence in 2017. While Income remained firmly at the top of the list, there were other changes related to Income which broadened the market for Supplies. The # of Earners became much less of a factor and there also were significant spending gains coming from lower middle-income groups.

Although it is not an absolute necessity like Food, the spending behavior on Pet Supplies can also be a reflection of the percentage of pet ownership across a demographic category. In our analysis of Food spending we suggested that part of the spending increase in unexpected segments may have been derived from an increase in the CU percentage of pet ownership. While not as dramatic as the food increase, all these groups also increased Supplies spending which would add support to the premise of more new Pet Parents.

The other trend that we saw in Food spending was a “movement” for more space – Rural Areas and Suburbs <2500. While not as dramatic as the lift in Food, those 2 areas also had the biggest Supplies spending lift in the category, +29%.

Finally – The “Ultimate” Pet Supplies Spending Consumer Unit consists of 4 people – a married couple, with 2 children, the oldest is over 18. They are in the 45 to 54 age range. They are White, but not of Hispanic origin. At least one of them has an advanced College Degree. Both of them work, running their own business and their oldest child just started a part time, after school job. They’re doing well with an income over $150K. They live in a larger suburb, adjacent to a big city in the Western U.S. and are still paying off the mortgage.

 

 

 

 

We looked at the Total Pet Spending for 2017 and its key demographic sources. Now we’ll start drilling down into the data. Ultimately, we will look at each individual segment but the first stop in our journey of discovery will be Pet Products – Pet Food and Supplies. This classification accounted for $49.69B (64.4%) of the $77.13 in Total Pet spending in 2017. This was up $7.35B (+17.4%) from the $42.34B that was spent in 2016. We have seen that this lift was driven by the market expansion of premium foods along with deflated prices in Supplies. Value was the key driver. Food and Supplies are the industry segments that are most familiar to consumers as they are stocked in over 200,000 U.S. retail outlets, plus the internet. Every week over 21,000,000 U.S. households buy food and/or treats for their pet children.

Pet Food spending turned around in 2017, +$4.61B, while Supplies built on a trend that began in the second half of 2016 to increase spending by $2.74B. We’ll combine the data and see where the bulk of Pet Products spending comes from.

We will follow the same methodology that we used in our Total Pet analysis. First, we will look at Pet Products Spending in terms of the same 10 demographic category groups that were responsible for 60+% of Total Pet spending. A couple fall below the 60% mark for Products, but they are very close. Then we will look for the best and worst performing segments in each category and finally, the segments that generated the biggest dollar gains or losses in 2017.

The first chart details the biggest pet product spenders for each demographic category. It shows their share of CU’s, share of pet products spending and their spending performance (spending share/share of CU’s). Although their share of the total products $ may be different from their share of the Total Pet $, the biggest spending groups are the same. The categories are presented in the order that reflects their share of Total Pet Spending. This highlights the differences. In Pet Products spending, higher education and occupation are less important while marriage and age matter more. We should also note that, like Total Pet Spending, Income is the highest performing demographic characteristic. In Pet Products there are 5 groups with a performance rating of over 120%, which is up from 4 last year. However, it is one less than Total Pet. This indicates that Pet Products spending is spread a little bit more evenly across the category segments.

1. Race/Ethnic – White, not Hispanic (85.7%) This is the largest group and accounts for the vast majority of spending in every segment. With a 125.1% performance rating, this category ranks #4 in terms of importance in Pet Products Spending demographic characteristics. While Hispanics, African Americans and Asian American account for over 30% of U.S. CU’s, they spend less than 15% of Pet Products $. Although pet ownership is relatively high in Hispanic American households, it is significantly lower for African Americans and Asian Americans.
2. # in CU – 2+ people (82.5%) The spending numbers for Pet Products are very close to those for Total Pet, 82.7%. If you put 2 people together, pets very likely will follow. If you have a pet, you must spend money on food and supplies. Their overall performance of 115.7% is lower because performance decreases as the number of people in the CU increases. However, with performance rating of 99%, even the CU’s with 5 or more people are “earning their share”. The key is “It just takes two.”
3. Housing – Homeowners (80.3%) Controlling your “own space” has long been the key to pet ownership, larger pet families and more pet spending. At 127.7% performance, homeownership moved up to second place in terms of importance for increased pet products spending. Homeownership increased by 0.5% in 2017. A big factor was the Millennials’ rate improving from 35% to 37%. Good news!
4. Income – Over $50K (70.9%), up from 68.1%. Pet Parenting is common in all income groups but money does matter in spending behavior for all industry segments. With a performance rating of 137.7%, (up from 136.2%) CU income is also the single most important factor in increased Pet Products Spending. As a general rule,  Higher Income = Higher Pet Products Spending. However, in 2017 much of the increase in share and performance was due to increased spending by the middle income groups, not the $150K+ elite.
5. Age – 35>64 (66.4%), up from 63.5%. Their performance also increased from 117.2% to 124.3% and they “joined” the 120+% performance club at #5. Although the 35>54 group increased spending by $2.47B, the 55>64-year-old Baby Boomers generated an additional $3.65B, which was half of the total national increase.
6. Occupation – All Wage & Salary Earners (66.1%), up from 64.4. Pet ownership is widespread across all segments in this group. The low performance, 108.2%, up from 105.7%, reflects this, as well as the contribution by Retirees. However, the lifts in share and performance were driven by a big spending increase from blue-collar workers.
7. CU Composition – Married Couples (63.1%). Up from 61.1%. Pet parenting and marriage both represent strong commitments. Their performance increased from 125.8% to 127.5 but they fell to 3^rd place. Like Homeownership, this group has been growing in importance and they both continue to battle it out for second place behind income.
8. # Earners – “Everyone Works” (59.9%) down from 65.0%. Their performance is 104.5%, down from 112.8% In this group, all adults in the CU are employed. No group had a bigger drop in share or performance. This is directly a result of the great year by CU’s with 2+ people and only one earner, along with Retirees. Income is a still a priority in Pet Products but not how many people work to get it.
9. Education – Associates Degree or Higher (59.0%) down from 60.3%. Their performance level also fell from 116.5% to 109.9%. Just 2 years ago this group had a performance level over 120%. In 2017 there was a big spending lift by High School Grads with some College. The current trend and situation shows that Pet Parents don’t need a College degree to recognize and buy, not just what is needed, but what is best for their Pet Children. Responsible Pet ownership is becoming even more widespread across America.
10. Area – Suburban (58.2%), down from (59.6%). Their performance also fell from 108.6% to 104.7%. Suburban households are still the biggest pet spenders and under normal circumstances they had a pretty good year, +14.7%. However, their share and performance were driven down by a spectacular performance in Rural areas.

Although the biggest spending groups are the same for Pet Products as for Total Pet, there are subtle differences in market share and performance. Money still matters most but how you earn it matters less. Pet Products Spending is definitely becoming more diverse  across occupations, # of earners and education levels.

Now, let’s drill deeper and look at 2017’s best and worst performing Products spending segments in each category.

Most of the best and worst performers are the ones that we would expect. However, there are 7 that are different from 2016. That is 2 more than last year and 4 more than Total Pet. Changes from 2016 are “boxed”. We should note:

Only 2 of the Product winners are different from Total Pet – Rural and 1 Earner, 2+ CU’s. The performance of the matching segments is down slightly from Total Pet, with 2 exceptions – the Adv. College Degree and 55>64 segments. The Educated group had a big decrease, from 147.3% to 133.8% and the 55>64-year olds are up from 146.2% to 152.5%.

