Archive for category: Pet Market

According to the numbers from the APPA, the total U.S. Pet Industry increased $2.24B (3.86%) in 2015. This was not quite the projected 4.4% increase and slightly less than recent years. If you factor in “Petflation”, the increase in the amount of goods and services sold was 2.86%. However, this means that 74.1% of the industry’s growth was “real”. Only 25.9% came from price increases. This is less than last year’s 83% real growth…but still very good.

In this post we’ll take a closer look at the performance of the total market and importantly, the individual segments. We’ll see which segments are “driving” or “retarding” the industry’s growth. The report will cover 2015 and also put this year’s numbers into perspective for the period from 2009 to 2015, the time since the great recession.

Here are the details for 2015. Some key data is highlighted:

Key Observations

• The ongoing deflation in the Food segment got markedly worse in 2015 (-1.03%).
  • Good News – The consumer actually bought even more product at the deflated prices.
  • Bad News – The deflation increases the competitive pressure on manufacturers, distributors and retailers.
• The Supply segment came within 1% of hitting the projected retail number and…prices were flat (a pause in the deflationary spiral) so 99% of the growth was real!
• The Service segment exceeded projected sales and while inflation was relatively high, 78% of the increase was real.
• The Veterinary Segment retail increase was only 55% of the projection and the high inflation rate resulted in Pet Parents actually buying less in terms of the amount of veterinary services in 2015!
• The Total Pet Market performance – up 3.9%…with 74% % of this being “real” looks pretty good. However, the high inflation rate in the Vet Segment has reached the point where it is depressing consumer sales, affecting the entire industry’s numbers. Food prices have been deflating for 2 consecutive years. Time for a change in these segments.

The Chart below may make it easier to visualize the situation…especially in the Vet & Food Segments

Now let’s take a look at the performance of the individual segments from 2009 to 2015 starting with Food!

OBSERVATIONS

• When you look at the cumulative Pet Food Sales since 2009, it looks pretty good.
  • 4.64% Annual Growth Rate
  • Low average inflation – 1.02%
  • 68% CPI adjusted Growth Rate: 79% of the growth since 2009 has been “real”.
• In the 6 years since 2009…
  • 3 were deflationary (-0.6%) Average
  • 3 were inflationary (2.5%) Average

The deflationary years are the most concerning. We have only had 4 deflationary years in Food (2000 was the other) and now we’ve had 2 in a row. The 2010 deflation came after a combined 20% Food CPI increase from 2007 to 2009 – in the heart of the recession and real growth ceased. The decrease in 2010 brought a positive response from the consumer – adjusted growth exceeded retail sales.

The years from 2011 to 2013 brought CPI increases in the 2+% range. The increases dropped the percentage of real growth below 50%. In 2014 & 2015, prices fell so the consumer paid less but the actual growth rate improved. The big concern with deflation is the impact on the supply and distribution channels and ultimately on the consumer… thru reduced choices.

Here’s what it looks like on a graph:

2016 Retail Food sales are projected to increase 4.2% to $24.01B. This may be a little high. The 3.5% range seems more likely unless we have a turnaround in pricing. I haven’t projected the CPI for this segment or others. It’s a little too early, especially with the volatility in Food and Supplies. Recently, the December and January Pet Food CPIs were up. February and March were down. Remember prices were pretty stable for the first half of 2015…then we had the biggest drop in history. If prices can stabilize or even turn up 0.5% in 2016, then the 4.2% increase in revenue becomes more likely.

Let’s turn next to Pets & Supplies.

OBSERVATIONS

• DEFLATION
  • Prices are 4.94% below 2009 (and about equal to what they were in April 2008)
  • Falling at an annual rate of -0.84%
• Consumer is still buying more
  • Retail Sales annual growth rate is 4.53%
  • Price Adjusted annual growth rate is 5.42% – 20% higher than the retail rate

In Supplies the first deflationary year was 2010. However, we should remember that inflation has generally not been a big issue in this segment. From 1997 to 2004 Pet Supplies increased in prices at an annual rate of under 0.5%. Then in 2005 and continuing through 2009, the CPI increased an average of 2.75% per year. This doesn’t sound like much but remember it was 5 times the rate of the previous 7 years and 2 of the biggest increases (+3.0%) came in 2008 and 2009, in the heart of the recession. The consumer reacted – and bought less.

