Archive for category: Pet Market

Now we will turn to the final Industry Segment, Veterinary Services. For years, Veterinary Services have had high inflation. This has resulted in CU income becoming the dominant factor in spending and a reduction in visit frequency.

In 2017 low inflation spurred an unusual 7.2% increase in visit frequency and a $2.5B increase in spending. In 2018 inflation returned to more normal levels. Consumers spent $0.56B more (+2.7%), but inflation was 2.6% so virtually all of the lift was from increased prices. In 2019 the situation got worse. Consumers spent $0.58B (+2.7%) more but inflation was 4.14%. This means that there was an actual decrease in the amount of Veterinary Services purchased. In 2020 the pandemic hit, and Pet Parents focused on needs – Food & Veterinary. Veterinary spending grew $3.05B, (+14.0%). In 2021, this behavior grew even stronger and produced a record $7.82B (+31.5%) increase. In 2022 inflation reached 8.8%. Spending fell -$2.95B (-9.0%) but the amount of Veterinary Services sold fell 16.4%. Pricing matters to almost everyone.

We’ll start our analysis with the groups who were responsible for the bulk of Veterinary spending in 2022 and the $2.95B decrease. The first chart details the biggest Veterinary spenders for each of 10 demographic categories. It shows their share of CU’s, share of Veterinary spending and their spending performance (Share of spending/share of CU’s). In terms of performance – 5 of 10 groups perform above 120%, 1 less than 2018>2021. This is currently 2 less than Supplies (7) and 1 less than Services (6) but 1 more than Food (4). This means that these big spenders are performing well but it also signals that there is still disparity between the best and worst performing demographics in this “needed” segment. Only the College Grads group is different from Total Pet and the categories are listed in the order that reflects their share of Total Pet $pending. Again, High Income is the most important factor in Spending.

1. Race/Ethnic – White, not Hispanic (86.0%) up from 84.7%. This group accounts for the vast majority of spending in every segment and gained share in Vet $ in 2022. Their 128.0% performance is also up from 126.0% but they fell from #4 to #5 in importance in Veterinary Spending. Whites spent $2.2B less but African Americans (+$0.18B) and Asians (+$0.09B) spent more. Whites gained in share & performance because of a -$1.1B decrease by Hispanics.
2. Housing – Homeowners (83.9%) up from 81.0% Homeownership is a major factor in pet ownership and spending in all industry segments. In terms of importance to Veterinary spending, their 128.9% performance rating is up from 125.2%, and they moved up to 4^th from 5^th place. All segments decreased spending but the biggest drop was by Renters, -$1.40B (-22.6%). This is produced the gains for Homeowners. However, we should note that Homeownership is still not nearly as important to Veterinary Spending as it once was. In 2015 their share was 88.4% with performance of 141.8%.
3. # in CU – 2+ people (79.8%) up from 79.7% This group, which is 69.0% of U.S. CUs, gained minimally in share and their performance grew from 114.7% to 115.7%. Their rank in terms of importance in Vet Spending stayed at #8. All sizes spent less. The gains happened because Singles had a slightly bigger % decrease (-9.7%) than 2+ CUs (-8.9%).
4. Area – Suburban & Rural (70.9%) down from 73.0% Suburban CU’s are the biggest spenders in every segment. All areas spent less. The Big Suburbs had the biggest decrease, -$1.93B (-12.1%) while Center City was only down -2.3%. This drove the big decrease in share and caused their performance to fall substantially to 108.2%, from 113.2%.
5. Education – College Grads (60.9%) down from 65.4%. Income generally increases with education. It is also important in understanding the need for regular Veterinary care. Their performance also dropped from 138.1% to 130.3% and they fell from #2 to #3 in importance. In 2022, College grads spent -$3.27B less while those without at least a BA/BS spent $0.31B more. This lift was small but widespread as only HS Grads with some college spent less.
6. Income – Over $70K (69.9%) down from 71.7% Their performance also fell significantly from 160.0% to 147.8% but higher income is still the most mportant factor in Veterinary spending. The only lifts were from $200K>, +$0.39B and $30>49K, +$0.04B. The biggest drops were $150>199K, -$1.51B and $70>99K, -$1.47B.
7. # Earners – “Everyone Works” (67.7%) down from 68.6% Their Performance also fell from 121.0% to 116.1%. They dropped out of the 120+% club & fell from #6 to #7 in importance. All adults in the CU work. Only Single, No Earner CUs spent more. 2 Earners had the biggest $ drop, -$0.99B while 1 Earner, Singles had the biggest % drop, -15.8%.
8. Occupation – All Wage & Salaried (65.9%) down from 66.4% and their performance decreased from 111.9% to 109.3%. Only Blue Collar Workers and Tech/Sls/Clerical spent more. The group lost share and performance primarily because of big drops by Mgrs/Professionals, -$1.47B and Service Workers, -$1.23B. Their perforrmance drop was also accelerated because they had 1.6 million more CUs than in 2021.
9. CU Composition – Married Couples (62.5%) up from 60.9% Their performance also grew to 130.8% from 128.4% and they moved up to #2 from #3 in importance. Only 2 segments spent more – Married Couple with an Oldest Child 6>17, +$0.67B and Single Parents, +$0.25B. The biggest drop was by All Adult, Unmarried CUs, -$1.26B.
10. Age – 35>64 (61.1%) down from 62.1% Their performance also fell from 118.7% to 117.1% but they moved up to 6^th from 7^th place in importance. Only 45>54, +$0.80B and 75>, +$0.18B spent more. The 2 biggest drops were 55>64, -$1.51B and 35>44, -$1.45B. These caused the group’s drops in share and performance.