The average performance of the 2017 Product winners was 142.8%, up from 139.2% – 8 were up. The average for the losers was 60.0%, down from 61.3% – 3 were up. Any reduction in performance disparity is generally being made by the segments in the middle ground, especially in the Occupation and Education categories. We should also note:

• Occupation – Self-employed lost CU’s and their income and spending fell. Managers & Professionals now have the highest Income and they spent it. Retirees came in last despite a 29.4% increase in spending.
• Region – The West is back on top while the South flipped from first to last. A 96.8% performance from the loser shows that there is spending parity among the regions.
• CU Composition – Married Couples Only has back to back wins. The big news is Single Parents got out of the cellar.
• # Earners – Usually 2 or 3 Earner CU’s are on top. This year 1 Earner, 2+ people CU’s came to the forefront.
• Area – We said that the Rural areas had a great year. Their performance was second only to $200K+ incomes.

It’s time to “Show you the money”. Here are segments with the biggest $ changes in Pet Products Spending.

In this section we will see who drove the big increase. There is only one repeat from 2016 – Self-employed spending continues to fall. 7 Segments switched positions – from first to last or vice versa. However, there are also other surprises, like the performance of Blue-Collar, 1 Earner – 2+ CU’s, HS Grads w/some College and Rural.

• Race/Ethnic – 7% of Pet Products’ Spending comes from White, Non-Hispanics and 87.2% of the increase.
  • Winner – White, Not Hispanic – Products Spending: $42.59B; Up $6.41B (+17.7%)
    • 2016: Hispanic
  • Loser – Asian – Products Spending: $1.13B; Up $0.23B (+25.1%)
    • 2016: White, Not Hispanic
  • Comment – All groups increased their Pet Products spending. Asian Americans finished last, but they had a 25.1% increase. Only Hispanics under performed, with a 6.4% increase.
• Housing – All segments had an increase in Pet Products spending in 2017.
  • Winner – Homeowner w/o Mtge – Products Spending: $14.93B; Up $4.69B (+45.8%)
    • 2016: Renters
  • Loser – Renter – Products Spending: $9.79B; Up $0.47B (+5.1%)
    • 2016: Homeowners w/o Mtge
  • Comment – 47% of the Rural CU’s have paid off their mortgage. In 55>64 it is 37% and of course Retirees – 58%.
• # in CU – It was the year of “2” as 2-person CU’s generated 64% of the increase.
  • Winner – 2 People – Products: $22.52B; Up $4.69B (+26.3%)
    • 2016: 4 People
  • Loser – 3 People – Products: $7.33B; Down $0.09B (-1.2%)
    • 2016: 5+ People
  • Comment: The largest CU’s, 5+ came in second with an increase of $1.35B. 3-person CU’s had the only decrease and it was driven down by a reduction in Food spending. Even singles spent more on both Food and Supplies.
• Occupation – The Blue-Collar workers group is probably the biggest surprise of the report.
  • Winner – Blue-Collar Workers – Products Spending: $11.22B; Up $4.24B (+42.5%)
    • 2016: Tech, Sales Clerical
  • Loser – Self-employed – Products Spending: $3.29B; Down $0.37B (-10.1%)
    • 2016: Self-employed
  • Comment – Blue-Collar workers upgraded their Food, but they also had a big increase in Supplies. Retirees had a great year in both Food and Supplies. The Self-employed decrease came only from Food as Supplies were up.
• # Earners – More earners generally mean a higher income and more Spending but in 2017 all groups were up.
  • Winner – 1 Earner, 2+ CU – Products Spending: $12.94B; Up $4.19B (+47.9%)
    • 2016: No Earner, Single
  • Loser – No Earner, Single – Products Spending: $2.85B; Up $0.12B (+4.4%)
    • 2016: No Earner, 2+ in CU
  • Comment – The 1 Earner, 2+ CU’s produced 57% of the increase with the biggest lifts in both Food and Supplies. The 3 earner CU’s came in second by spending $1.2B more. No earner, singles flipped from first to last, but still eked out an increase in both Food and Supplies.
• Age – The Boomers are back…with a big lift that flipped them from last to first!
  • Winner – 55>64 yrs – Products Spending: $14.41B; Up $3.65B (+33.9%)
    • 2016: 75+ yrs
  • Loser – <25 yrs – Products Spending: $1.29B; Down $0.05B (-4.0%)
    • 2016: 55>64 yrs
  • Comment: The 35>54 age range was up $2.47B. The Under 25 group was the only segment with a decrease and it was driven down by Food. The 25>34-year olds also bought less Food, but more Supplies. These two instances of reduced Food spending were the only decreases in either segment across all age ranges.
• CU Composition – Married Couples Only dominated, producing 47%of the increase with only 23% of the CU’s.
  • Winner – Married, Couple Only – Products Spending: $16.69B; Up $3.47B (+26.3%)
    • 2016: Unmarried, 2+ Adults
  • Loser – Married, oldest child <6 – Products Spending: $1.28B; Down $0.30B (-19.0%)
    • 2016: Married Oldest Child >18
  • Comment – Married Couples with an oldest child under 6 spent -$0.53B less on Food but more on Supplies. This was the only decrease in either Food or Supplies spending across the entire demographic category.
• Education – Higher Education has equated to increased Pet Products spending. In 2017 it became less of a factor.
  • Winner – HS Grad w/some College – Products Spending: $12.35B; Up $3.12B (+33.9%)
    • 2016: Assoc. Degree
  • Loser – Associates Degree – Products Spending: $5.04B; Down $0.21B (-4.0%)
    • 2016: BA/BS Degree
  • Comment – College Grads still produced the biggest share of the increase but this year’s segment winner, HS Grads w/some College had a big increase in Food spending. This suggests that the food upgrade is becoming widespread. Assoc. Degree (the only negative group) had a big year in 2016 but value shopped for Food in 2017.
• Income – Income matters in Pet Products spending, but the importance of high income was dialed back in 2017.
  • Winner – $40 to $69K – Products Spending: $11.29B; Up $2.80B (+33.0%)
    • 2016: $70 to $99K
  • Loser – $30 to $39K – Products Spending: $3.30B; Down $0.53B (-13.8%)
    • 2016: $100 to $149K
  • Comment – The lower middle-income group stepped up. In fact, only the $30>39K segment spent less in 2017.
• Area Type – All areas increased spending, but Central City “flipped” from first to last.
  • Winner – Rural – Products Spending: $7.70B; Up $2.78B (+56.4%)
    • 2016: Central City
  • Loser – Central City – Products Spending: $13.05B; Up $0.86B (+7.0%)
    • 2016: Suburbs >2500
  • Comment –Rural won, but all areas under 2500 pop., rural or urban, generated $4.6B (62%) of the increase.
• Region – The winners and losers are always changing in this category.
  • Winner – Midwest – Products Spending: $10.73B; Up $2.14B (+24.9%)
    • 2016: Northeast
  • Loser – South – Products Spending: $18.45B; Up $1.60B (+9.5%)
    • 2016: West
  • Comment – The South “lost” with a $1.6B increase. The good news was widespread in this category.