Prices fell 1.7% in 2010 and the consumer bought more. The prices briefly stabilized in 2011 and then began moving downward. The consumer’s reaction was to buy more. 2015 brought another pricing pause, almost exactly equal to 2010. Overall Retail growth slowed slightly to 3.1% and adjusted growth dropped from 4.6% to 3.1%. The good news for the sellers is that this growth was 99% real and more profitable, exactly the same consumer reaction as in 2011.

Here’s the graph:

In 2016 Pet Supplies are projected to increase 4.2% to $17.09 B. That seems a bit high. 3.5% may be closer. In 2015 there was some indication that this segment might be truly pulling out of the deflationary spiral. However, a record CPI drop in the second half produced a year similar to 2011. Remember, 3 years of deflation followed that year. However, January through March of 2016 have seen moderate monthly increases in the Supply CPI. I’ll update you throughout the year.

Now onto the Service Segments – First, NonVet Services.

OBSERVATIONS

• Growth
  • Annual Growth rate 8.26% – Amazing!
  • Inflation – a little high at 2.48%, but doesn’t seem to be significantly slowing consumer purchasing
  • 68.3% “real” growth
• If price increases continue or accelerate, eventually the consumer will “push back”, but it hasn’t happened yet. Right now, a 2.5% inflation rate seems to be acceptable to the consumer.

There are no real negatives regarding this segment. It is growing strongly and consistently, especially since 2011. Last year the growth even reached double digits at 11.8%. However, it is a small segment, only accounting for 9.0% of the total market…but that’s better than 8.3% in 2014.

Here’s how the sales look on a graph:

2015 sales are projected to be $5.73 B, a 5.9% increase. This may even be a bit low. Based upon recent history 7-8% seems more likely. In regard to inflation rate, the average annual rate of 2.5% seems like a reasonable estimate for 2016. This would produce a “real” growth rate of 3.4% (42.4% of growth from price increases). The 2016 adjusted sales would be $4.83B.

The final individual segment is Veterinary Services. This segment accounts for over 25% of the Total Pet Market.

Let’s take a closer look at the Veterinary Service Segment.

OBSERVATIONS

• Retail Growth
  • Up 28.1% since 2009
  • Annual growth rate 4.21%
• Inflation is the problem
  • Annual average CPI increase 3.58%
• Price increases account for 85.6% of Veterinary Retail growth!
• “Real Sales”
  • Consumers actually bought less in vet services in 2011, 2012 and 2015. They just paid more.
  • Sales have been stagnant since 2009 – average annual growth rate 0.6%
  • Even worse, 2015 sales were about equal to 2010. Consumers bought the same “amount”. They just paid almost $3B more,

Regular veterinary visits are generally viewed as a “need” not a “want”. The high inflation rate over the years finally generated a consumer response in 2011…they cut back on veterinary services. Consumers have turned to OTC medicines, supplements, treatments and home testing whenever possible. Pet Health Insurance is growing and there may be fundamental changes in Veterinary Clinics – more chains and groups. Major medical procedures and emergency care will always be needed but it seems steps should be taken to make regular veterinary care more affordable.

Here’s the graph of sales since 2009:

Veterinary Services are expected to hit $15.92 B in 2016, a 3.2% increase. If that happens, we will probably have another decrease in the amount of services. Prices are already up 1.7% from December and we’re only through April.

Now in our final section we’ll go back to the total pet market.

OBSERVATIONS

• Retail Growth expected to reach $62.75B in 2016
  • ↑32.4% since 2009; Annual growth rate 4.79%
• Inflation: Only 9.1% since 2009; 1.45% annual CPI increase.
• “Real” Sales are 68.6% of Total Cumulative increase – a 3.28% annual growth rate.

