Archive for category: Pet Market

In 2017 The U.S. Pet Industry had a year that can best be described as Spectacular. Spending skyrocketed to $77.13B, up $9.84B (+14.6%). The good news was widespread as the 3 largest industry segments registered double digit increases. The only sour note was a slight decrease in Pet Services spending. Here are the specifics:

• Pet Food – $31.11B; Up $4.61B (+17.4%)
• Pets & Supplies – $18.58B; Up $2.74B (+17.3%)
• Veterinary – $20.67B; Up $2.56B (+14.1%)
• Pet Services – $6.77B; Down $0.07B (-1.0%)

However, as we have learned, the industry truly is a “sum” of its integral segments. Each segment has very specific and often very different buying behavior from the many consumer demographic segments. For this reason, we’re going to analyze each of the industry segments first. This will put the final analysis of Total Pet Spending into better perspective. Note: The numbers in this report come from or are calculated by using data from the current and past US BLS Consumer Expenditure Surveys. In 2017, this was gathered by the U.S. Census Bureau from over 42,000 interviews and spending diaries. The final data was then compiled and published by the US BLS.

We will start with the largest Segment, Pet Food (and Treats). In 2017 Pet Food Spending totaled $31.11B in the U.S., a $4.61B (17.4%) increase from 2016. This was the second largest increase in history, trailing only the +$5.4B lift in 2015. While the size was somewhat of a surprise, the increase was expected after the drop in 2016. As you recall, in a detailed historical analysis conducted last year we discovered a distinct pattern in Pet Food Spending. The following chart documents annual Pet Food Spending since 1997 in full Retail Dollars and adjusted for inflation.

The pattern begins in 1997. Retail Pet Food Spending increases for 2 consecutive years then reaches a plateau year or even drops. There is a notable exception – the period from 2006 to 2010. During this time, there were two traumas which directly impacted the Pet Food Retail market. The first was the Melamine recall, which resulted in radically increased prices as consumers insisted on made in USA products with all USA ingredients. The second affected everyone – the great Recession in 2009. This was the first time that annual U.S. retail spending had declined since 1956. The net result was that the plateau period was extended to include both 2009 and 2010.

Pet Food seems to be driven by short term trends. A new food trend “catches the consumers’ attention” and grows…for 2 years. Then sales plateau or even drop…and we’re on to the next “must have”. The increases have become more pronounced in recent years and the whole situation has gotten even more complicated since 2014. That was the year that Food prices began an extended period of deflation due to an unprecedentedly competitive market.

After consumers choose to upgrade to a more expensive pet food, their #1 priority becomes, “Where can I buy it for less?” The internet entered this battle in a big way and “value shopping” was a major contributing factor in the big spending drop in 2016.

The internet also contributed to the 2017 lift in Pet Food spending by making the higher priced, upgraded foods more affordable to a wide swath of households. Super Premium was the obvious name for the last trend, which is continuing and expanding to include options like customizable, micro-targeted, ancestral and even DIY.

Pet Owners became Pet Parents in the 90’s. We took it a step further after the turn of the century and began truly humanizing our pets, especially our canine children. This trend is very accurately reflected in the evolution of Pet Food. We became increasingly more conscious of fulfilling the health needs of our pets, beginning with the first move to premium foods in 2004. This ramped up considerably after the Melamine scare in 2007. Now consumers read pet food labels, research ingredients and expect their pet foods to meet the same quality standards as the best human foods.

Just like the spending drop in 2016, the big lift in spending 2017 fits the pattern. Now, let’s look at some specifics. In 2017, the average U.S. Household (pet & non-pet) spent a total of $239.66 on Pet Food. This was a 17.1% increase from the $204.71 spent in 2016. This doesn’t exactly “add up” to the 17.4% increase in total Food Spending. With additional data provided from the US BLS, here is what happened.

• 0.3% More U.S. households
• Spent 15.1% more $
• 1.8% more often

By the way, if 68% of U.S. H/H’s are pet parents then their annual Pet Food Spending is $352.44. Let’s look at a rolling history of Pet Food Spending over the course of the “Super Premium Cycle”.

Pet Food Spending dipped in the first half of 2014. This corresponds to the beginning of a 3 year deflationary period in this segment. During deflation, in a “need” category like Food, you don’t buy more, you just spend less. The spectacular lift in Pet Food Spending beginning in the second half of 2014 came from a fundamental change in spending behavior. Consumers began to buy more Super Premium Food and Med/Supplements in Treat form, all of which cost more.

An increasing number of consumers chose to upgrade their Pet Food and spending peaked in 2015. Then spending began to fall in the first half of 2016 and the decline intensified in the second half. At first it appeared that consumers were backing down on the upgrade. As it turns out, they were just applying the #1 driver in their buying behavior since the great recession – price (75%). They began shopping for value and there were plenty of bargains to be found.

The Pet Food market had become incredibly competitive between manufacturers

• Of course, initially the manufacturers of “regular” pet foods were trying to keep consumers from upgrading or to “buy back” those that switched. That is still an ongoing battle, but things quickly got more heated.
• The spending lift due to the move to Super Premium foods and supplements caused an explosion in the number of companies competing in this segment. To best illustrate this situation, let’s take a look at GPE and SZ exhibitors.

This chart shows the number of GPE and SZ exhibitors offering food or treats for dogs and/or cats from 2014>2018.

• The % increase is from 2014 to 2018. Ranging from +33% to +58%, the competition has obviously gotten fierce.
• The Treat companies began their growth in 2015 (especially at GPE) and it has continued right through 2018.
• The lift in the number of food manufacturers did not start until after the big consumer spending increase in 2015. Obviously, more companies wanted a piece of the action. Most of the growth in the numbers of Pet Food came from 2015 to 2017 which created the highly competitive market and helped fuel the -1.1% deflation in 2017. This radically increased “profit pressure”. In 2018 the growth in numbers slowed markedly and we have also seen a large number of mergers and acquisitions. This may help to stabilize both the number of companies and prices in this segment.

The competition starts between manufacturers, but the actual battle for the Consumers’ Pet Food $ is fought between retailers and now, even whole retail channels.

According to the Economic Census, most Pet Products (67%) are sold in non-pet store outlets. However, Pet Stores have traditionally been the primary purveyors of specialty foods and treats. This exclusivity protected them from battles with Mass Market outlets. The recent consumer movement to super premium and the resulting huge lift in spending has changed all that.

• Super Premium Pet Foods are significantly higher priced products which Pet Parents need every day without fail. With lower prices due to lower overhead, the internet offers big savings in $ and the convenience of regular, free home delivery. Is it any wonder why the internet has become a big player in this category?
• Some Premium brands are also moving to the mass market in an effort to reach more consumers.
• Large Mass Market retailers are developing their own private label premium brands.
• Pet Stores still have the advantage of being more flexible in their merchandising so they can respond more quickly to new trends and new products. Consumers also currently prefer to make major buying decisions on pet products in store, rather than online. This protects pet stores, at least initially, during the trial period of the food buying cycle.