We’ve now seen the “winners” and “losers” in terms of increase/decrease in Pet Products Spending $ for 11 Demographic Categories. 2017 was a great year for Pet Products Spending and the “greatness” was in large part due to the increase being more widespread across demographics. Such winners as Blue-Collar workers, HS Grads with Some College, 1 Earner – 2+ CU’s and Rural areas give evidence to this supposition. Of course, not every good performer can be a winner but some of these “hidden” segments should be recognized for their outstanding performance. In 2017 there were a lot of them. I’ve narrowed it down to 6. They don’t win an award, but they deserve….

HONORABLE MENTION

Pet Products spending was up over $7B in 2017. The strong performance by these groups is immediately apparent and gives further evidence that the increase was demographically widespread. It was a very strong year for 2-person CU’s but also for the biggest CU’s, as 5+ people were up $1.35B (+39.3%). Single Parents are under strong financial pressure but increased spending by 37.4%. The lower middle-income group had the biggest increase but the upper middle income, $100>149K group, wasn’t far behind, up $2B (+28%). African Americans had the biggest percentage increase of any segment in the Racial/Ethnic category. Blue-Collar workers were the stars, but second place belongs to the Retirees, up $1.9B. Increased Pet Products spending in 2017 was about more space. Rural areas won the race, but Suburban areas with a population under 2500 were also up a lot, +26%. In Pet Products spending there was good news from almost everyone. Only 10 of 99 segments had a decrease, so 90% spent more.

Summary

Spending on Pet Products has been on a roller coaster ride since 2015. Many consumers upgraded to Super Premium Food and cut back on Supplies in 2015. In 2016 they value shopped for Food and Spent some of the saved money on Supplies. In 2017 there was increased availability and value in both segments. Consumers recognized the opportunity and spent $7B more.

In 2017, on the surface, big changes weren’t immediately apparent. The demographic groups responsible for most of Pet Products Spending were the same as those in 2016. However, there were changes in their spending share rankings. Marriage and Everyday Workers moved up while the number of Earners and Higher Education became less important. These were the first indications of a movement towards more spending equality in certain demographic categories. In terms of their performance, Income, Homeownership and Marriage still came out on top. However, there were now 5 groups with 120+% performance as Age Group entered the club. Total Pet has the same 5, Plus Higher Education.

When we looked at the performance of individual segments, changes started to become more apparent. Two of the new top performers were notable – 1 Earner – 2+CU’s and Rural Areas. However, when we looked at the biggest gainers in $, that’s when the changes really stood out. Many winners – Blue-Collar, 1 Earner – 2+CU’s, HS Grads w/some College, $40>69K and Rural are real evidence that spending is becoming more demographically balanced across America, especially  in income, occupation and education. There was also a big spending lift in less densely populated areas.

This data raises another issue. Spending money on Food and Supplies is an absolute necessity in Pet Parenting. Obviously, your pet needs food every day so you must buy it regularly and often. Although Supply items are often more discretionary in nature, there are plenty of supplies that are necessities and many more that improve the quality of life for Pets and Pet Parents. Because of this necessity, the spending behavior on Pet Products can be an important reflection of the percentage of pet ownership in a demographic category. The APPA reported that the percentage of Pet Parenting H/H’s rose from 65% to 68% in 2017. We originally attributed the food spending increase to upgrades. Perhaps there were 2 trends going on. The Spending data provides supporting evidence for both an upgrade and new pet ownership. It also helps to identify the participants, or should I say, new Pet Parents. The Food Segment analysis should be interesting.

Finally…The “Ultimate” Pet Products Spending CU is a married couple, alone. They are in the 55 to 64 age range. They are White, but not of Hispanic origin. At least one of them has an advanced College Degree. However, only 1 works, as a manager and earns over $150K. They still have a mortgage on their house in a rural enclave in the West.

 

 

 

 

U.S. Consumers spent $7.8 Trillion dollars in 2017, up $383B (+5.2%) from 2017. However, the pet industry had an even better year. Americans spent $77.13B, 0.99% of total expenditures, on our companion animals. Increases in the three largest industry segments drove overall Pet Spending up $9.84B (+14.6%) in 2017. U.S. Consumers are heavily driven by value and in 2017 they found it almost “across the board” in all industry segments. Even the Services segment, which had a small decrease, had an increase in purchase frequency. Pet Parents just paid less. We’ll continue to monitor the situation to see if this spending behavior continues or evolves.

In this report we will look at Pet Spending for undoubtedly today’s most “in demand” demographic measurement – by Generation. Baby Boomers have driven the industry. Are they starting to fade? Are Millennials stepping up? What about Generation X? Using data from the US BLS Consumer Expenditure Survey we will look for the answers.

We’ll start by defining the generations and looking at their share of U.S Consumer Units (CUs are basically Households)

GENERATIONS DEFINED

• Millennials: Born 1981 to 1999
  • In 2017, Age 18 to 36
• Gen X: Born 1965 to 1980
  • In 2017, Age 37 to 52
• Baby Boomers: Born 1946 to 1964
  • In 2017, Age 53 to 71
• Silent Generation: Born 1928 to 1945
  • In 2017, Age 72 to 89
• Greatest Generation: Born before 1928
  • In 2017, Age 90+

• Baby Boomers are still the largest number of CU’s at 44.7M and 34.4% of the total but they are starting to lose some ground. In fact, all 4 of the older generations have fewer CU’s than in 2016.
• The 2 Oldest Generations will continue to lose CUs primarily due to death or movement to permanent care facilities. However, it appears that the Gen Xers are reducing their CU count by coming together in their “middle age” years.
• Millennials have the largest number of individuals, but they rank only third in the number of CU’s. However, this number is rapidly growing as a significant number gained financial independence in 2017.

Now let’s look at some key CU Characteristics.

The most significant change is that Millennials are “coming of age” with increases in all areas. The oldest Americans are fading in all measurements but homeownership, which registered an increase from all groups but the Gen Xers.

• CU Size – CU’s with 2+ people account for 71.3% of all U.S. CU’s and 82.5% of pet spending (up from 80.5%). In 2017 Millennials exceeded the National Average for the first time. However, CU size, with all the related responsibilities, still peaks with the Gen Xers and then starts dropping. The Boomers are the last to average over 2 people per CU.
• # Children < 18 – 28.6% of U.S. CU’s have children and they generate 28.1% of Pet Spending. For the first time, CU’s with children aren’t earning their share. However, the story is more complex. In the past Single parents spent the least and the pet spending of married couples increased as their children got older, which often correlated with increased household income. In 2017, married couples with an oldest child under 6 fell to the bottom in Pet Spending. In 2017, there were 3 changes in the number of children per CU. The Silent Generation fell to essentially 0. The Gen Xers dropped from 1.2 to 1.1 and the Millennials increased from 0.8 to 0.9. This means that the drop in pet spending by households with the oldest child under 6 was likely driven by Millennial parents.
• # Earners – Pet spending is also tied to the number of earners in a CU. 2 Earner CUs annually spend 27.9% more on their pets than 1 Earner CUs. As the chart shows, the “earning” is being done in America by Gen Xers, Millennials and Boomers. In 2017, Gen Xers remained steady at 1.7, while Boomers fell 0.1 and Millennials increased by 0.1
• Homeownership – Owning and controlling your own space has always been a major factor in increased Pet Ownership and spending. Currently, homeownership is 62.9%, up from 62.4%, and accounts for 81.4% of Total Pet Spending, up from 79.8%. All groups but Gen Xers had an increase in homeownership and homeowners accounted for 92.5% of the total Pet Spending increase.
  • Millennials are the most common renters in society, but their level of Homeownership increased from 33% to 35%. However, it is still only 55% of the national average and about 2/3 of the rate of Gen Xers and Boomers when they were the same age.
  • Gen Xers remain near the national average and the rate of Homeownership continues to grow as we age.