The great Total Pet numbers are a big reason why so many people are attracted to the Pet Industry. The retail numbers are also consistently good across the segments. However, as I’ve said so often, when you look a little deeper into “petflation” and the actual amount of goods and services sold, you find that the total industry numbers are generated by two undesirable situations that tend to counteract each other when the numbers are combined. Specifically:

• Deflation in the Supplies Segment, which has paused after 5 yrs. We’ll see if it begins again or if we have reached a turning point. Commoditization, channel migration, consumer value shopping and lack of innovation have created extreme competitive pressure. Consumers have been buying more… but paying less.
• We now have had 2 consecutive years of deflation in the Food segment, including an all-time record monthly price drop in July of 2015. This is a big concern in the industry’s largest category. What will 2016 bring?
• The Veterinary segment has the exact opposite problem. Years of inflation have caught up. Consumers bought less in 3 of the last 6 yrs. 85% of growth is from price increases and 2015 “real” sales are equal to 2010.

In 2016 the Total Industry is expected to increase 4.1% to $62.75B. If the deflation and inflation both improve, we could see an inflation rate of perhaps 1.25%. This would generate a “real” increase of 2.85% and 2016 adjusted sales of $56.9B in the chart above. Bottom Line: We need moderation in the CPI trends for Pet Food and Veterinary Services.

Finally, always look beneath the surface in your business numbers. The headlines may not tell the whole story!

 

The spending on Total Pet Services in the U.S. is $20.85B. This is down -$1.15B (-5.2%) from a year ago. These figures are based upon data published in the USBLS Mid-year Update of their Consumer Expenditure Survey. As we saw in the Pet Products update, the story is complex. We will take a closer look at each of the two Service Segments – Veterinary and Pet (Non-Veterinary). Let’s start with the good news.

Pet Services Spending $5.86B – Up $0.54B (10.1%)

This chart should put that number in perspective with recent history:

Flat…then trending up. This chart gives a good overview. Let’s do some direct comparisons of like time periods.

• 2014 vs 2013: Sales up $0.39B (+7.4%)
  • By Half Year vs previous year: Jan>Jun 14 up $0.04B; July>Dec 14 up $0.35B
• Mid Yr 2015 vs Mid Yr 2014: Sales up $0.54B (+10.1%)
  • By Half Year vs previous year: July>Dec 14 up $0.35B; Jan>Jun 15 up $0.19B
• We have seen extreme price sensitivity in the Supply segment but thus far Services have been relatively immune. However, it should be noted that the CPI in Jan>Jun 2014 was up over 3.2% from 2013 and sales flattened out. The CPI increase from July 2014 through June 2015 dropped below 2.5% and sales increased. Perhaps 2.5% is the limit?

Let’s take a look at the Services spending numbers by Age Group:

Age Group Observations

• There is no clear pattern here. The “Boomers” and the “Millennials are contributing to the growth. The younger Gen X group shows the only decline. The number of 35>44 year old households was essentially equal. Their annual H/H spending on Pet services fell 3.6%…but only $1.80 per H/H. Let’s look at Income.

Income Observations

• With the $30>$70K group showing the only decrease, and the under $30K showing an increase, it appears that income is a factor, but it’s not “clear cut”. Time to pull out the “master database” and look deeper.
• Driving the increase, we find the “usual suspects” – college educated, managers or professionals, who live in an “urban” setting, own their own home (with a mortgage) and make over $100K per year. We also need to include the over 65 crew, who make less money but have an increased need for pet services.
• Now let’s look at who makes $30>$70K. On the decrease side we find a whole group of occupations – technical & clerical workers, operators & laborers, construction workers & mechanics. The drop is actually by far the greatest in households of 2 or more people with one earner (-0.34B). It’s also focused on incomes ranging from $50K>$80K, not the low end. There is not a hypersensitivity to price but these groups are definitely watching their budgets.