I think that it is pretty safe to say that there were bargains readily available in Pet Food last year. In fact, 2017 was just a continuation of the most price competitive Pet Food market in history – across all of its segments.

Now let’s look at some specific 2017 Pet Food Spending Demographics. First, we’ll look at income. This is the most influential demographic in Total Pet Spending. In the past, it was less dominant in Food. However, the move to Super Premium has brought it more to the forefront. We will show the annual spending from 2013 through 2017. This will put the 2017 numbers into better perspective and allow you to see the cyclical nature of Pet Food Spending.

The 2017 National Numbers were – $31.11B (a new record); Up – $4.61B (+17.4%); 2013>2017 – Up $8.15B (+35.5%)

• All of these large Income Groups increased their Pet Food spending in 2017. This didn’t even happen in the big 2015 lift. However, only two individual groups – $70>$100K and $100>$150K, set new, all-time pet food spending highs. The other 3 were slightly below 2015.
• Under $70K: In 2017 (61.6% of H/Hs) – $181.18 per H/H – $14.34B; Up – $1.88B (15.1%). As incomes rise, the number of H/H’s in this segment has been shrinking. The move to significantly higher priced Super Premium foods also had a major impact. In 2015, for the first time, the under $70K group spent less than 50% of Pet Food $.
• Over $70K: In 2017 (38.4% of H/Hs) – $331.06 per H/H – $16.77B; Up – $2.73B (19.5%). The spending pattern of this higher income group is remarkably similar to the under $70K group. However, in today’s “premium” food environment, the higher incomes continue to gain share of total pet food $.
• Under $30K: In 2017 (30.2% of H/H’s) – $133.37 per H/H – $4.9B – Up $0.42B (+9.4%). Obviously this group is very price sensitive. It is also getting smaller. The number of H/H’s was down 2.6% in 2017 and 8.9% since 2013. This decrease masks the true food situation. Their Total Food $ are up 9.1% since 2013, but their average H/H food spending is up 25.2%. This group still has an ongoing commitment to their pets.
• $30K>$70K: In 2017 (31.4% of H/H’s) – $222.57 per H/H – $9.44B – Up $1.46B (+18.3%). The spending for this group is actually the closest match to the national pattern. Their income is triple that of the under $30K group. However, they still spend more than they make. This ends when incomes reach $50>$70K. For Pet Food Spending in 2017, the key was reaching $40+K in income. The $40>70K group spent $2.1B more on Pet Food, 45% of the national increase.
• $70K>$99K: In 2017 (14.9% of H/H’s) – $312.95 per H/H – $5.97B – Up $0.99B (+19.8%). The Pet Food Spending for this group has been very stable and in 2016 was even contrary to the national trend. They were the only group to increase spending on Pet Food in 2016. This middle income group is still value conscious. In 2017, it appears that the ongoing price war finally reached the “right” retail and they got fully “on board” with the Pet Food upgrade.
• $100K>$149K: In 2017 (12.7% of H/H’s) – $353.24 per H/H – $5.98B – Up $1.59B (+36.2%) They have a high income but also large families, with the resulting responsibilities. They look for deals too. Except for the dip in 2014, their spending matches the national pattern. In 2017, they had the largest increase in Pet Food spending. It appears that in today’s competitive market the pet food upgrade trend has reached a high level of penetration with this group.
• $150K> (10.9% of H/H’s) – $329.02 per H/H – $4.66B – Up $0.16B (+3.4%). 92% are college grads so they certainly know how to recognize value and how to save. Despite the higher price, they saw the value of Super Premium food very early in the cycle. In 2017, the $150>$200K part of the group finally focused on price. They reduced their H/H pet food spending by 27%. The increased $ in this group comes from the $200+K section and an increase in H/H’s.

In 2017, the increase in Pet Food spending was widespread across incomes. In fact, groups totaling 84.7% of all U.S. households spent more on Pet Food. However, there were 2 groups, $30>$40K and $150>200K, who spent less. These groups are far apart in income, but they both bought into the super-premium upgrade in 2015. It appears that the intensively price competitive market finally motivated both to “get a deal”. In terms of the income demographic, the food upgrade has made a deep penetration of the market.

Now let’s take a look at another Key Demographic Category – Age

Again, the 2017 National Numbers were – $31.11B; Up – $4.61B (+17.4%); 2013>2017 – Up $8.15B (+35.5%)

For this demographic, 2017 Pet Food Spending was simple. Over 35, spending was up. Under 35, spending was down.

• 55>64 (19.0% of H/H’s) – $413.26 per H/H – $10.24B – Up $2.83B (+38.2%). This group (all Baby Boomers) has been the key to recent major spending swings. In 2015, a large portion of them changed their Pet Food spending behavior and opted to upgrade to Super Premium. In 2016 this group looked for and found a better price. In 2017 they are back again. However, rather than a whole new trend, the huge lift seems more likely to be the result of a deeper penetration of the upgrade movement in this age group as a result of increased availability and better prices.
• 65>74 (14.3% of H/H’s) – $217.84 per H/H – $4.05B – Up $0.26B (+7.0%). Much of this group is retired, with lower income, so price is always a concern. However the number of Baby Boomers in this group is growing, now 70%, so their spending pattern resembles that of 55>64 year olds. They also have a strong commitment to their pets which is evidenced by the fact that 1.1% of their Total H/H spending is on their pets.
• 75> (10.2% of H/H’s) – $134.47 per H/H – $1.73B – Up $0.25B (+16.8%). Both the effort and the expense of Pet Parenting become issues as we reach 75+. However, it appears that the discounted prices in 2016 and 2017 moved an increasing number of this group to upgrade their pet food.
• 45>54 (18.1% of H/H’s) – $265.27 per H/H – $6.21B – Up $0.74B (+13.6%) This group is #1 in income and total H/H expenditures. Up until 2015 they were #1 in Pet Food spending. They buy premium food but didn’t fully participate in the 2015 upgrade. They did take advantage of the 2016 discounts and spent less. In 2017, it appears that they became more committed to super premium as their Pet Food Spending reached a record high.
• 35<44 (16.2% of H/H’s) – $222.95 per H/H – $4.64B – Up $0.8B (+20.9%) They are 2^nd in income and expenditures, but have the biggest families. Searching for Value is a way of life and their spending pattern tends to be less volatile. Apparently they found value in the 2017 prices as they spent 20.9% more and also set a new record.
• <25 (5.8% of H/H’s) – $80.11 per H/H – $0.62B – Down -$0.2B (-23.9%) This group has a very small share of pet food spending (2.0%) as they are just getting started as Pet Parents. Their Pet Food spending was flat in 2015>2016. In the past it has been prone to big swings, which was the case again in 2017, as it dropped -23.9%.
• 25>34 (16.4% of H/H’s) – $167.65 per H/H – $3.62B – Down -$0.08B (-2.2%) Their spending was down slightly in 2017 while all the older groups were up. I saved this group of older Millennials for last for a specific reason. They have a unique spending pattern, which is interesting and could be important. Let’s review the time since 2013:
  • Their spending was up sharply in 2014 while other groups were showing only small increases or even declining numbers.
  • In 2015, the movement to Super Premium caused a big spending lift for every group under 75 except the 25>34 group, which fell -29%.
  • In 2016, every other group under 75 was “value shopping” so their spending fell sharply. However, the 25>34 year olds spent 23.7% more.
  • In 2017, the spending of every group 35 and over increased as the food upgrade penetrated the market more deeply. For the 25>34 group, spending was down slightly, but essentially flat.
  • Is it possible that the spending behavior of the 25>34 group provides a preview of next year’s national trend? Let’s hope not. If it does, then food spending in 2018 will be down, flat or at best have a minimal increase.