Spending disparity fell in 6 categories and the average group performance was 123.2%, down from 125.7% in 2021. Spending became slightly more balanced. Notably, higher income & education became a little less important. Also, Married Couples reached #2 in iimportance. In 2020, they were #6.

Now, we’ll look at 2022’s best and worst performing Veterinary spending segments in each category.

Almost all of the best and worst performers are those that we would expect and there are only 4 that are different from 2021, down from 5 last year. This is 1 more than Services, but 1 less than Supplies and far fewer than the 11 in Food. Also, the average difference between Best & Worst was 88.8%, down from 94.4% in 2021.There was slightly less turmoil and spending disparity between segments in 2022. The changes from 2021 are “boxed”. We should note:

• Income– The Winner & Loser are the same. The gap is 181.8% but 5.3% less than 2021.
• Earners – This repeat winner and loser have the highest and lowest incomes. The gap narrowed by 23.2%.
• Occupation – Service workers replaced Retirees at the bottom, but the gap was 3.5% smaller.
• Age – The 45>54 yr-olds, the highest income group, replaced 55>64 at the top. The gap actually widened by 9.3%.
• Race/Ethnic; Another set of expected repeats. The gap between winner and loser narrowed by 5.9%
• Education; Housing; Area – These all had an expected repeat winner & loser, but the performance gap grew for all. Education: +1.8%; Housing: +14.3%; Area: +16.2%.
• Region –Midwest replaced Northeast at the top. The South has now finished last for 7 years in a row, but the win/lose gap decreased by 15.2%. Also, for the second consecutive year, 2 regions performed at 100+%.
• CU Composition – Married, Oldest child <6 replaced Single Parents at the bottom. The gap narrowed 33.6%.
• # in CU – The same winner & loser but the gap widened by 10.7%. Only 2,3 & 4 people CUs perform above 100%.
• Generation – No change again and the performance gap widened, but only by 1.6%.

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

We saw little turmoil in performance. That’s not true here. There were 3 repeats and 14 segments flipped from 1^st to last or vice versa. Last year there were 8 repeats and 3 flips. There were 5 surprise winners – Blue Collar, <HS Grads, African Americans, No Earner, Singles & Center City. There were only 3 losers that weren’t a surprise – Northeast, Unmarried, 2+ Adults & Renters. ln 3 categories all segments spent less. In 2021, there were 9 where all spent more. Plus, in 2021, 93% of 96 demographic segments spent more. That fell to 23% in 2022.