Non-Vet Pet Services Comment

Pet Service Spending can be a convenience or as in the case of aging Pet Parents, a growing need. The bulk of the spending in this segment is discretionary. Therefore Income is a big factor. In fact 34.9% of the H/H’s, those over $70K in income, account for 68.1% of the spending. Moreover, the over $120K income group, 14.4% of H/H’s spend 37.4% of Total Pet Services $.

Although prices have increased in this segment considerably above the national CPI average for years, thus far the consumer demand has been largely unaffected. This could be because the bulk of the business is coming from high income groups and the increases were relatively insignificant in terms of their overall spending. However, we saw a significantly smaller increase in spending in the first half of 2015, when prices increased by more than 3% for the first time in 3 years. We also saw a decrease in spending from $50K>$80K income group in the Mid-year numbers. These could be anomalies or it could be that the increasingly price conscious U.S. consumers were sending a first message. “There are limits.”

NOW ON TO THE VETERINARY SEGMENT!

U.S. VETERINARY SERVICES SPENDING $14.98B – Down $-1.69B (-10.1%)

Veterinary Spending turned sharply downward in the first half of 2015, after a huge increase in 2014. This chart should help put these trends into perspective.

A rapid climb that slowed, then a steep drop. Let’s compare like time periods.

• 2014 vs 2013: Sales up $3.03B (+20.8%) Incredible!
  • By Half Year vs previous year: Jan>Jun 14 up $2.12B; July>Dec 14 up $0.91B
• Mid Yr 2015 vs Mid Yr 2014: Sales down –$1.69B (-10.1%)
  • By Half Year vs previous year: July>Dec 14 up $0.91B; Jan>Jun 15 down –$2.60B

The prices of Veterinary Services have been increasing at an extraordinary annual rate – 5% since 1997. This has recently slowed, but is still 3.5% since the recession. Inflation has affected the spending of most lower income groups. The big spending increase in 2014 came primarily from two demographics – over $120K H/H income and the 55>74 age group. The Jan>Jun 2015 drop was huge -$2.6B. Let’s look a little deeper. First, by Age Group

Age Group Observations

• It is apparent that the mid-year spending decrease was widespread across U.S. H/H’s. Every age group from 25 to 64 spent less – a Total of -$3.58B. This group includes over 90M H/H’s, 70.6% of the U.S. total.
• The over 65 group had a substantial increase, $1.51B, with more than half, $0.8B coming from Retirees.
• There is also good news from under 25 group. Their spending was up $0.38B. Remember, they had a 30% increase in Food spending. These numbers indicate that more in this group are becoming pet parents.

Let’s take a look at Veterinary Spending by Income Group

Income Observations

• The drop is evident in every income level over $30K…even the $120K> group. This includes 86M H/H’s – 67.2% of the U.S. total.
• The < $30K group is surprisingly showing an increase of $0.83B. This is primarily driven by Retirees and the under 25 age group, who together had a $1.1B increase.

Veterinary Services Comment

We generally consider most Veterinary expenditures as “need” rather than discretionary spending. Regular Veterinary care for their companion animals is a responsibility of Pet Parents. However, non-emergency services may be becoming more discretionary to the consumer. The extraordinarily increases in Veterinary prices over a number of years has caused many of the lower income groups to delay or even forgo services. This was evident in 2014 when an overall $3B increase included a $1B drop from H/H’s with income less than $50K.

Households with incomes over $70K (34.9%) account for 57.8% of Veterinary Spending. However, there are other patterns in Veterinary Spending. The over 65 and under 25 age groups have generally lower incomes but are both showing significant increases in Veterinary Spending. The older group is generally more aware of the importance of their own medical care and this translates into increased awareness of the importance of Veterinary Care for their companion animals. In the Under 25 group the increased spending comes from new “pet parents”

Overall Pet Services Comment

It appears that we have 2 opposite trends in the overall Services group. Pet Services spending, which has generally been considered discretionary and very dependent on income, is showing increased spending based upon “need” with the aging of the huge group of Baby Boomer Pet parents. Veterinary Services, at least the non-emergency portion, which has been considered “need” spending is moving to a more discretionary nature due to years of extraordinarily high inflation and the increasing price consciousness of U.S. consumers.