Finally, let’s take a look at other key demographic “movers” behind the $4.6B increase. Some are quite surprising.

Summary

The current “deflated”, price competitive market had a big impact on 2017 Pet Food spending. Super Premium foods have made sense from the beginning. The 25>34 yr old age group first bought into this in the second half of 2014. In 2015, many others followed their lead, especially the 55>64 yr old Boomers. Most of the initial upgrade group had a college degree, worked as a manager or professional and made a lot of money. There were some exceptions, like the first wave of retirees to convert. Then in 2016 the market changed, it became more price competitive and the internet came strongly into play. Many of the 2015 upgraders value shopped the category to a $3.4B dollar decrease. However, the price war didn’t end there. In 2017, it actually intensified with more competition, record deflation and increased availability of super premium foods.

The net result of this was very positive, with increased penetration of Super Premium foods across a wide range of demographics. In fact, of 94 demographic segments 78 (83%) had increased Pet Food spending, including 6 of 8 income groups and all age groups over 35. The wide range of the trend is also shown in where and how people live. Both renters and homeowners – with and without a mortgage had increases as did every area type, from rural to center city.

You see additional very specific evidence of the deep penetration of the upgrade in the winners listed in the chart above.

• Education: HS Grad w/some college
• Occupation: Workers, not Mgrs.
• Area: Under 2500 population
• # Earners: 1 Earner, 2+ people

2017 was a great year for pet food spending – up $4.61B due to increased “upgrade” penetration. What’s next? I don’t know that we can use the performance of the 25>34 year olds to predict 2018. I think we have to just wait and see.

The Total U.S. Retail Market in 2017 reached $5.75 Trillion dollars – up $235B (+4.3%). This is significantly better than last year’s (+3.2%). For this report, we will focus on the “Relevant Retail” Total – removing Restaurants, Auto and Gas Stations from the data. This segment totals $3.4 Trillion. We should also note that in 2017, Gas prices increased. As a result, for the first time since 2012, there was an increase in revenue in all these major segments

In a recent report we reviewed the 2017 sales performance of the Top 100 U.S. Retailers. That covered the “Headliners” but everyone can’t be a headliner. How are specific Retail Channels performing? We’ll start with a market overview and then work our way down.    (Base Data is from the U.S. Census Bureau Retail Trade Report)

Remember: This data is very relevant to the Pet Industry. According to the last Economic Census:

1. Retailers other than Pet Stores generated 66.5% of all the Pet Products revenue in the U.S.
2. Pet Products, on average, generated 1.94% of the total revenue of all non-pet stores that chose to stock them.

• Restaurants (Food Service) – 11.8% of Total Retail – Up 2.7%, which was less than half of last year’s (+5.9%).
• Automobile Sales – 20.7% of the Total – Revenue grew +4.3%, about the same as 2016 (+4.1%).
• Gas Stations – 7.9% of the Total – Up 8.8% from 2016. Gas prices turned up in March of 2016 and in 2017 showed their first annual increase since 2012. The result was a sharp increase in revenue.
• Retail, Less Food, Auto and Gas – Up 4.0% to $3.4 Trillion, better than last year’s +3.6% but less than the total market. This segment is 59.6% of the Total U.S. Retail market.

To put this year into perspective, let’s look at the overall performance in recent years.

The U.S. retail market has grown each year since 2012 but each segment has a different pattern. The low point for the total came in 2015 due to a precipitous drop in gas prices. However, with a big turnaround in gas prices the growth rate of the overall market has returned to more normal levels. Restaurant sales growth is an almost perfect pyramid. I wonder what 2018 will bring. Auto sales are still strong but the growth is definitely slowing. Our “Relevant Retail” Segment has been the most consistent. As expected, its 4.0% growth is below the 4.5% increase of the Top 100 Retailers. However, for the first time since 2012 it is lower than the total market. It will still serve as a benchmark as we review the individual channels. Above 4.0%, a channel is gaining market share. Below 4.0%, they are losing ground.

Now, we’ll slice up the U.S. “Relevant Retail” Channel “Pie”.

These are large slices of the U.S. Relevant Retail pie. Three divisions – General Merchandise Stores, Food and Beverage and Non-Store account for 59.3% of the total. This is up slightly from 58.8% in 2016. Once again, the increase is all due to Non-Store Retailers. The other two major segments continue to lose market share. All three are very important to the Pet Industry. Based upon the last U.S. Economic Census, these three major divisions produced 59.7% of total Pet Products sales. Consumers spend a lot of money in Pet Specialty Stores – 33.1% of their Pet Products $. However, they spend over 60% more in these 3 major retail channels. Pet products are “on the list” wherever the consumer shops.

Because they are so huge, major Divisions of the market generally don’t show much movement in market share in just one year so the changes in General Merchandise, Food & Beverage, Non-Store and Bldg Material are very significant. Each of the major divisions includes a number of sub segments. For example, General Merchandise includes Traditional Department Stores, Discount Department Stores, Supercenters and Clubs as well as $ and Value Stores. These specific retail channels can have even greater movement in share because this is the level that the consumer “views” when making their initial shopping choice. Change at this level is where any ongoing consumer shopping migration first becomes apparent.

Here is the Market Share change “Rule” for 2017: To gain 0.1% in Market Share your $ increase must exceed the amount generated by a 4.0% sales increase PLUS an additional $3.4B. Example: If a channel did $100B in 2016, they need to do $100 +$4.0 + $3.4 = $107.4B to gain just 0.1% in 2017 share. You will see channels with revenue increases that still lose share because the increase was less than 4.0%. It shows that even small changes in share are significant.