Next, we’ll compare the Generations to the National Avg.:

In Income, Total CU Spending, Total Pet Spending and the Pet Share of Total CU Spending

• CU National Avg: Income – $73,573;
• Total CU Spending – $60,060;
• Total Pet Spending – $593.63;
• Pet Share of Total CU Spending – 0.99%

• Income – The 37>52 year old Gen Xers are the leaders and will soon occupy all the slots in the peak earning years – 45 to 54. The Boomers earn about 17% less and this difference will increase as they age. The income of the Silent Generation is about half of the Boomers as retirement becomes almost universal in this 72+ year old group. With an influx of new CU’s, Millennials’ income fell 6% and is now 22% less than the Boomers and only 65% of the Gen Xers.
• Total Spending – The Gen Xers make the most and spend the most but it’s not out of line with their income. Boomers also spend more than the average but currently their income can support it. Spending doesn’t fall as fast as income with the older generations. In fact, they are actually deficit spending in relation to their after tax income. The Millennials’ spending has become less in line with their income. They are not deficit spending yet, but their income fell 6% while spending increased by 5.5%
• Pet Spending – The Boomers are by far the Pet Spending leaders, but the Gen Xers also exceed the National average per CU. Millennials’ Pet Spending fell in relation to the national average, but they still moved into 3^rd place overall.
• Pet Spending Share of Total Spending – In 2017 the Pet Spending share almost reached 1%. It was driven up by a substantial increase from the Boomers with help from the younger groups, who have shown consistent growth. At the same time, the 2 oldest generations continue their decline. Although, the Silent generation is still ahead of the Millennials. The Boomers remain the runaway leaders and the only group to exceed the 1% level for Pet Spending.

Now, let’s look at Total Pet Spending by Generation in terms of market share as well as the actual annual $ spent for 2014 through 2017. The 2017 numbers are boxed in red (decrease) or green (increase) to note the change from 2016.

• Boomers continue to dominate Pet Spending and their share is back up to 46.8% after falling to 44.0% in 2016.
• There is a definite age-related pattern which is readily apparent in the bar graph. Spending in the oldest groups is relatively low and falling. In contrast, the two youngest groups are showing consistent year after year growth. That leaves the Boomers in the middle. They have the biggest share and are also the most likely group to have a strong reaction to trends. With their tremendous buying power, this can cause major spending swings in the industry.
• In 2017, the Boomers led the way to a record spending year, but they got strong support from Gen Xers and Millennials. Combined they were up $10.5B, but each group was up over 10% with an increase in excess of $2B.
• Boomers – Ave CU spent $804.94 (+137.82);
  • 2017 Total Pet spending = $36.09B, Up $6.48B (+20.7%)
  • 2014>2017: Up $6.62B; In 2017, they had a big lift in all but the services segment.
• Gen X – Ave CU spent $616.37 (+$74.42);
  • 2017 Total Pet Spending = $21.34B, Up $2.0B (+10.4%)
  • 2014>2017: Up $3.58B; Their annual Pet spending growth since 2014 has been the most consistent of any group.
• Millennials – Ave CU spent $413.14 (+$36.54);
  • 2017 Total Pet Spending = $13.49B, Up $2.05B (+17.9%)
  • 2014>2017: Up $3.8B; The Millennials had a big lift in spending in 2014 but Spending grew only slightly in 2015. Since then, their total pet spending has grown by $3.76B. Plus, it has become much more evenly balanced across industry segments as they have become more conscious of all facets of pet parenting.
• Silent Gen. – Ave CU spent $368.80 (-$28.27);
  • 2017 Total Pet Spending = $6.07B, Down $0.60B (-9.0%)
  • 2014>2017: Down $0.8B; They still spend a relatively high amount on their pets, but age is becoming a factor.
• Greatest Gen.– Ave CU spent $102.91 (-$2.73);
  • 2017 Total Pet Spending= $0.14B, Down $0.09B (-41.2%)
  • 2014>2017: Down $0.39B; After a lifelong commitment to their pets, their Pet Parenting days are fading away.

The Boomers are back in a big way and they brought their younger spending partners to help!

Let’s look at individual segments. First, Pet Food…

• For Boomers and the younger groups, the up and down, trendy nature of Pet Food is readily apparent, but the swings in spending are more pronounced for the Boomers. In the older generations, pet ownership is fading.
• The Millennials’ may be the food trend pioneers so their performance in any given year may be a harbinger of the performance of Gen Xers and Boomers for the following year. If so, Food Spending should be up slightly in 2018.
• Boomers – Ave CU spent $348.92 (+$74.26);
  • 2017 Pet Food spending = $11.92B, Up $3.79B (+31.8%)
  • 2014>2017: Up $5.97B – Great prices pushed the food upgrade trend broadly across America.
• Gen X – Ave CU spent $224.52 (+33.17);
  • 2017 Pet Food spending = $7.71B, Up $0.85B (+12.4%)
  • 2014>2017: Up $0.72B Although they are the highest income group, they still recognize and act on value.
• Millennials – Ave CU spent $154.40 (+$1.39);
  • 2017 Pet Food Spending $5.05B, Up $0.25B (+5.2%)
  • 2014>2017: Up $0.77B They are the only group with increases in both 2016 and 2017, but 80% of the 2017 increase came from an increase in the number of CU’s.
• Silent Generation – Ave CU spent $156.63 (-$10.38);
  • 2017 Pet Food spending = $2.57B, Down $0.214B (-7.6%)
  • 2014>2017: Down $0.31B; From 2014>2016, their pattern is very similar to that of the Gen Xers, but in 2017 it appears that they are starting to fade.
• Greatest Gen. – Ave CU spent $51.70 (-$9.56);
  • 2017 Pet Food spending= $0.06B, Down $0.07B (-51.1%)
  • 2014>2017: Down $0.12B; A 50% drop in spending was primarily due to a 42% drop in CU’s.

Pet Food Spending is driven by trends. Perhaps the young, connected Millennials are the first to react and “buy into” each new “advance” in Pet Food so their behavior may predict the future of the segment. Now, let’s look at Supplies Spending.