Cinco De Mayo seems like an appropriate time to do a brief update on Pet Spending by U.S. Hispanic Households. I wish there were better news to report but we’ll drill deeper to see what is causing this steep drop. The numbers  in this report are computed from data in the Consumer Expenditure Survey conducted by the USBLS.

Hispanic households are growing in number and influence in the U.S.  They increased by 1,000,004 (6.3%) over the previous year, far exceeding the overall U.S. growth of 1.1%. As of 6/30/15 they numbered  16,910,000. That is 13.2% of all U.S. H/H’s.

Additionally, while their H/H Income (79%) and Spending (85%) are below the U.S. average, both increased slightly faster than the average household. Financially, they are slowly gaining ground. However, Hispanic H/H’s only spend 0.5% of their total expenditures on Pets, compared to the U.S. average of 0.9%. Now, let’s take a look at their recent history of Pet Spending.

This chart should give an overview of Total Pet Spending since 2013. Remember , when making direct comparisons using a rolling chart, it is best to use similar time frames. Ex: 2014 vs 2013.

Any way you look at it, a change of 1 year brought a big drop in spending. Let’s use the same type of chart to get an overview of the Hispanic spending in the individual industry segments.

Comments by Segment on Rolling Time Periods

• Pet Food – The dip in Mid 2014 mirrors what we saw in the overall Food market. However, the Total market made a big comeback in the second half of 2014 to end up 4.8% for the year. The Hispanic Market did not quite make it back to even. The Total Market saw explosive growth in Jan>June ending up 16.6% at mid-year 2015. The Hispanic Market was up, but only 6% and still below 2013 annual numbers.
• Veterinary – This is THE reason for the huge drop in Hispanic Pet Spending. Down to less than 1/3 of 2013 spending, the continued strong inflation rate in this segment seems to have had precipitous consequences in the Hispanic demographic.
• Services – A very small part of overall Hispanic Pet Spending, annually this segment continues to trend downward. Although Jan>June 2015 was up 30M from the same period in 2014.
• Supplies – This segment shows steady growth across all time periods, without the dip that we saw in the Jan>Jun 2015 numbers in the total market. It’s possible that the spectacular drop in veterinary spending has helped fuel this increase as Hispanic Pet Parents turn more to OTC meds and treatments.

Now let’s take a look at the Hispanic Spending in the Mid-Year Report by Industry segment. This chart compares the latest Mid-Year numbers versus the same period a year earlier.

Comments

• There may be other factors. However, the Service segments, especially veterinary, certainly appear to reflect the consequences of continued high inflation.
• The Supplies Segment is up $200M (17.1%) and is certainly the bright spot in the Hispanic Demographic. H/H spending on Supplies increased 10% and the number of H/H’s increased 6% to generate this increase.
• Food is still down from 2013 and 2014 year end numbers, but it is up slightly from the same period a year ago – $100M (6.0%). However, consider this. H/H spending on Pet Food was up 4.4% and the number of H/H’s was up 6.3%. If the percentage of Pet H/H’s remained the same and they spent 4.4% more per H/H then Pet Food Spending would be up 11%. Based upon this, the 6% increase in Pet Spending is basically little or no real progress.
• Let’s hope that the Veterinary spending trauma is over and that spending in all the segments turns up again. The Hispanic demographic is an important and growing segment in the overall U.S. market and should be for the Pet Industry too.

 

There is no getting around it. Pets are big part of our lives and our spending in America. However, there are distinct differences in the demographics of spending between the industry segments. The Prices in the Service Segments, especially Veterinary have been strongly inflating. Sharply higher prices affect the spending of a wider range of groups. Veterinary Spending was up $3B from 2013 despite a $1B drop in spending from consumers making $50K or less. Both the Food and Supply segments have been deflating in recent years so a lower H/H income is less of a factor. Also Pet Products (Food & Supplies) are a “must spend”. If you have a pet, you spend money on Pet Products . For this report we’ll take the services out of the mix and just look at Pet Products.