With that overview, we’re ready to drill deeper into the data. Let’s look at the 2017 performance of some of the specifically “Pet Relevant” Channels to see which are doing the best…and worst in gaining consumer spending. Eleven of the twelve were chosen because they generated at least 1% of the Total Pet Products (food & supplies) spending in the last Economic Census – 2012. I have also included Traditional Department stores on the list. Even though they have never truly embraced Pet Products, they have long been a fixture in the U.S. Retail Marketplace. Their continued decline, as consumers migrate to outlets which better fit their needs, has profoundly affected U.S. retail shopping as generally they were the “anchor” stores for the Shopping Malls across America.

We will use 2 separate graphs to illustrate the situation in these Pet Relevant Channels. The first will show the % change in sales in 2017 vs 2016. The next will “show us the money” by translating the percentages into $ gained or lost. Then we will have observations on each segment.

Remember, you must be up at least 4.0% or you’re losing market share!

The leader and #3 are big surprises. 9 of these pet relevant channels are showing increased sales. However, regarding market share, they are evenly split – 6 gaining, 6 losing. The market share losers include the traditionally largest channels. In the next chart, we’ll “show you the money!” Remember, the Total increase for the “Relevant Retail” Market was $132B and you must be up 4.0% PLUS $3.4B just to gain just 0.1% in Market Share.

The growth of the Internet is obvious. However, 3 channels are a bit of a surprise. The revenue from Home Centers has been growing in recent years, but Hardware and Garden/Farm Stores have been flat. What happened in 2017 to spur this growth? The answer is… bad weather. In 2017 we set a record for weather related property damage – over $300B. This “smashed” the old record of $200B set back in 2005. Consumers turned their time and resources to repairing their homes. The trend may be continuing into 2018 and even showed up online. Recently, Amazon Prime Day registered a 200% increase in sales of products in the Home Improvement category. We have seen that changes in the retail environment affect businesses. It turns out that changes in the actual environment can also have a major impact.

OBSERVATIONS BY CHANNEL

(Note: % of Total Business from Pet Products for stores that stock Pet)

• Internet/Mail Order – $545.0B, Up $57.3B (+11.7%) – 43.5% of the total increase for the $3.4T Relevant Retail Market came from Internet/Mail Order. The Consumer Migration to this channel continues – gaining 1.1% in Market Share. They passed SuperCtrs/Clubs in 2016. Now, they have set their sights on Supermarkets. (1.2% Pet)
• Super Markets – $609.6B, Up $11.3B (+1.9%) This largest sub-segment continues to lose ground as it is down 0.4% in Market Share in 2017 and 0.6% since 2015. The Internet/Mail order channel has recently put increased focus on grocery products and is pushing very hard to become the leading retail channel. (1.6% Pet)
• Department Stores – $54.1B, Down $0.8B (-1.5%). Their decline is slowing but 50 years ago they “ruled” the GM category. However, they failed to adapt to the changing wants and needs of the consumer. One small example of this is their failure to address America’s growing relationship with our companion animals. (N/A Pet)
• Discount Department Stores – $96.2B, Down $1.6B (-1.7%). The rise of this segment started the downhill slide of Department Stores but their tenure at the top of GM was relatively brief as the SuperCenters/Clubs offered true 1 stop shopping. Now, they have the Internet to contend with – not a good outlook. (2.3% Pet)
• SuperCenter/Club Stores – $463.0B, Up $12.7B, (+2.8%). These outlets, with their broad mixture of grocery and general merchandise…at great prices, quickly became a dominant force in the retail market – second only to Supermarkets in Market Share for many years. In 2016 they were passed by the internet. Consumers still like them as their sales are still growing, but not enough. They continue to lose market share – Down 0.15%   (2.4% Pet)
• $ & Value Stores – $78.6B, Up $5.2B, (+7.1%). – A Great Value and easy to shop – 2 of U.S. Consumers’ major “wants”. This segment has shown steady growth in recent years and got even stronger in 2017. (4.3% Pet)
• Drug Stores – $276.9B, Up $5.0B, (+1.9%). There is a lot of turmoil in this segment. Intense competition has led to large mergers and acquisitions which have slowed growth. (0.3% Pet)
• Sporting Goods – $44.7B, Down -$2.8B, (-5.9%). A Minor player in Pet. The turmoil in the category continues with mergers and store closings. (N/A Pet)
• Home Centers – $287.3B, Up $17.8B, (+6.6%). These large, “project driven” outlets have never done a significant Pet Business. The top 2 retailers – Home Depot and Lowes, continue to drive the growth. (0.6% Pet)
• Hardware – $26.1B, Up $2.5B, (+10.7%). Consumers seeking to repair weather damage had a huge impact on this channel, turning sales sharply upward after years of slow or even flat growth. (2.6% Pet)
• Farm and Garden Stores – $51.0B, Up 6.4B, (+14.2%). This segment has been growing in recent years in both overall sales and in Pet but it was largely driven by Tractor Supply. The landscape weather damage that occurred in 2017 brought Garden Centers to the forefront of the increase in sales. (8.9% Pet)
• A/O Miscellaneous Stores $78.1B, Up $3.6B, (+4.8%). Florists, Pet Stores, Art Dealers…are typical of the segments bundled into this group. Pet Stores probably account for over 20% of the $ in this segment. These stores, whether chain or independent, tend to be small to medium in size. Their increase slightly exceeded the market so these stores, which focus on another consumer trend – a more personalized shopping experience, are “holding their ground” against the large format retailers and the internet. (Pet Stores 91%)

The chart below puts the Market Share of each of these segments for 2017, 2016 & 2015 in a visual format so that it is easier to appreciate the relative sizes. Growth in share since 2015 is indicated by a green box, a decline is boxed in red.

Now we’ll wrap it up with a brief summary and a detailed chart for future reference.

SUMMARY 

Pet Stores remain the #1 channel for Pet Products. However, in the Overall Market, there are 3 Olympic Medalists. SuperCenters & Clubs are firmly entrenched with the Bronze medal. The big race is for the Gold. Two years ago in 2015 SuperMarkets led the Internet/Mail Order Channel by 4.83% in market share. In 2017 the lead was down to 1.89%. Barring a major turnaround, Internet/Mail Order should become the #1 retail channel in the U.S. no later than 2019 but perhaps as soon as 2018. One factor that could speed up the Internet/Mail Order victory is that Amazon, the largest retailer in the segment, has firmly set their sights on the fresh grocery business. They demonstrated this commitment very dramatically by their purchase of Whole Foods Market in 2017.

2017 had similarities, but also some distinct differences from 2016. The increase was 4%, up slightly from 3.6%. However, for the first time since 2012 the increase in the “Relevant Retail” market was less than the increase in the Total Retail Market. Once again the Internet/Mail Order Channel provided much of the excitement and 43.5% of the growth, but we also saw the effect of the physical environment, as record weather related property damage drove sales in all the Building Materials channels. Traditional and Discount Department stores continued their decline while sales in the easy to shop and save, $ Stores grew. The small to medium Miscellaneous Stores (Includes Pet) maintained their place in the market by appealing to consumers desiring a more personalized shopping experience.