• Region – Both winner and loser flipped. This is 5 consecutive years of flips for the Northeast.
  • Winner – Midwest – Veterinary Spending: $7.62B; Up $1.16B (+18.0%)                               2021: Northeast
  • Loser – Northeast – Veterinary Spending: $4.88B; Down $2.64B (-35.1%)                           2021: Midwest
  • Comment – Only the Midwest increased spending. In 2021, all had double digit % increases.
• Age – 55>64 flipped from 1^st to last. 45>54 is a new winner.
  • Winner – 45>54 yrs – Veterinary Spending: $6.90B; Up $0.80B (+13.2%)                                2021: 55>64 yrs
  • Loser – 55>64 yrs – Veterinary Spending: $6.14B; Down $1.51B (-19.7%)                                2021: <25 yrs
  • Comment: Only 45>54 and 75> spent more. In 2021 all segments increased Veterinary spending. While 55>64 had the biggest individual decrease, 25>44 spending fell -$2.25B. In 2021 they spent $3.34B more, 44% of the record increase. Despite a slightly younger winner, spending skewed a little older in 2022.
• CU Composition – This was the only category with no repeats or flips. The winner & loser are both new.
  • Winner – Married, Oldest Child 6>17 – Veterinary: $4.51B; Up $0.67B (+17.4%)              2021: Married, Couple Only
  • Loser – Unmarried, 2+ Adults – Veterinary: $4.29B; Down $1.26B (-22.7%)                       2021: Single Parents
  • Comment – Single Parents were the only group to spend less in 2021. In 2022, they were 1 of only 2 segments to spend more and it was a big lift, +41.1%. Married, Oldest Child <6 had the biggest % drop, -62.6%.
• Generation – Millennials flipped to the bottom as Gen X replaced them on top.
  • Winner – Gen X – Veterinary: $9.73B; Up $0.46B (+4.6%)                                                        2021: Millennials
  • Loser – Millennials – Veterinary: $7.13B; Down $2.10B (-22.7%)                                           2021: Born <1946
  • Comments – Only Gen X and Gen Z had increases. 2022 was the year that Gen Z “got on board” in every aspect of Pet Parenting. They more than doubled their spending on Food & Services, spent 73% more on Supplies and had a +$0.32B (+80.9%) increase in Veterinary. Millennials had the biggest drop, but they are still up $1.1B from 2020.
• Income – $200K> held on to the top spot while $150>199K replaced the low income $30>39K group at the bottom.
  • Winner – $200K> – Veterinary Spending: $6.72B; Up $0.39B (+6.2%)                                    2021: $200K>
  • Loser – $150>199K – Veterinary Spending: $3.43B; Down $1.51B (-30.5%)                          2021: $30>39K
  • Comment – In 2021, only the $30>39K group spent less. In 2022, 3 groups spent more – $30>39K, $40>49K and $200K>. Their increases were small and when you factor in 8.8% inflation, all groups bought a smaller amount.
• Occupation – The winner and loser both flipped, producing 2 surprises.
  • Winner – Blue Collar – Vet Spending: $1.92B; Up $0.35B (+22.4%)                                      2021: Mgrs & Profess.
  • Loser – Mgrs & Professionals – Vet Spending: $10.67B; Down $1.47B (-12.1%)                 2021: Construction Workers
  • Comment – Tech/Sls/Cler and All Other/Unemployed also spent a little more. Service workers had the 2^nd biggest $ decrease, -$1.23B, but the highest % drop, -31.3%. They had a $1.55B lift in 2021.
• Education – <HS Grads flipped to the top while Adv. College degree replaced them at the bottom.
  • Winner – <HS Grads – Veterinary Spending: $0.62B; Up $0.25B (+66.5%)                             2021: BA/BS Degree
  • Loser – Adv. College Degree – Veterinary Spending: $8.06B; Down $1.69B (-17.4%)          2021: <HS Grads
  • Comment – In 2021, all Education levels spent more but the lift was very much skewed towards higher Education. In 2022, the situation reversed. College grads spent -$3.27B less. <College Grads only spent +$0.31B more but all segments in the group but HS Grads w/some college increased their Veterinary spending.
• Race/Ethnic – The winner and loser flipped.
  • Winner – African Americans – Veterinary: $1.18B; Up $0.18B (+18.0%)                                2021: White, Not Hispanic
  • Loser – White, Not Hispanic – Veterinary: $25.55B; Down $2.10B (-7.6%)                           2021: African Americans
  • Comment– Asian Americans also spent more. In 2020 & 2021 all groups spent more. The 2 groups with the highest level of Pet ownership drove most of the 2019>21 increase and all of the 2022 decrease. The two groups with the lowest level of pet ownership have now spent more for 3 straight years. That’s encouraging.
• # Earners – 2 Earners flipped from 1^st to last and we have another surprise winner. No Earner, Singles.
  • Winner – No Earner, Single – Veterinary Spending: $2.44B; Up $0.02B (+0.9%)                   2021: 2 Earners
  • Loser – 2 Earners – Veterinary Spending: $12.20B; Down $0.99B (-7.5%)                              2021: 1 Earner, Single
  • Comment – No Earner, Singles had the only increase, and it was minuscule. The drops were pretty balanced across the segments. Except for 2 Earners, all CUs with 1+ earners had a drop between -$0.55B and -$0.68B.
• # in CU – The winner and loser flipped again.
  • Winner – 3 People – Veterinary Spending: $4.89B; Down $0.12B (-2.5%)                               2021: 2 People
  • Loser – 2 People – Veterinary Spending: $11.93B; Down $1.24B (-9.4%)                                 2021: 3 People
  • Comment: In 2020 and 2021, all groups spent more. In 2022, all groups spent less. The $ drop by 2 People CUs was twice as big as #2, Singles. Most drops were small. Only 5+ CUs, -21.4% was over -10%.
• Area Type – Another dual flip.
  • Winner – Center City – Veterinary Spending: $8.62B; Down $0.21B (-2.3%)                          2021: Suburbs 2500>
  • Loser – Suburbs 2500> – Veterinary Spending: $14.04B; Down $1.93B (-12.1%)                  2021: Center City
  • Comment – In 2020 and 2021 all groups spent more. In 2022, all spent less. Center City has now flipped for 3 straight years. The Suburbs 2500> have the biggest share of Vet $ and had a $4.4B lift in 2021. With the 2022 drop, they are still +$2.47B (+21.3%) from 2020.
• Housing – Both Homeowners w/Mtges and Renters held onto their “usual” spots at the top and the bottom.
  • Winner – Homeowner w/Mtge – Veterinary: $16.90B; Down $0.66B (-3.8%)                        2021: Homeowner w/Mtge
  • Loser – Renter – Veterinary: $4.79B; Down $1.40B (-22.6%)                                                      2021: Renter
  • Comment – In 2021, all spent more and had an increase of at least $2B. In 2022, all spent less but Renters had the only drop over -$1B. From 2020>2022: Homeowners w/Mtges are +$2.84B (+20.1%); Homeowners w/o Mtges are +$1.43B (+21.7%); Renters are +$0.60B (+14.3%).