First, let’s “bundle” segments together to reach a dominant market share of Pet Products spending (80%). Like Total Pet Spending, Homeowners, Metro Area Dwellers, H/H’s with 2 or more people, White Not Hispanic and H/H’s with income over $30K are all groups which exceed 80% of Pet Products spending. Let’s dig a little deeper.

“Which of the 80+ individual segments are performing best in Pet Products?” The chart below identifies the best and worst performing segments in key demographic categories. The performance of each segment was determined by comparing the share of total pet spending to the share of households. Ex: If a segment accounts for 10% of households but generates 15% of Pet Spending the score is 15/10=1.5 = 150%…a great performer. However, if the situation was reversed, 10/15=.67 = 67%…not so good.

Married Couples with children, Homeowners vs renters, Rural vs Center City, Larger family H/H’s, White Not Hispanic, the 45-54 yrs age group… Some of the best and worst performers are exactly what one would expect.

• African Americans are the lowest of the under-performing groups. The most recent American Housing Survey indicated that Pet Ownership by African Americans H/H’s was about 50% of the national average!
• 2 of the fastest growing occupations in the U.S. are Service Workers (+1M) and Self-employed (+300K). Both had increases in Pet Products Spending per H/H but the Service Workers spending increase did not keep up with the 7% increase in the number of H/H’s.
• Higher Income and higher education both are harbingers of increased pet product spending. However, pet ownership crosses all income and education levels. The lowest performers are still relatively high.
• The Under 25 age group…Getting people started as “pet parents” must be an industry priority.

We have identified the best/worst performing segments. Which ones are “on the move”- the segments within each category with the biggest $ gain or loss (or smallest gain) in Pet Products Spending from 2013-14.

POINT #1 –When we looked at Total Pet Winners & Losers, 8 of the 10 categories had negative segments. For Pet Products, only 4 of 10 categories have any negative segments…at all! This is great news! Let’s take a look!

Income – Although higher incomes fueled the increase, every major income group spent more on Pet Products.

Occupation – The Self-employed group grew by 339K in numbers and their Pet Product Spending per H/H went up 26%. The Tech, Sales, Clerical group numbers fell by 339K and their Pet Product Spending per H/H dropped by 17%. They were the only occupational group with a drop in Pet Products Spending per H/H.

Race/Ethnic – 70% of H/H’s (White) account for 87% of Pet Products Spending. African Americans were the only racial/ethnic group with a decrease in Pet Products Spending…despite a 535K increase in H/H’s.

Highest Education in H/H – All education groups had an increase in spending. The group with less than a college degree is leading the way in the increase…a nice surprise.

H/H Size – It just takes 3 or maybe 1. Even singles had a significant increase in their spending. Two person H/H’s showed the only decrease. As you will see in the next category, these twosomes were not married couples.

H/H Composition – Married Couples with children drove the increase. No groups had a negative number. The “Married couple only” group was flat in spending. Even single parents showed an increase.

Region – Spending was up in all Regions. However, the Midwest was up $2.1B and the West…only $0.2B.

Area Type – Consumers in areas with under 2500 population, both inside and outside of Metro areas, are showing the most growth. Suburbs, the biggest spending segment is showing the slowest growth. In fact, spending per H/H is actually down slightly.

Housing Tenure – Homeowners are at the top with +$2.0B, but even Renters had a $1B increase (+16%).

Age – Good news. The 25>34 age group is showing the biggest growth. Bad news. The richest, highest spending segment, 45>54 is down. Much of this comes from a drop in numbers but their spending per H/H is also down

Major Issues: 1.The ongoing concern of more racial/ethnic diversity in Pet Ownership. 2. Getting the under 25 age group started. 3. Two big spending groups are slipping – the 45>54 age group and consumers residing in the suburbs. Both are spending less per H/H. The ongoing deflation in Pet Products could be a factor. Innovative, new products is certainly one way to motivate these firmly established “pet parents” to spend more.