The U.S. Retail Market continues to grow and evolve as the consumer migrates to the channels which best fulfill their current wants and needs. This is not a new phenomenon. It has always been that way. Currently, the “Channel of Choice” is Internet/Mail Order and their victory appears to be inevitable and may occur even sooner than expected. Traditional Brick ‘n Mortar stores will not go away but they must adapt to the new “electronic” environment.

Finally, the Chart below contains Detailed 2015 > 2017 Sales Performance Data for over 30 U.S. Retail Channels.

Pet Products spending totaled $45.87B for the 12 month period ending 6/30/17. This was an increase of $2.41B (+5.5%). Total U.S. spending for the period totaled $7.58 Trillion, up $320B (+4.4%). Driven by a big increase in Supplies, Pet Products Spending exceeded the pace of Total U.S. spending.

In this report we will update Pet Products Spending for arguably the most popular demographic measurement – by Generation. Baby Boomers built today’s Pet Industry, but they are getting old. What happens next? Most of the conversation revolves around Millennials. They are obviously the future but they are still young and a long way from spending “maturity”. This means that we can’t ignore the Gen Xers. They don’t get much publicity but they are next in line to the Boomers. The numbers come from or are calculated from data in the US BLS Consumer Expenditure Survey.

First, let’s define each generation and look side by side at their share of Consumer Units (H/H’s) and Total Spending.

• Millennials: Born 1981 and after
  • In 2017, age 18 to 36
• Gen X: Born 1965 to 1980
  • In 2017, age 37 to 52
• Boomers: Born 1946 to 1964
  • In 2017, age 53 to 71
• Silent: Born 1928 to 1945
  • In 2017, age 72 to 89
• Greatest: Born before 1928
  • In 2017, age 90 and over

• Boomers are still the largest group with 44.9M CUs (34.8%) and the biggest spenders – $2.8T. Their numbers are flat but their spending continues to grow and is over performing as their share in relation to their share of CUs is 106%.
• Gen X is the second largest CU group. Their overall numbers are down slightly as more singles “pair up”. They also had a minuscule drop in spending. However, they spent $2.4T and they had the best spending performance 118%.
• Millennials are the largest generation in sheer numbers, but third in CUs. More are developing financial independence as CUs grew by 2.3M. They also had the biggest increase in spending +$182B. Their total spending was $1.5T – 3^rd place. However, their spending performance vs share of CUs is 85%. They still have a ways to go.
• The Silent generation lost numbers, primarily due to death and movement to assisted living facilities but their overall spending was flat. This means their spending per CU was up slightly. The Greatest Generation will soon be too small to be a measureable, separate spending group.

There is the obvious difference in age to be considered and differences in behavior. However, we have also learned that there are key Consumer Unit characteristics, like income, family situation and home ownership that make a difference both in Total Spending and in Pet Spending. Let’s look at some of these key differences.

• It just takes 2. Households with 2 or more people account for 81% of all Pet Products Spending
• The size of the CU and number of children is all about Family responsibility and all the financial pressures that this generates. The CU size overall is unchanged from Mid-2016 and still peaks with the Gen Xers. However, the Boomer and Silent generations decreased by 0.1 person.
• Married couples with children under 18 are an important segment, 23% of all CUs. They account for 27% of all Pet Products spending and 29% of Supplies Spending. However, as the number of children grows, the increased financial responsibility can slow Pet Spending.
• Boomers still average 2+ people in the CU. However, they are much less likely to have children <18 at home. As their human children leave home, they turn their attention and spending to their Pet Children who are still with them.
• Pet Products spending is also tied to the number of earners in a CU. 2+ Earner CUs account for 41% of the total but they spend 53% of Pet Products $. As you can see the “earning” is being done in America by Gen Xers, Millennials and Boomers with Gen Xers at the top, as to be expected.
• Homeownership – Owning and controlling your own space has always been a key to increased Pet Ownership and spending. Homeowners currently account for 78.8% of all Pet Products Spending, which increased by $1.7B (+5%). However, Renters’ spending was also up $0.7B (+8%), which shows the growing influence of the younger groups.
  • Nationally, Homeownership showed a slight increase from 62% to 63%. Gen Xers remain at or near the national average. Homeownership continues to increase until we reach the oldest Americans.
  • The Millennials are obviously lagging behind but they did increase from 32% to 34%, which is encouraging. Boomers also moved up from 75 to 77%. For the record, the homeownership rate for the over 25 Millennials remains 20% below the rate for the older generations when they were the same age.

Next we’ll compare the Generations to the National Average in Income, Spending, Pet Products Spending and Pet Products Share of Total $pending

• CU Avg Income – $73,207;
• Total Spending – $58,460;
• Pet Products Spending – $353.92;
• Pet Products Share – 0.61%

• Income – The 37>52 year old Gen Xers are the leaders. The Boomers earn about 16% less and their income will continue to fall as they age. The big drop occurs with the Silents as retirement becomes almost universal. The Millennials income is still 20% less than the Boomers and only 67% 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 their income can still 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 under 25 are also in an after tax income deficit spending situation. However, the rising income from the 25>36 group makes up the difference and brings overall generational spending in line with income.
• Avg CU Pet Products Spending – The Boomers have been alone at the top since they made the move to upgrade to Super Premium Food in 2015. However, their lead began dropping once they began value shopping for food. The Millennials trail the Gen Xers by 37% and the Boomers by 44%. The Gen Xers made the most significant move in Pet Products spending as they broke the national average for the first time since 2014. At that time they were in a tie for the lead with the Boomers. Both were spending at 113% of the national average.
• Pet Products Share of Total Spending – One measure of the level of commitment to their Pets.
  • Only Boomers exceed the National Average but everyone under 90 years of age is at least 85% of the national average. Pet Parenting is a lifelong commitment.
  • Another key point is that the Gen Xers were the only group to increase their pet products spending in terms of its share of their overall spending. This takes on even more significance when you consider that this group makes and spends the most money.
  • Millennials are in third place in both income and total spending but they fell to 4^th place in this measurement. Much of their Pet Products spending growth was due to an increase in CUs.
  • You can see that spending dropped significantly for the very Oldest, “Greatest” Americans but the 72 to 89 year old Silent Generation is still making “noise” with their commitment to their pet companions.

Now let’s look at Pet Products $ spent by Generation and their share of the total.