We’ve now seen the winners and losers in terms of increase/decrease in Veterinary Spending $ for 12 Demographic Categories. 2021 had a record lift but 2022 brought a $2.95B drop. The decrease brought little turmoil in performance as 88% held their position. However, the change in $ was a different story. Only 3 were the same as 2021 and 14 of 24 flipped from 1^st to last or vice versa. However, the biggest difference was that in 2021, 93% of demographics spent more including 9 categories where all segments had increases. In 2022, only 23% spent more and there were 3 categories where all spent less. This made the “hidden gems” harder to find, but we did. Here are some segments that didn’t win but helped slow the drop in Veterinary spending. These groups don’t win an award, but they certainly deserve…

                                                                                                         HONORABLE MENTIONWith huge lifts in all segments, Gen Z “got on board” with all aspects of Pet Parenting. Because of strong family and financial pressures, Single Parents are often at the bottom in Pet spending. In 2022, they spent 54.1% more with lifts in all segments but Supplies, including a 41% increase in Vet Services. Asians have the highest income but the lowest percentage of Pet Parents. In 2022, they focused on services, with lifts in both Non-Vet & Veterinary Services. The 75+ group is also under tremendous financial pressure. Inflation caused them to dial back Food spending, but they had lifts in all other segments. Tech/Sls/Clerical workers are low profile. In 2022, they stood out with lifts in all but Supplies. Associates Degree also usually gets little notice, but 2022 was different. They increased spending in all segments.