In a recent post we identified the demographics of the “Ultimate” Pet spending household. Unfortunately, there are just not enough of these “prime” households. So we took the next step and bundled the subsets together for each category until we could identify a group with a dominant market share. Our goal was 80%. This produced some interesting results. Metro area dwellers, Homeowners, white but not Hispanic, 2 or more people living together and those with an income over $30K are all groups that generate 80+% of Pet Spending.

With over 80 segments in 12 different demographic categories, it is natural to wonder, “Which individual segments are performing best? Who are the winners…and losers?” This report will address those questions. The chart below identifies the best and worst performing segments in key demographic categories.

The performance of each segment was determined by comparing the share of total pet spending to the share of households. Ex: If a segment accounts for 10% of households but generates 15% of Pet Spending the score is 15/10=1.5 = 150%…a great performer. However, if the situation was reversed, 10/15=.67 = 67%…not good.

The top performers generally reflect our “Ultimate” Pet Spending H/H. Regarding the underperformers:

• The under 25 age group was the worst of all the underperforming segments. Improving the pet spending of this demographic should be an Industry priority. Make it easy to get started as a Pet Parent.
• Consumers of all income levels have pets. However, income is undeniably a factor in spending. This is reflected in the spending of single parents and service workers as well as the lower income segment.
• Having more space and “owning” it are two keys to increased Pet ownership and…spending. You can see the impact of this in Center City dwellers and renters.
• Pets are a great companion for singles, but get 2 adults together and pets are more likely to “follow”.
• The Asian underperformance is curious. They have the highest H/H income but spend the least on pets.
• Higher education generally means increased Pet Spending. However, Pet ownership is not dependent on education. In fact consumers who dropped out of HS spent more per H/H than HS grads with no college.

In the next chart we’ll “Show you the money”! We’ll identify the demographic segments within each category with the biggest gain or loss (or smallest gain) in Pet $pending from 2013-14.

Age & Occupation – Want proof of the impact of the Baby Boomers? Almost half the industry’s growth comes from the over 65 age group…and “retired” was the #1 “occupation” in growth contribution. Over 600K “Boomer” H/H’s turned 65 in 2014. Now on the Flip side: The tech, sales, clerical occupation lost 5% in income and 2% in H/H’s so their Pet purchases fell sharply. The 45-54 age group makes the most money and their H/H Pet spending went up…but over 600K “Boomers” moved up to the 55-64 so group spending fell.

Income – 14% of the H/H’s (over $120K) account for 82% of the Industry’s growth. The lowest incomes are being impacted by rising Veterinary prices.

Race/Ethnic – 70% of H/H’s (White) account for 87% of Pet Spending and 105% of the increase. There is definitely a racial/ethnic disparity in Pet spending.

Highest Education in H/H – Although Consumers with a Master’s Degree or above spend more on their pets, pet parenting is not about education. 61% of U.S. H/H’s don’t have a college degree but their pet spending increased 15% and they accounted for 64% of the $6.6B increase. Those H/H’s with a BA/BS spent significantly less on services, driving their overall Pet expenditures down.

H/H Size – It just takes 2…or more! Single person H/H’s spending was down.

H/H Composition – Married Couples, with or without children, accounted for 124% of the increase. The combined Pet spending for Singles, Single Parents and all other combinations was down…a total of $1.6B.

Region – Pet Spending was up in all Regions. However the Midwest was up 26% and the South…only 1%.

Area Type – Consumers in areas with under 2500 population spend the most but we are growing more Urban every day. There is strong growth both in Rural sections within metro areas and center cities. The Suburbs have the biggest share of Pet Spending at 46% but their spending per H/H dropped 4% in 2014.

Housing Tenure – Homeowners account for 80% of Pet Spending but 2014 was a really good year all-around as Renters pet expenditures increased $2.9B..↑23%.

Three “opportunities” seem readily apparent.

1. Keep the aging/retiring “boomers” spending on their pets.
2. Get the under 25 group started faster.
3. Investigate the racial/ethnic disparity in Pet Spending