• In terms of 2017 Mid-Yr Performance, it was all about the younger groups, especially Gen X – Up $2.33B.
• Boomers still have the largest share but it is down and is now less than the combined share of Millennials and Gen X.
• Overall – Ave CU spent $353.92 (+16.94); 2017 Mid-Yr Pet Products spending = $45.87B, Up $2.41B (+5.5%)
  • It is all about 2017 – quite a turnaround! July>Dec 16, Down $1.12B; Jan>Jun 2017, Up $3.53B
• Boomers – Ave CU spent $445.43 (-$18.72); 2017 Mid-Yr Pet Products spending = $19.95B, Down $0.68B (-3.3%)
  • They began a comeback in the first half of 2017. – Jul>Dec 16, Down $2.34B; Jan>Jun 17, Up $1.66B.
• Gen X – Ave CU spent $397.01 (+$69.67); 2017 Mid-Yr Pet Products Spending = $13.92B, Up $2.33B (+20.1%)
  • Good growth in 2016 but 77% of the increase came in 2017. – Jul>Dec 16, Up $0.53B; Jan>Jun 17, Up $1.80B
• Millennials – Ave CU spent $251.72 (+$4.68); 2017 Mid-Yr Pet Products Spending = $7.95B, Up $0.91B (+12.9%)
  • Unlike the Gen Xers, 2/3 of the Millennials’ gain came in 2016. – Jul>Dec 16, Up $0.58B; Jan>Jun 17, Up $0.33B.
• Silent Gen. – Ave CU spent $239.30 (+$11.18); 2017 Mid-Yr Pet Products Spending = $3.94B, Down $0.08B (-2.0%)
  • The overall decrease came from a reduction in CUs. Jul>Dec 16, Up $0.12B; Jan>Jun 17, Down $0.20B.
• Greatest Gen.– Ave CU spent $90.86 (-$5.47); 2017 Mid-Yr Pet Products Spending= $0.17B, Down $0.06B (-26.1%)

The Pet Products $ increase was primarily due to the Gen Xers. Let’s look at individual segments. First, Pet Food..

• Boomers once again have the largest share but it has dropped significantly from a peak of 52% in 2015.
• Gen X has 14% more CU’s than the Millennials but spent 70% more on Pet Food. Their spending lift came in 2017.
• Millennials spent $0.86B more on Food Mid-Yr 2017 versus 2016 but the increase was all in 2016.
• Overall – Ave Cu spent $219.43 (-$2.58); 2017 Mid-Yr Food spending = $28.44B, Down $0.18B (-0.6%)
  • 2017 brought an about face that stopped the downward slide. Jul>Dec 16 (-$2.12B); Jan>Jun 17 (+$1.94B)
• Boomers – Ave CU spent $287.34 (-$45.41); 2017 Mid-Yr Food spending= $12.85B, Down $1.88B (-12.8%)
  • July>Dec 16 (-$2.81B) – Value Shopping; Jan>Jun 2017 (+$0.93B) – In 2017 they started a comeback.
• Gen X – Ave CU spent $233.28 (+$33.62); 2017 Mid-Yr Food spending= $8.14B, Up $1.11B (+15.8%)
  • It appears that upgrading food became more pervasive in 2017. Jul>Dec 16 (-$0.17B); In Jan>Jun 17 (+1.28B)
• Silent Generation – Ave CU spent $155.78 (-$3.68); 2017 Mid-Yr Food spending $2.56B, Down $0.24B (-8.6%)
  • Spending was Flat in the 2^nd half of 2016, then fell in 2017. Jul>Dec 16 (-0.02B); Jan>Jun 16 (-$0.22B)
• Millennials – Ave CU spent $150.21 (+$11.31); 2017 Mid-Yr Food Spending $4.80B, Up $0.86B (+21.8%)
  • Jul>Dec 16 (+$0.87B); Jan>Jun 17 (-$0.01B). Much of the lift is coming from a big increase in CUs. However, we could be seeing the start of a new food trend. The Millennials pioneered the move to Super Premium.
• Greatest Gen. – Ave CU spent $57.89 (-$5.84); 2017 Mid-Yr Food spending= $0.09B, ↓ $0.03B (-25%)- fading.

We are still seeing the impact of Pet Food Value Shopping in 2016. However, 2017 started off strong for Gen X and the Boomers. The Millennials are once again spending to a “different beat” as their pattern is the exact opposite. Now, Pet Supplies…

• Boomers still have the largest share but unlike Food, the Younger Groups – Gen X and Millennials control 51.6%.
• The lift is consistent and widespread. Plus, there was an exceptionally great start for 2017.
• Overall – Ave CU spent $134.49 ($19.52); 2017 Mid-Yr Supplies spending = $17.43B, Up $2.59B (+17.5%)
  • A great 12 month long comeback for Supplies. Jul>Dec 16 (+$1.0B); Jan>Jun 17 (+$1.59B)
• Baby Boomers – Ave CU spent $158.09 (+$26.69); 2017 Mid-Yr Supplies spending= $7.1B, Up $1.2B (+20.3%)
  • A strong 12 month increase, as the Boomers come back to Supplies. Jul>Dec 16 (+$0.47B); Jan>Jun 17 (+$0.73B)
• Gen X – Ave CU spent $163.73 (+$36.05); 2017 Mid-Yr Supplies spending= $5.78B, Up $1.22B (+26.8%)
  • A Consistent and even stronger increase than the Boomers. Jul>Dec 2016 (+$0.69B); Jan>Jun 17 (+$0.53B)
• Millennials – Ave CU spent $101.51 (-$6.61); 2017 Mid-Yr Supplies spending= $3.15B, Up $0.04B (+1.3%)
  • Their increase came only from more CUs, which showed up in 2017. Jul>Dec 16 (-$0.30B); Jan>Jun 17 (+$0.34B)
• Silent Generation – Ave CU spent $83.52 (+14.86); 2017 Mid-Yr Supplies spending= $1.38B, Up $0.16B (+13.1%)
  • Their momentum faded in 2017 but still an increase in both halves. Jul>Dec 16 (+$0.14B); Jan>Jun 17 (+$0.02B).
• Greatest Gen. – Ave CU spent $14.31 (-$12.82); 2017 Mid-Yr Supplies spending= $0.03B, Down $0.02B (-60%)

There was a steep drop in Supplies spending in 2015 as consumers upgraded to Super Premium Pet Food. By the first half of 2016, Supplies spending flattened out as consumers shopped for price on food and used some of those saved dollars for Supplies. The spending lift which began in the second half of 2016 crossed generational lines, especially from age 37 to 89. However, the biggest drivers were the Gen Xers and the Baby Boomers, who accounted for $2.42B (93.4%) of the total $2.59B increase.

In the final chart we will compare each generation’s share of spending on Total Products, Pet Food and Pet Supplies to their share of CU’s and see “Who is earning their share?” Then we will review their actual performance numbers.

• Performance = Share of Spending/Share of CU’s    
• 100+% indicates you are “earning your share”. 
• If a share of market is outlined then performance exceeds 100%.   