Summary

2016 & 2017 produced a combined increase of $3.6B in Veterinary Spending as inflation moved to record low levels. In 2018 & 2019 a Baby Boomer Spending “Bust” impacted Food & Veterinary. Fortunately, Gen X and Millennials stepped up to produce a 2.7% increase in both years. In 2020 the pandemic focused Pet Parents on the needed segments. This drove a $3B increase in Veterinary $. Boomers & Millennials led the way, but the lift was widespread as 85% of demographic segments spent more. In 2021 the lift grew to a record $7.82B with 93% of all segments spending more including 9 categories where all segments had increases. In 2022, the “binge” was not repeated. Inflation also increased radically to 8.8% and spending fell -$2.95B (-9.0%). There was little turmoil in the best and worst performing demographics as only 3 were different from 2021. However, there was considerable turmoil in the segments with the biggest changes. Only 3 of 24 winners & losers were the same as 2021 and 14 flipped from 1^st to last or vice versa. 77% of all demographics spent less and in 3 categories, all segments decreased spending.

The performance of big spending groups is very important in all industry segments. In Veterinary we identified 5 demographic categories with high performing (120+%) large groups. That is 1 less than 2021. It is also 1 more than Pet Food, but 1 less than Services and 2 less than Supplies. The big groups with a high performance level in Veterinary are:

• Income: $70K> (147.8%) Performance increases with income but doesn’t reach 100+% until income reaches $100K
• CU Composition: Married Couples (130.8%) Only Married Couples perform at 100+%. (All but those w/oldest child <6)
• Education: College Grads (130.3%) Performance increases with education. All with an Associate’s Degree> are 100+%
• Housing: Homeowners (128.9%) Only Homeowners w/Mtge perform above 100%.
• Race/Ethnic: White, Not Hispanic (128.0%). Hispanics, African Americans & Asians only perform between 31% and 53%

Consumers have no control over Race/Ethnicity but can make decisions in the other categories. Income is still the most important factor. The others are important but essentially equal in performance – 128>131%. Although spending fell, it became slightly more balanced with the drop from 6 to 5 big groups performing over 120%. Another indication of this is that the average spending disparity between the best and worst performing segments dropped from 94.4% to 88.8%.

Another big concern is high inflation. In 2021 spending grew 31.5% in the pandemic surge. Inflation was high at 4.2% but 84% of the growth was real. In 2022 spending fell -9.0%. Inflation was 8.8% so the amount sold was really down -16.4%. Also 77% of 96 demographic segments spent less $ but if we factor inflation into the numbers, 91% actually bought less Veterinary Services. If high inflation continues it could have a major impact on Veterinary Spending.

Finally – The “Ultimate” Veterinary Services Spending Consumer Unit consists of 4 people – a married couple with an oldest child over 18. They are 45>54 years old. They are White, but not of Hispanic origin. At least one of them has an Adv. College Degree and works as a Mgr/Professional. Their oldest child also works. Their total income is $200K>. They live in a small suburb, adjacent to a big city in the Midwest and are still paying off the mortgage on their home.

Next, we’ll turn our attention to Pets and Supplies. We’ll see definite differences from Pet Food as the spending in the Supplies segment is more discretionary. There are other factors too. Spending can be affected by the spending behavior in other segments as consumers often trade $ between segments. However, the biggest factor is price. Many categories have become commoditized so pricing changes can strongly impact Consumers’ buying behavior. In the 2nd half of 2016, deflation began, and Supplies started a 24 month spending lift, totaling $5B. Prices turned up in mid-2018 due to new tariffs and Supplies $ fell a record -$3B in 2019. In the 2020 pandemic, Supplies weren’t a necessity, so sales continued to drop, -$1.7B. In 2021, Pet Parents caught up with their children’s needs and Supplies spending exploded, +$8.65B. In 2022, the “binge buy” was not repeated and inflation was high. Spending fell -$1.86B, -7.8% to $21.94B.