• Boomers still have the largest share, but the younger groups have their biggest “presence” in Supplies. It is the only segment in which Gen Xers and Millennials together account for over half of the spending – 51.9%.
• Baby Boomers – Ave CU spent $167.52 (+$26.17);
  • 2017 Pet Supplies spending = $7.49B, Up $1.11B (+17.5%)
  • 2014>2017: Up $0.82B; They started their supplies comeback in 2016 but it truly accelerated in 2017.
• Gen X – Ave CU spent $171.74 (+$24.10);
  • 2017 Pet Supplies spending = $5.97B, Up $0.72B (+13.7%)
  • 2014>2017: Up $0.49B; Gen Xers perform best in Supplies. Like the Boomers, they surpassed their 2014 record.
• Millennials – Ave CU spent $112.34 (+$17.67);
  • 2017 Pet Supplies spending = $3.66B, Up $0.85B (+30.4%)
  • 2014>2016: Up $0.63B; Supplies are again Millennials’ best performing segment. In 2016 they cut spending to help fund increases in Food and Veterinary. In 2017 they came back incredibly strong to set a new all time high.
• Silent Generation – Ave CU spent $86.92 (+6.57);
  • 2017 Pet Supplies spending = $1.43B, Up $0.08B (+5.6%)
  • 2014>2017: Down $0.27B; Pattern is similar to Boomers & Gen X, but not as pronounced and with lower results.
• Greatest Gen. – Ave CU spent $14.78 (-$5.13);
  • 2017 Pet Supplies spending = $0.02B, Down $0.03B (-54.2%)
  • 2014>2017: Down $0.10B; A big drop in CU’s and Supplies have a lower priority for these oldest Pet Parents.

Most groups cut back on Supplies spending in 2015 due to a combination of rising prices and an attempt to compensate for the cost of upgrading their pet food. Supplies started their comeback in 2016 when Consumers value shopped for food and spent some of their saved money on Supplies. Then Supply prices dropped in 2017 and basically everyone under 90 years old recognized the value and spent more on Supplies – $2.74B more!

Next, we’ll turn our attention to the Service Segments.

First, Non-Veterinary Pet Services

• Boomers have the biggest share, but again the combined Gen X/Millennial share is larger in a discretionary segment.
• Baby Boomers – Ave CU spent $65.52 (-$5.65);
  • 2017 Pet Services spending = $2.93B, Down $0.28B (-8.7%)
  • 2014>2017: Up $0.25B; Services are becoming more appealing with age but Boomers have learned to value shop.
• Gen X – Ave CU spent $54.68 (+$6.16);
  • 2017 Pet Services spending = $1.90B, Up $0.176B (+10.2%)
  • 2014>2017: Up $0.31B; Significantly increased the frequency but got Services at a good price.
• Millennials – Ave CU spent $36.75 (-$1.21);
  • 2017 Pet Services spending = $1.20B, Up $0.07B (+6.4%)
  • 2014>2017: Up $0.49B; Services are growing in importance. They are the only group with an increase every year.
• Silent Generation – Ave CU spent $44.58 (+$0.17);
  • 2017 Pet Services spending = $0.73B, Down $0.015B (-2.0%)
  • 2014>2017: Up $0.07B; They definitely have a growing need. The decrease came from a drop in number of CU’s.
• Greatest Gen. – Ave CU spent $3.64 (-$7.00);
  • 2017 Pet Services spending = $0.005B, Down $0.015B (-78.9%)
  • 2014>2017: Down $0.03B; A big drop in the number of CU’s and in pet parents.

This segment has always found a way to grow every year – until 2017. The small drop in spending was caused by a combination of factors. An extremely competitive environment created deals so even with increased frequency, consumers paid less. Another factor is age. Services are often of greatest benefit to older pet parents. In 2017 the number of “over 53” CU’s fell by 1.7M. Small increases by the Millennials and Gen Xers couldn’t make up the difference.

Now, Veterinary Services

• Boomers continue to dominate this industry segment – their share is 73% more than the #2, Gen Xers.
• Of particular interest is the consistently growing commitment of the younger groups to this Pet Parenting responsibility. The combined veterinary spending of Millennials and Gen Xers has increased $4B (+74%) since 2014.
• Boomers – Ave CU spent $222.98 (+43.04);
  • 2017 Veterinary spending= $9.97B, Up $1.853B (+22.8%)
  • 2014>2017: Down $0.41B; Although not yet back to their 2014 level, they staged a major comeback in 2017.
• Gen X – Ave CU spent $165.43 (+$10.99);
  • 2017 Veterinary spending= $5.75B, Up $0.26B (+4.7%)
  • 2014>2017: Up $2.05B; Since 2016, their Veterinary spending has exceeded the CU Average. They are a solid #2.
• Millennials – Ave CU spent $109.65 (+$18.69);
  • 2017 Veterinary Spending $3.58B, Up $0.88B (+32.5%)
  • 2014>2017: Up $1.91B; Their CU spending is up 74% since 2014. Veterinary has become a much bigger priority.
• Silent Generation – Ave CU spent $80.67 (-$24.63);
  • 2017 Veterinary spending $1.33B, Down $0.45B (-25.2%)
  • 2014>2017: Down $0.30B; Money is always a factor. Their Veterinary spending decline continues.
• Greatest Generation– Ave CU spent $32.79 (+$18.96);
  • 2017 Veterinary spending= $0.05B, Up $0.015B (+46.4%)
  • 2014>2017: Down $0.15B; Food and Veterinary are still the biggest priorities of these oldest pet parents.

Gen Xers and Millennials have consistently increased their commitment to Veterinary Services. In 2014, their share of Veterinary Spending was 30%. It is now 45.1% – a 50% increase. This is a big, fundamental change in spending behavior.

One last chart to compare the share of spending to the share of total CU’s for the 4 largest generations.

• Silent Generation Performance – Total: 62.1%;
  • Food: 65.2%; Supplies: 60.8%; Services: 85.6%; Veterinary: 50.7%
  • This group ranges in age from 72 to 89. Pet Parenting is more challenging after age 75. (note: They perform best in Services) The desire and the commitment to their pets is still there. This is evident in the fact that 0.83% of their total CU spending is on pets, which is higher than Millennials. They don’t earn their share but they’re trying.
• Baby Boomers Performance–Total: 136.1%;
  • Food: 146.9%; Supplies: 117.2 %; Services 125.9%; Veterinary: 140.2%
  • Boomers led the way in building the industry and are still the “top dogs”. They earn their share and in fact, are the spending leader in every segment. At some point, this will begin to fade with age. However, that is still years off. After a dip in 2016, due to value shopping for food, they came “Booming Back” – +$6.5B in 2017.
• Gen X Performance – Total: 103.4%;
  • Food: 92.6%; Supplies: 120.2%; Services: 105.0%; Veterinary: 104.0%
  • The Gen Xers are next in line to Boomers in age and performance. In 2017, they “earned their share” as their Total Pet Spending performance again exceeded 100%. They have increased their Total Pet Spending every year since 2014. During this time, their spending has become more diverse and their performance has improved. They now earn their share in every area, but Food and it is close at 92.6%. They range in age from 37 to 52 so they are just entering the peak earning years. Expect their commitment and their pet spending to continue to grow.
• Millennials Performance – Total: 69.7%;
  • Food: 64.7%; Supplies: 78.6%; Services: 70.6%; Veterinary: 69.0%
  • Like the Gen Xers, Millennials have increased their pet spending every year since 2014. However, their future as the Pet Parenting spending leaders is still a long way off. They need increased income and a more settled family and home environment. Right now, their spending is becoming more evenly spread across segments and their performance just passed the Silent Generation but is still 30% below Gen X and about half that of the Boomers. They are educated and well connected. Indications are that they may lead the way in adopting new trends, especially in food. Their progress is good news, but in reality, their leadership is still more than a decade away.