• Greatest Generation – is not included in this section as both their market share and CU share are too small.
• Silent Generation Performance – Pet Products: 66.7%; Pet Food: 70.9%; Pet Supplies: 62.2%
  • This group ranges in age from 72 to 89. Pet ownership is more difficult after age 75 and this is reflected in the low share of Pet Products spending. However, the desire and the commitment are still there. This is evident in the 70.9% performance on Pet Food, which beats the Millennials by a “nose”.
• Baby Boomers Performance – Pet Products: 125.7%; Pet Food: 130.6%; Pet Supplies: 117.6 %
  • The Boomers truly led the way in building the pet industry and they are still at it. They are earning their share and are the spending leader in both Food and Supplies. Their performance is down from last year and it will continue to fade as they age. However, based upon their history, they will continue to perform well for many more years.
• Gen X Performance – Pet Products: 112.2%; Pet Food: 104.8%; Pet Supplies: 121.6%
  • The Gen Xers are next in line and next in performance to the Boomers. They outperform the Boomers on supplies and now their food performance also exceeds 100%. Plus, there is more “good” to come. Gen Xers range in age from 37 to 52. They already make and spend the most money. As they fill up the 50 to 54 age group and move on, their children will start to move away from home. Their focus will then turn to their Pet Children. Expect their performance to continue above the 100% level and to surpass the Boomers, perhaps within the next five years.
• Millennials Performance – Pet Products: 72.4%; Pet Food: 70.7%; Pet Supplies: 75.7%
  • The Millennials are widely touted as the future of the industry. This is ultimately true, but the future is still a ways off. The Millennials are currently 18 to 36 years old. They have pets, a lot of them, but their responsibilities are growing and money is still in short supply. They have been spending a lot on Supplies as they are establishing Pet households and actively seeking products that make Pet Parenting easier. This year they swapped out some of those Supplies dollars to spend on food. One thing is certain. Value shopping is their golden rule, especially on the internet. They are 18 years away from occupying the highest income age group. Plus, since they are having children later, the spending lift from children leaving will undoubtedly be delayed. We’ll keep a close eye on them, but realistically, they are 20 years away from being the dominant force in Pet Spending.

A Final Word – There’s no getting around it. In terms of Pet Products Spending, the 12 month period from 7/1/16 to 6/30/17 belonged to the Gen Xers. They produced $2.33B of a $2.41B increase with a strong performance in both Food and Supplies. They also “more than earned their share” in both segments. They stand next to the Baby Boomers and it appears that they are ready and able to ultimately take their turn at the top of Pet Products spending pyramid.

In our mid-year analysis of Pet Food spending, we saw a slightly negative number but discovered that this was primarily due to a carryover from the second half of 2016 and was masking a very positive start for 2017. Pet Supplies spending tells a totally different story, and it is all positive. Mid-Year 2017 Pet Supplies spending was $17.43B, up an incredible $2.6B. Pet Supplies Spending last reached this level in Mid-Year 2013 and is higher than any annual number since 2010. The following chart should put the recent spending history into perspective.

Here are this year’s specifics:

• Mid Yr 2017 ($17.43B) vs Mid Yr 2016 ($14.84B)
  • ↑ $2.59B (+17.5%)
    • Jul > Dec 2016: ↑$1.0B
    • Jan > Jun 2017: ↑$1.6B

Like Pet Food, Pet Supplies spending is also on a roller coaster ride. However, the driving force is much different. Pet Food is “need” spending and is powered by a succession of “must have” trends. Pet Supplies spending is largely discretionary so it is impacted by 2 primary factors. The first is spending in other major segments. When consumers ramp up their spending in Pet Food, like upgrading to Super Premium, they cut back on Supplies. However, it can go both ways. When they value shop for Premium Pet Food, they take some of the saved money and spend it on Supplies. The other factor is price. Price inflation tends to retard sales, usually by reducing the frequency of purchase. On the other hand, price deflation generally drives Supplies spending up. There is also another factor that can “trump” both of these influencers – innovation. If a new “must have” product is created, something that significantly improves the pet parenting experience, then consumers will spend their money. Unfortunately, we haven’t seen much of that in this segment recently.

In 2015, consumers spent $5.4B more on Pet Food. At the same time, Pet Supplies prices went up 0.5%. This was a “killer” combination as Supplies spending fell $2.1B. In 2016 consumers value shopped for Food, saving $2.99B. Supplies spending stabilized by mid-year then increased by $1B in the second half, despite price inflation of 0.6%. Consumers spent some of their “saved” money on Supplies. In December 2016 Supplies Prices turned downward and stayed below 2016 levels all year. Food spending increased $1.94B in the first half of 2017 but this came from a limited group. The result was that Supplies Spending had explosive growth, up $1.6B. Let’s look a look a little deeper at the “who” behind the big Supplies Spending increase.

First, 2017 Mid-year Supplies Spending versus previous year by Income Group

• The Supplies spending was flat in the financially pressured <$30K group. Everyone else had an increase.
• With the exception of the lower middle income $50>$70K group, all of the increases exceeded $0.5B.
• The increases grew larger for groups with income over $100K. This is to be expected in discretionary spending.

Now, let’s take a look at another key demographic – Spending by Age Group

• Once again, the increase is very consistent across age groups, with the exception of the 25>34 year old Millennials.
• Although the spending fell in the 25>34 group, we should remember that last year they were the only group from 25>75 to have an increase in Supplies Spending. On average their Supplies Spending has been consistent over 3 yrs.
• The biggest $ increase (+$.73B) came from the 35>44 group. (Gen Xers…again). The biggest % (+48%) came from 75>

The Supplies Spending increase is remarkably well spread across both income and age groups. Mid-year sales numbers include data from parts of two calendar years. One of the priorities of this analysis is to determine how the latest year is starting out. Supplies’ Spending in the first half of 2017 was up $1.6B versus the same period in 2016. Our final chart will show the segments driving that big increase in key demographic categories.

You can see that there were very strong increases across the whole spectrum of demographic categories. In fact, only 6 of 80 separate demographic segments had a decrease in Supplies spending in the first half of 2017 and those were all minor. The leaders in our chart may all seem very familiar. They should be familiar. They are the traditional leaders in Pet Spending. The fact that they are leading the surge in 2017 Pet Supplies Spending may indicate that this segment is finally “returning to normal”. We’ll see what the second half of 2017 brings, but this is a great start

Using data from the annual Consumer Expenditure Survey conducted by the US BLS, we have done an in depth analysis of U.S. Pet Spending in over a dozen different individual demographic categories. This has given us a better understanding of “who” is behind the strength and continued growth of the Pet Industry. As always, the focus of the US BLS is on accuracy but at the same time they are never satisfied with the status quo. They are continually experimenting with new reports. This commitment to “make it better” is what led to the very timely and wildly popular demographic spending report by generation.

They’re at it again, producing a report that combines the two most popular and impactful spending demographic measures – income and age group. To get the required sample size, they combined the data from 2015 and 2016. As you recall, the Total Pet Spending for each of these years exceeded $68B. Unfortunately, because of the complexity of this test report we only have the numbers for Total Pet, not for individual industry segments…yet.