Let’s see which groups were most responsible for the bulk of Pet Supplies spending in 2022 and the $1.86B decrease. The first chart details the biggest pet supplies spenders for each of 10 demographic categories. It shows their share of CU’s, share of Supplies spending and their spending performance (Share of spending/share of CU’s). All groups are the same as Total Pet and are presented in the order that reflects their share of Total Pet Spending. This highlights the differences in importance. The biggest difference is in performance. There are 7 groups with performance of 120% or more, the most of any segment. That’s 2 more than Total Pet and 3 more than Pet Food. It’s also 1 more than 2021 which indicates that Supplies spending became less balanced in terms of the big groups in 2022.

1. Race/Ethnic – White, not Hispanic (81.5%) down from 83.2%. This large group accounts for the vast majority of spending in every segment. Their share decreased and their performance fell from 123.9% to 121.2% but they moved up from #6 to #4 in importance in Supplies Spending. Minority groups account for 32.8% of all CUs but spend only 18.5% of Supplies $. This is actually their biggest share of any segment. Only African Americans spent more.
2. Housing – Homeowners (78.8%) up from 76.9%. Homeownership is a big factor in pet ownership and spending in all segments. Their performance grew to 121.0%, from 118.9% and they joined the 120% club at #5 in importance in Supplies spending, up from #8 in 2021. Only Homeowners w/o a Mortgage spent more on Supplies in 2022.
3. # in CU – 2+ people (83.3%) the same as 2021 but their performance increased to 120.8%, from 119.8%. Only 3 People CUs spent more, +$0.44B and $4+ People CUs were down -$1.93B. Performance was aided by a drop in CUs.
4. Area – Suburban & Rural (70.3%) down from 76.0%. A big drop in share and their performance fell to 107.3%, from 117.8% in 2021. They’re now last in importance. The big Suburbs, over 2500 population were the only segment to spend less, but the decrease was substantial, -$2.74B. The Areas <2500 Population spent a little more, +$0.08B (+1.5%) but Center City had double digit percentage growth, +$0.80B (+14.0%).
5. Education – Associate’s Degree> (72.0%) down from 76.1%. This expanded group lost market share in 2022 and their performance level also decreased from 131.9% to 124.8%. Higher Education fell from 2nd to 3rd in importance. The drop was driven by College Grads, especially those with Advanced Degrees, who spent -$2.99B less. There was a clear spending divide. College Grads spent less while all groups with less than a BA/BS spent more. Those with an Associate’s Degree had the biggest lift, +$1.18 (+63.6%).
6. Income Over $70K (71.0%) up from (68.4%) A gain in share but their performance fell from 152.7% to 150.2%. Income remains the most important factor in increased Pet Supplies Spending. Both <$70K and $70K> spent less. However, all segments from $70K to $199K spent more while $200K> spent -$2.68B less. The <$70K group had a different pattern. The $40>49K group spent $0.23B more but all other groups spent less. Of Note: All incomes over $70K perform above 100% with an average of 150.2%. Those <$70K have a performance average of 55.0%.
7. # Earners – “Everyone Works” (69.7%) down from 73.4%. Their performance fell from 129.5% to 119.5% and they dropped from #4 to #7 in importance. In this group, all adults in the CU work. The # Earners is more important than in Food but it is income that truly matters. The results were mixed. No Earner, Singles, 1 Earner, 2+ CUs & 3+ Earners spent more. All other segments spent less, especially 2 Earners. Only CUs with 2+ earners perform above 100%.
8. Occupation – All Wage & Salary Earners (68.7%) up from 60.9%. Their performance was 114.0%, up from 102.6%. Tech/Sls/Cler had the only decrease in the group. Mgrs/Prof were +$0.58B. The gain in share and performance was largely due to a small spending lift by the group, while All Other/Unemployed & Self-Employed spent a lot less.
9. CU Composition – Married Couples (60.7%) down from 62.0%. Their performance also decreased from 130.8% to 127.1% but they moved up from 3^rd to 2^nd in importance. Married, Oldest Child 18> had the biggest lift, +$1.17B but Married, Couples Only & those with additional Adults also spent more. Married, Oldest Child 6>17 had the biggest drop , down -$2.77B but all other CU types with or without kids spent less..
10. Age – 35>64 (61.8%) down from 66.3%. Their performance level decreased to 118.6% from 126.6%. They fell from #5 to #8 in importance and dropped out of the 120% club. Only the 25>44 yr-old groups spent less. All others spent more. A -$2.81B decrease in spending by 35>44 yr-olds caused the big drop in share and performance. The biggest lift was only +$0.42B by 45>54 yr-olds. Supplies spending skewed a little older in 2022.