Gen Xers and Millennials are ultimately the future of the industry, so everything should be done to encourage them and to make their Pet Parenting experience easier and better. However, by any spending measurement, the “here and now” of the Pet Industry is still the Baby Boomers.

 

 

 

 

 

 

 

 

 

 

 

In 2017 Total Pet Spending in the U.S. was $77.13B, a $9.84B (14.6%) increase from 2016. There was almost universal good news. The movement to Super Premium Foods made a deeper penetration across demographics. Deflating prices in the Supplies Segment spurred spending. Veterinary prices had record low inflation which increased spending AND visit frequency. The only “bad” news came from a minor decrease in Services spending. Increased competition saw consumers shopping for value. Their purchase frequency on Services was up a bit. They just paid a little less. Trading $ between segments was not a big factor in 2017. Food had a big turnaround. Supplies and Veterinary built upon a spending increase that began in 2016. Only Services was down, for the first time since 2010. Here are the $ changes:

• A big $4.61B (+17.4%) turnaround in Food
• A $74B (+17.3%) lift in Supplies
• A $2.56B (+14.1%) increase in Veterinary
• A very unusual –$0.07B (-1.0%) drop in Services

Let’s see how these numbers blend together at the household level. In any given week, 28.4 Million U.S. Households (1/5) spent money on their Pets – food, supplies, services, veterinary or any combination – up from 27.1M in 2016.

In 2017, the average U.S. Household (pet & non-pet) spent a total of $593.63 on their Pets. This was a 14.3% increase from the $519.57 spent in 2016. However, this doesn’t “add up” to a 14.6% increase in Total Pet Spending. With additional data provided from the US BLS, here is what happened.

• 0.3% more H/H’s
• Spent 9.5% more $
• 4.3% more often

If 68% of U.S. H/H’s are pet parents, then their annual H/H Total Pet Spending was $872.99.

Now, let’s look at the recent history of Total Pet Spending. The rolling chart below provides a good overview. (Note: All numbers in this report come from or are calculated by using data from the US BLS Consumer Expenditure Surveys – The 2016 & 2017 Totals include Veterinary Numbers from the Interview survey, rather than the Diary survey due to high variation)

• In 2015, the Food upgrade began, but early in the year consumers were trading $ in other segments to pay for it.
• In 2016, they were intensely value shopping for super premium foods. They started spending some of this saved money on Supplies and Veterinary Services, but not quite enough as spending fell slightly for the year.
• In 2017, the Industry showed its true strength. Spending took off in all but Services, especially in the second half, when it was up $6.57B from the same period in 2016. Consumers found the money and spent it on their Pets.

Now we’ll look at some Demographics. First, 2017 Total Pet Spending by Income Group

All Income Groups increased Total Pet Spending!

• < $70K – (61.6% of U.S. H/Hs); H/H Pet Spending: $393.93, +13.6%; Total $: $31.37B, ↑$2.98B (+10.5%)..
  • Food ↑$1.88B
  • Supplies ↑$0.90B
  • Services ↓$0.33B
  • Veterinary ↑$0.53B
  • The move to Super Premium Food became more widespread across all incomes. You also see the positive impact of price deflation in Supplies and record low inflation in Veterinary Services. Money matters a lot to this group. Value Shopping is a necessity and they also “traded” some Services $ to pay for other increases.
• >$70K – (38.4% of U.S. H/Hs); H/H Pet Spending: $911.26, +11.7%; Total $: $45.76B, ↑$6.86B (+17.6%) from…
  • Food ↑$2.73B
  • Supplies ↑$1.84B
  • Services ↑$0.26B
  • Veterinary ↑$2.03B
  • This group continues to grow, up 4.2% in 2017. This magnifies the impact of increased household spending. They also show that income remains the single biggest factor in Pet Spending. 38% of households spent 59% of Total Pet $. They spent significantly more in all segments and accounted for 70% of the Total Pet increase.
• < $30K – (30.2% of U.S. H/Hs); H/H Pet Spending: $286.42, +10.1%; Total $: $10.91B, ↑$0.63B (+6.1%) from…
  • Food ↑$0.42B
  • Supplies ↑$0.09B
  • Services ↑$0.004B
  • Veterinary ↑$0.12B
  • This lowest income group truly shows just how great 2017 was for the Pet Industry as they registered increases in every segment, even Services.
• $30>$70K – (31.4% of H/Hs); H/H Pet Spending: $492.83, +15.2%; Total $: $20.46B, ↑$2.35B (+13.0%) from…
  • Food ↑$1.46B
  • Supplies ↑$0.81B
  • Services ↓$0.33B
  • Veterinary ↑$0.41B
  • This low to middle income group is by necessity price sensitive, but is also committed to their pets. The drop in Services spending came from a combination of trading $ and value shopping in a competitive market.
• $70>$99K – (14.9% of H/Hs); H/H Pet Spending: $697.80, +13.0%; Tot $: $13.41B, ↑$1.89B (+16.4%) from…
  • Food ↑$0.99B
  • Supplies ↑$0.25B
  • Services ↑$0.05B
  • Veterinary ↑$0.60B
  • This upper middle income group also had across the board increases but their primary focus was on the more “necessary” segments. They upgraded their food and increased their Veterinary visits.
• $100K>$149K– (12.7% of H/Hs); H/H Pet Spend: $900.95, +22.3%; Tot $: $15.02B, ↑$3.32B (+28.4%) from…
  • Food ↑$1.59B
  • Supplies ↑$0.44B
  • Services ↑ $0.37B
  • Veterinary ↑$0.93B
  • We should probably start calling them the “swing” group. In 2015 they were the Star of the income groups. In 2016, they had the worst performance with decreased spending in every segment. In 2017 they are back on top again. This probably indicates that they are the most responsive to industry trends. They have the money to do what is needed or what they want, but are still very “value” conscious.
• $150K> – (10.9% of H/Hs); H/H Pet Spending: $1214.05, +2.5%; Total $: $17.33B, ↑$1.65B (+10.5%) from…
  • Food ↑$0.16B
  • Supplies ↑$1.15B
  • Services ↓$0.16B
  • Veterinary ↑$0.50B
  • Money Matters ! They are the proof. They are the best performing income group in Total Pet Spending with 10.9% of U.S. Households generating 22.5% of all Pet $. They are also the only income group to increase annual Pet Spending every year since 2014. The slight dip in Services spending actually makes sense. They spend 35% of all Pet Services $ so they are the most likely to be aware of “deals” in the highly competitive market. They didn’t reduce their purchase frequency. They just paid less. Actually, it even gets worse/better as income goes even higher. The over $200K segment of this group is the runaway best performer in every industry segment and generates 13.2% of all Pet $ from only 5.5% of the households.

Income Recap –  The #1 driver in consumer spending behavior is value. VALUE = QUALITY + PRICE. 2017 was a year of great Value in the Pet Industry. All four industry segments matter to Pet Parents and income is the most impactful demographic in spending so it often comes down to “price”. In 2015 we saw a strong move to high priced Super Premium Pet Foods. By 2017, the price had come down so the movement spread. 2017 also saw deflating Supplies prices, a record low inflation rate in Veterinary Services and extraordinary retail competitive pressure in Services. All of this “price” pressure served to substantially increase the “value” in every segment. U.S. consumers recognize and respond to Value. In  2017, they did…in a big way in Pet Spending…across all income groups!