Even this “simplified” report requires a rather complex analysis. We have endeavored to keep it as simple as possible to make it easier to visualize and comprehend. The data is segregated into the following groups:

Age Groups

25 to 34 – All older Millennials

35 to 44 – All younger Gen Xers

45 to 54 – ½ Gen Xers & ½ Boomers

55 to 64 – All Boomers

65 & Over – 5 yrs of Boomers + older groups

Income Groups

Under $30K

$30K to $49K

$50K to $69K

$70K to $99K

$100K & over

This produces 25 subgroups, accounting for 98% of Total Pet Spending. The under 25 group is not included due to a very low share of Pet Spending and an extremely small sample size in the highest income levels. It is still very complex, especially in building graphs. Normally, a pie chart would be used to show the share of total CUs for each group. However, 25 slices of a pie, with 15 having a share less than 3%, make the chart unreadable. Therefore, we will focus on the largest, most impactful groups. Our first chart shows the market share for the 10 largest age/income segments.

• The economic division in the U.S. is very apparent as all the largest groups are either under $50K or over $100K.
• However, the division is strongly weighted towards lower incomes as 7 of 10 are under $50K – 5 of these are <$30K.
• The 2 largest segments of each of the 3 groups in the 35>64 age range are over $100K and under $30K.
• The oldest and youngest Americans have 4 of the 10 largest groups, all under $50K. (1/6 of all CUs are 65>, <$50K)
• There are no groups in the $70>99K range. Middle income America is obviously very fractionalized in terms of age.

It’s not all about income and age. There are other factors that impact Pet Spending. Two of the biggest are homeownership and family size, especially the number of children in the household. The following graphs show the distribution of these two demographics across income and age groups.

# of children under 18 – The financial pressure is high on lower and middle income Parents trying to fulfill the needs and wants of their human children and still be good Pet Parents. As expected, the vast majority of children are found in CU’s in the 25 to 44 year age range, especially the 35 to 44 yr old Gen Xers. Also, the number of children generally increases with CU income, except for Millennials. Their path is a bit of a roller coaster with the lowest number of children being in households with the highest income. We have all heard that Millennials are a little different. They are slow to leave their parents’ home, get married later, delay having children and are more likely to live in households with 2+ unmarried adults. These are all factors affecting the number of children in their households.

% Homeownership – About 83% of Total Pet Spending comes from Homeowners. Having more space that you control has always been a key to increased pet spending. Perhaps more than any other demographic, Homeownership regularly increases by age and income. For every age group, higher income means a higher percentage of homeownership. This is also true by income group as increased age shows increased homeownership, with one slight variation. There is a virtual tie for first at 94% by both over 55 groups, making $100K or more. The national homeownership average is 62%. You can see that the younger the group, the higher the required income to meet the average. It has been noted that Millennials are more likely to live in central cities and less likely to own a home than previous generations. This is reflected in the fact that they don’t reach the national homeownership average until their income exceeds $100K.

Now let’s get to the $pending. The next chart groups Pet Spending by income group so we can see if age matters.

• <$30K – This group represents almost 1/3 of all U.S. households and obviously has a financial struggle. The 45>64 year age group, which is ¾ Boomers spends noticeably more than the other groups.
• $30K>49K – With less family pressure the 45 and older groups increasingly focus on their Pet Children. Of note, the over 65 group takes the lead in household pet spending in this income range. The average retirees’ income is $40K. Once they reach this level, the financial pressure is reduced and they can increase their focus on their pets.
• $50>69K – Every group increases their Pet Spending but there is a big lift in the over 55 groups. Apparently this is a significant income threshold for them in terms of Pet Spending. We also see an incredible lift in the spending by the 25 to 34 year old Millennials. This could relate to that dip in the number of children that we saw earlier as well as the differences in the Millennial lifestyle.
• $70>99K – We have reached middle income. The over 55 groups show a big increase and in fact the spending of the 55 to 64 year olds takes off like a rocket. They become the overall #1 Pet Spending age/income group. The 35 to 44 group is still feeling strong financial pressure and remains in last place. The spending by the Millennials dips slightly but they are still 10% ahead of the 35 to 44 Gen Xers.
• $100K+ – Pet Spending explodes when income reaches $100K. The 55>64 year old group dips slightly but they still lead the pack. Perhaps the most significant increase (150%) comes from the 35>44 group. With some relief from financial pressure they can focus more on their pets. The only group under $1000 is the 25>34 year olds. However, their average over $100K income is 20% below the others so the $800 is on a relative par with the other groups.

Now let’s look at the same data from the age group view.

• Each age group seems to regularly increase Pet Spending as their income grows. Then, at some point they reach a significant threshold income and their Pet Spending doubles.
• For the 55 to 64 year old Boomers and the 25 to 34 year old Millennials, the critical point is $50 to 69K.
• For the oldest group, it comes at the lower $30>49K level. As we stated earlier, this is the average income for retirees and indicates a significant reduction in financial pressures.
• The 35 to 44 year olds have a different story. With the pressure from the largest families and in a critical phase of career building they don’t get any relief until their income passes $100K. When it does, they have a truly amazing response – a 150% increase in Pet Spending, moving up from last place to 3^rd, trailing only the over 55 groups.
• Although the Boomers peak at a lower level, you can certainly see that an income of $100K+ is a universal magic number in Total Pet spending

Now, we will truly “show you the money”. Here are the top 10 groups in terms of Total Pet $pending.

• These 10 age/income groups account for 50% of all U.S. CU’s and 65% of Total Pet Spending.
• Money Matters Most as all age groups making $100K or more are included.
• Age is also a huge factor as 7 of the 10 groups are over 55 years old. (55>64 Boomers win with 4 groups)
• The 3 groups under 55 all make more than $100K

Finally, let’s look at the top performers which we will define as having the highest Share of Pet $/Share of CU’s. 7 are repeats from the chart above and have matching colors in the chart below. New additions are outlined in green.

• Once again age matters as only the same two under 45, over $100K income groups made the list.
• Although it seems impossible, money matters even more in Pet Spending performance than in Pet Spending $. There are no groups making under $50K. The 2 under $50K, over 65 age groups were replaced by 2 other over 65 age groups making from $50 to $99K. Even the 55>64 Boomers lost their <$30K group to a 45>54 middle income group.

The data in this report strongly reinforces the importance of age (life stage) and especially income in Pet Spending. The availability of disposable income results in increased Pet Spending for every age group. Pet Spending really explodes when any group’s income meets or exceeds $100K. For the lower income groups, the amount of available disposable income varies due to circumstances. The younger groups have more pressure due to family size and building a career. The 45>64 age groups have less family pressure. The over 65 folks just need to meet some low minimum income levels. One thing is certain for everyone. When disposable income increases, one of the first places that it gets spent is on pets.