Next let’s look at the 2017 Total Pet Spending by Age Group

All groups spent more but the groups over 35 led the way with double digit increases.

• <25 – (5.8% of U.S. H/Hs); H/H Pet Spending: $258.82, +9.1%; Total $: $1.99B, ↑$0.12B (+6.6%) from…
  • Food ↓$0.20B
  • Supplies ↑$0.14B
  • Services ↑$0.04B
  • Veterinary ↑$0.14B
  • This youngest group is just getting started in life and as Pet Parents. In 2017 they value shopped for food but increased spending in all other segments. They are the only group to increase Pet $ every year since 2014.
• 25-34 – (16.4% of U.S. H/Hs); H/H Pet Spending: $446.83, +6.4%; Total $: $9.56B, ↑$0.67B (+7.5%) from…
  • Food ↓$0.08B
  • Supplies ↑$0.41B
  • Services ↓$0.002B
  • Veterinary ↑$0.34B
  • These oldest Millennials are just starting their families and careers so they are prone to trading $ between segments. However, they have shown slow, but steady spending growth since 2015.
• 35-44 – (16.2% of H/Hs); H/H Pet Spending: $579.89, +12.9%; Total $: $12.155B, ↑$1.20B (+11.0%) from…
  • Food ↑$0.80B
  • Supplies ↑$0.36B
  • Services ↑$0.13B
  • Veterinary ↓$0.10B
  • This group has the largest families and is in the middle of building their careers. This makes them very sensitive to value. They responded to the opportunity in 2017. The decline in Veterinary comes after a 38% increase in 2016 and is the result of just paying less. Their spending frequency actually increased.
• 45-54 – (18.1% of U.S. H/Hs); H/H Pet Spending: $729.90, +17.7%; Total $: $17.17B, ↑$2.29B (+15.4%) from…
  • Food ↑$0.74B
  • Supplies ↑$0.56B
  • Services ↓$0.17B
  • Veterinary ↑$1.15B
  • This group has the highest income but still appreciates value. They responded strongly to the values in 2017, especially Veterinary.  They also increased their frequency in Services but got good deals so they spent less.
• 55-64 – (19.0% of U.S. H/Hs); H/H Pet Spending: $866.44, +21.3%; Total $: $21.44B, ↑$4.07B (+23.5%) from…
  • Food ↑$2.83B
  • Supplies ↑$0.82B
  • Services ↓$0.28B
  • Veterinary ↑$0.71B
  • These Baby Boomers learned about value shopping in 2016 from Super Premium Pet Foods. They have applied that knowledge across the board. The drop in Services comes after a 54% increase in 2016. Plus, 90% of the decrease just comes from paying less. They have had a long standing commitment to all aspects of pet parenting, which is once again demonstrated with a $4B (23.5%) increase in what was already the highest level of pet spending.
• 65-74 – (14.3% of U.S. H/Hs); H/H Pet Spending: $585.83, +6.0%; Total $: $10.87B, ↑$0.99B (+10.0%) from…
  • Food ↑$0.26B
  • Supplies ↑$0.20B
  • Services ↑$0.07B
  • Veterinary ↑$0.46B
  • Many in this group are retired and now over half are Baby Boomers. Their commitment to their pets along with their new found skill in value shopping really shows. They don’t have as much money as the younger Boomers but they were the only age group to increase spending in every industry segment.
• 75> – (10.2% of U.S. H/Hs); H/H Pet Spending: $303.60, +13.9%; Total $: $3.96B, ↑$0.50B (+14.5%) from…
  • Food ↑$0.25B
  • Supplies ↑$0.25B
  • Services ↑$0.15B
  • Veterinary ↓$0.15B
  • Pet Parenting is more difficult and money is tight for these oldest Pet Parents but their commitment is still there. They increased spending in 3 of the 4 industry segments. In Veterinary, their frequency was virtually unchanged. They just spent less. This could be a combination of lower prices and a cut back on some services.

Age Group Recap: 2017 was a great year for the Pet Industry and the good news was widespread. Although the groups over 35 had the biggest increase, all age groups spent more on their Pets. There are two lower profile groups that deserve some special recognition and they are years apart. The 65>74 year olds were the only age group to have an increase in every industry segment. Plus, we can’t forget the youngsters. The under 25 households are the only age group to increase Total Pet Spending every year since 2014.

Even the few decreases in spending for individual segments were not primarily due to less frequent purchases. Consumers just spent less in a market “ripe” with great values.

Finally, let’s take a look at some Key Demographic “Movers” for 2017.

Summary

2017 was a spectacular year for the Pet Industry and the good news was widespread. This is immediately apparent from the chart. 7 of 10 demographic categories had no segments that spent less on their Pets in 2017. It gets even better. 87 of 92 individual segments (94.6%) increased their Total Pet Spending.

Many of the winners, like high income, managers, 2 people H/H’s, married couples only, 55>64 year olds and white, not Hispanics are familiar names in the winners’ circle. The same is true on the losing side for under $30K income, renters, center city, singles and married couples with an oldest child under 6.

There are two surprise winners, which further emphasizes the wide ranging impact of the spending lift. Specifically, 2+ person households with only one earner are usually under financial pressure. By the same token, high school graduates with some college are also not usually in the highest income tier. Both of these segments usually don’t have an excess of disposable income, but in 2017 they found some and generated the biggest Pet spending increase in their category.

On the “down” side, there is only one unexpected losing segment – self-employed. This high income segment had a bad year. In fact, they had the biggest spending decrease in 3 of the 4 industry segments. However, they had 8.9% fewer households, which was a big factor. Center City also came in last in 3 segments, but their only decrease was in Services.

6 of the 10 Total Pet winners had the biggest increase in 3 categories. Only 2 person households owned the top spot in all industry segments. With no human children, their focus and spending naturally turns to their pet children.

On the other side, Asians had small decreases in Food and Services but didn’t finish last in any individual segment. However, when you add up all their numbers, they had the lowest increase in Total Pet Spending.

As we noticed early on in our analysis, the key to the Pet Spending lift was “Value”, in every segment. Super Premium Pet Food was available at attractive prices. Pet Supplies Prices deflated, which always spurs consumers to spend more and more often. Veterinary prices, which have been strongly inflating for years fell to a record low rate. People not only spent more Veterinary $ but their frequency was significantly up. Services had a minor spending decrease. This came from the retail competitive pressure as the number of outlets offering services increased. Consumers maintained their frequency of visits but many got a “deal”.

What about 2018? If much of the big lift was driven by lower or “more acceptable” prices in every segment then the CPI could be a major factor. Through September of 2018, Pet Food prices have remained essentially stable. Veterinary prices have moved up to a more “normal” inflation rate. However, prices in both Services and Supplies turned sharply up in the second quarter. In general, this does not bode well for spending. However, it’s the pet industry. We’ll just have to wait and see.

 

 

 

 

Non-Vet Pet Services has shown consistent growth in recent years. In 2017, spending fell -$0.07B to $6.77B, a (-1.0%) decrease from 2016. This was the first drop since 2010 – the great recession.  It is a minor decrease but as we drill deeper we will once again find that consumer pet spending behavior is becoming increasingly more complex. (Note: All numbers in this report come from or are calculated by using data from the US BLS Consumer Expenditure Surveys)

Services’ Spending per H/H in 2017 was $52.06, down from $52.77 in 2016. (Note: A 2017 Pet H/H (68%) Spent $76.55)

More specifically, the decrease in Pet Services spending came as a result of:

• 0.3% more households
• Spending 1.6% less $
• 0.3% more often

The chart below gives an overview of recent spending on Pet Services

The growth was consistent until Mid-year 2016. In the second half of 2016, spending flattened out and then fell sharply in the first half of 2017. The second half of 2017 saw a spending rebound, but it was not quite enough. The pattern over the last 18 months coincides with a radically lower inflation rate. It appears that the price sensitivity in this segment is growing. Now, let’s look at some specific spending demographics. First, by Income Group.

In 2017, the upper middle income groups spent more but it wasn’t enough to overcome the spending decrease by 2 disparate groups – H/H’s just below the average income and the upper tier, over $150K. Since 2014, the spending by the $30>100K group is down while the high and low end groups are both up. However, 92% of the increase came from the $100+K group. Services spending is still driven by income as the $100+K group, 23.6% of H/H’s, spends 42.2% of the $.

• <30K (30.2% of H/H’s) – $19.38 per H/H – $0.76B, Up $0.004B (+0.5%) – This segment usually doesn’t have the money to spare for Services. However, they were one of only two segments to increase H/H spending – +3.2%.
• $30>70K (31.4% of H/H’s) – $29.11 per H/H – $1.19B, Down $0.33B (-21.9%) – This group dialed back their discretionary spending on Supplies to help offset a big spending increase in all other segments.
• $70>100K (14.9% of H/H’s) – $49.99 per H/H – $0.97B, Up $0.5B (+5.7%) – They actually spent slightly less per H/H on Services. The small spending lift in total $ came from a 6.2% increase in the number of H/H’s.
• $100>150K (12.7% of H/H’s) – $90.67 per H/H – $1.5B, Up $0.37B (+32.3%) – There was a 29% lift in H/H spending on Services by this group which indicates both new users and an increase in frequency by existing users.
• $150K> (10.9% of H/H’s) – $166.79 per H/H – $2.36B, Down -$0.16B (-6.2%) – Their H/H Pet Services spending fell 9.7% which shows that even the wealthiest Americans appreciate a value.

Now, let’s look at spending by Age Group.

The Age demographic also reflects a truly “mixed bag” in spending. Perhaps, the key observation is that the 65+ group, the fastest growing segment, is spending significantly more on Services. Here are the specifics:

• 75> (10.2% of H/H’s) – $29.71 per H/H – $0.39B – Up $0.15B (+63.5%) This group has the greatest need for pet services but money is always an issue. The competitive values available made a huge difference in 2017. Up 63.5% can’t be ignored. 4% more H/H’s spent 60.4% more $, 0.5% more often.
• 65>74 (14.3% of H/H’s) – $66.72 per H/H – $1.24B – Up $0.07B (+5.6%). This group is also very value conscious but 2017 was certainly their year for “pets” as they were the only age group to increase spending in every pet industry segment. In Services, the lift was small but 8% more H/H’s spent 13.8% more $, 8.8% less often.
• 55>64 (19.0% of H/H’s) $65.12 per H/H – $1.61B – Down -$0.28B (-14.8%) In 2016 they had a huge lift in Services spending, taking over the #1 spot. In 2017 they turned their attention to the other segments. They cut back on services spending primarily by value shopping as 3% more H/H’s spent 13.3% less $, 2.1% less often.
• 45>54 (18.1% of H/H’s) – $63.00 per H/H – $1.49B – Down -$0.17B (-10.4%) This group has the highest income and until 2016 was the leader in Pet Services spending. In 2017, these regular users took advantage of the available values in the competitive market, which is obvious as 2.0% fewer H/H’s spent 12.6% less $, 4.6% more often.
• 35>44 (16.2% of H/H’s) – $48.98 per H/H – $1.03B – Up $0.13B (+14.7%) While they haven’t fully recovered from the huge drop in 2016, the competitive situation in 2017 at least got them back in the game. The group size was smaller, -1.7%, but they spent 3.6% more money. However, it was most significant that they spent it 12.5% more often.
• 25>34 (16.4% of H/H’s) – $41.06 per H/H – $0.87B – Down – $0.002B (-0.2%) This group of Millennials is also value conscious. In 2016 they upgraded their Food. In 2017 they spent more on Supplies and Veterinary. Throughout this time Services spending has been essentially flat. In 2017, 2.0% more H/H’s spent 4.3% more $ but 6.2% less often
• <25 (5.8% of H/H’s) – $18.08 per H/H – $0.14B – Up $0.04B – (+37.2%) Pet Services is low priority to these youngest Pet Parents, but the 2017 market got their attention. 3.9% more H/H’s spent 12.9% more $, 17.5% more often.

Finally, let’s take a look some other key demographic “movers” behind the 2017 Pet Services Spending decrease.

SUMMARY

The overall spending decrease was minor but the graph above gives some idea of the tumult that was going on within demographic categories. 53% of individual demographic segments spent less on Pet Services in 2017, while 47% spent more, so the ups and downs were relatively evenly divided.

In the graph above, about half of the winners are expected groups, like High Income and…

• Managers and professionals
• 2 people H/H’s
• College grads.
• Homeowners w/mtge

However, there are some definite surprise winners, especially…

• 65+ years – This growing group definitely has a need for services, but usually not the money. This is very significant.
• African Americans – have only 4.5% of the Services business. White, Non-Hispanics account for 88%. An Amazing Win!
• 1 Earner, 2+ H/H’s – Many H/H’s in this group have strong financial pressures – an unusual win.
• Rural Suburban (<2500 Pop) – Services $ are skewed towards more urban areas but this group increased spending by 39%.

There are some surprises in the “losers” column too.

• Self-employed and 3+ earner households have higher income which usually means more Services Spending, not less.
• Center City – Pet Services got their start in this area. A big drop is unusual to say the least.
• Advanced Degrees – The biggest surprise. This is the second best performer in Services of ALL demographic segments.

So what caused all this turmoil? In a word – Competition. In 2017 there was a significant increase in the number of retail outlets offering Pet Services. For Pet Stores, the addition of Pet Services was one way to counteract the impact of the internet and the Mass Market. “You can’t get your dog groomed online…or in a SuperCenter!” More and more outlets began offering “one stop shopping” for all your pet needs. Convenience is a big consumer driver. However, the #1 driver remains price/value. The increased competition encouraged retailers to offer deals as they fought to gain new customers and keep existing ones. We saw this in the Services CPI. While it was not deflating, it had the second lowest increase since they began keeping records. Only 2010 had a smaller increase, which was due to the great recession.

So how can this affect Services spending? Lower prices and “deals” can attract new users or encourage existing customers to buy more or more often. Both of these increase revenue. However, it can also result in regular users spending less for the same services. There is another factor at work in Services Spending. It is the most discretionary of all the segments. This can result in consumers trading out Service $ to use in another segment, like a food upgrade. In 2017, we saw “all of the above” which created the turmoil.

Spending fell slightly in 2017, but we should remember… There were more users and they bought more often. They just spent a little less for their Services. This is not all bad news. What will happen next? In May of 2018 the Services CPI rose 2.5%, the biggest increase ever. We’ll have to wait and see…