Pet Supplies spending still skews more towards younger and higher income CUs than Food. However, the biggest difference may be in the spending disparity in segments within the big groups. Supplies now has 7 big groups with perfomance of at least 120%. That’s up from 6 in 2021 and 5 in 2020. It’s also almost twice as many as the 4 in Pet Food.

Now, we’ll look at 2022’s best and worst performing Pet Supplies spending segments in each category.

Almost all of the best and worst performers are those that we would expect. There are truly no big surprises. In Pet Supplies spending, there are only 5 that are different from 2021, up from 4 last year. That is 2 more than Veterinary & Services but 2 less than Total Pet and 6 less than Pet Food. They are also tied with Total Pet & Food for the most new winners – 4. In 2021, Supplies had the fewest changes and new winners. In terms of disparity, the difference between the avg winner & loser was 87.5%, down radically from 123.6% in 21. Changes from 2021 are “boxed”. We should note:

• Income matters in Supplies spending.
  • Like Pet Food, the $150>199K> group was the top performer. They replaced $200K> which is the top performer in both Service Segments and Total Pet. BTW: It is #2 in Food & Supplies so $150K> is #1 for all.
• # Earners – 3+ Earners replaced 2 Earners at the top but again, only these 2 groups performed above 100%.
• Age – 45>54 traded places with 35>44 for the win. However, 35>44, 116.7% barely edged out 55>64, 116.1% for 2^nd place. The 35>54 groups are mostly Gen Xers. Gen X “rules” in Supplies spending.
• Region – The West won again but the Midwest also performed over 100%. The Northeast replaced the South at the bottom. However, the performance disparity from 1^st to last fell from 103% in 2021 to 41% in 2022.
• CU Composition – Married, Oldest Child 18> replaced Oldest Child 6>17 at the top while Singles held their spot at the bottom. In 2022, all Married CUs – with or without children, performed over 100%.

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

In 2019, Tarifflation caused a record $2.98B drop in Supplies spending. 2020 brought the pandemic and pet parents focused on “needs” so the more discretionary Supplies segment fell another $1.65B. In 2021 Pet Parents caught up on  the Supplies needed by their “children” and spent a record $8.65B more. In 2022, the binge wasn’t repeated so the $ fell -$1.86B. In the chart, there is only 1 repeat from 2021, but 5 segments switched from last to 1^st  and 10 flipped from 1^st to last. This is a lot of turmoil. In 2021, 97% of all segments spent more and in 9 categories all segments had increases. In 2022, despite the decrease, 52% of segments still spent more but no category was all positive. Here are the specifics:

• Income – $150>199K took the top spot as $200K> flipped from 1^st to last.
  • Winner – $150>199K – Pet Supplies Spending: $3.64B; Up +$1.30B (+55.3%)                            2021: $200K>
  • Loser – $200K> – Pet Supplies Spending: $3.73B; Down -$2.68B (-41.9%)                                   2021: $40>49K
  • Comment – In the <$70K group, only the 2021 loser, $40>49K spent more. In the $70K> group, only the 2021 winner, $200K> spent less, but it was substantial , -$2.68B. Overall, in both the under/over $70K and the under/over $100K groups both higher & lower spent less but the lower incomes had the biggest drop.
• Education – Associate’s Degree won while Advanced College Degrees flipped to the bottom.
  • Winner – Associate’s Degree – Supp. Spending: $3.03B; Up +$1.18B (+63.6%)                         2021: Adv College Degree
  • Loser – Adv. College Degree – Supplies Spending: $5.84B; Down $2.99B (-33.9%)                   2021: <HS Grad
  • Comment – The spending pattern was the opposite of what we expected. All College Grads spent less while all groups without a BA/BS spent more. The lift did increase with education, but peaked at an Associate’s degree.
• CU Composition – Married, Oldest Child 18> finished on top while Married, Oldest Child 6>17 flipped from 1^st to last.
  • Winner – Married, Oldest Child 18> – Supplies: $2.92B; Up $1.17B (+66.9%)                        2021: Married, Oldest Child 6>17
  • Loser – Married, Oldest Child 6>17 – Supplies: $3.13B; Down $2.77B (-46.9%)                     2021: Married, + Other Adults
  • Comment – Only Married, Couples Only, Married, plus Adults, but no Kids & those with a Child 18> spent more. Overall, CUs w/kids spent -$1.79B less while those w/o kids were only down -$0.07B.
• Region – The South won while the West flipped from 1^st to last.
  • Winner – South – Pet Supplies Spending: $7.65B; Up $1.12B (+17.2%)                                  2021: West
  • Loser – West – Pet Supplies Spending: $5.98B; Down -$3.41B (-36.3%)                                 2021: Northeast
  • Comment – In 2018, all regions spent more on Supplies. In 2019 and 2020 all Regions spent less. In 2021, like 2018 all regions spent more. In 2022 spending was divided. The South and Midwest each spent over $1B more while the West (-$3.41B) and the Northeast (-$0.63B) spent less.
• Area Type– Center City and the Big Suburbs swapped places.
  • Winner – Center City – Pet Supplies Spending: $6.51B; Up +$0.80B (+14.0%)                           2021: Suburbs 2500>
  • Loser – Suburbs 2500> – Pet Supplies Spending: $9.84B; Down -$2.74B (-21.8%)                    2021: Center City
  • Comment– The Areas <2500 Population also spent a little more, +$0.08B. The Big Suburbs had the only decrease.
• Housing – The winner and loser flipped positions.
  • Winner – Homeowner w/o Mtge – Supplies: $5.58B; Up +$0.58B (+11.7%)                               2021: Homeowner w/Mtge
  • Loser – Homeowner w/Mtge – Supplies: $11.71B; Down -$1.61B (-12.1%)                                2021: Homeowner w/o Mtge
  • Comment – Last year’s loser “lost” with a 45.7% increase. In 2022 they won with a lift of 11.7%. Homeowners w/Mtges had the biggest decrease, but Renters also spent less, -$0.83B (-15.2%).
• Occupation – Managers & Professionals held their spot at the top and Tech/Sls/Clerical finished last.
  • Winner – Managers & Professionals – Supplies Spending: $8.37B; Up +$0.58B (+7.4%)            2021: Mgrs/Profess.
  • Loser – Tech/Sls/Cler – Supplies Spending: $2.82B; Down -$0.67B (-19.2%)                                  2021: Operators & Laborers
  • Comment – Managers & Professionals are the only segment that spent more in 2020, 2021 & 2022. In 2021 all Occupations, including Retirees, spent more on Supplies. In 2022, only Tech/Sls/Clerical, Self-Employed and All Other/Unemployed spent less.
• # Earners – 2 Earners flipped to the bottom.
  • Winner – 1 Earner, 2+ CU – Pet Supplies Spending: $4.02B; Up +$0.57B (+16.5%)                     2021: 2 Earners
  • Loser – 2 Earners – Pet Supplies Spending: $9.62B; Down -$2.15B (-18.3%)                                2021: No Earner, Single
  • Comment – Income is a big factor, but the # of Earners became a little less important in Supplies Spending. The ups & downs were mixed with no clear pattern. No Earner, Singles, 1 Earner, 2+ CU and 3+ Earners spent more. 1 Earner, Singles, No Earner, 2+ CU and 2 Earners spent less. The big drop by 2 Earners drove Supplies $ down.
• Race/Ethnic – White, Not Hispanic and African Americans swapped positions at the top and bottom.
  • Winner – African Americans – Supplies: $1.28B; Up +$0.53B (+70.2%)                                    2021: White, Not Hispanic
  • Loser – White, Not Hispanic – Supplies: $17.87B; Down -$1.94B (-9.8%)                                 2021: African Americans
  • Comment – Although their share of Pet Supplies $ has fallen from 86.3% in 2018 to 81.1% in 2022, White, Not Hispanics still drive this discretionary segment. They have the highest % of pet ownership and the second highest income. The interaction of these two factors is very apparent in this category. Whites had the biggest gain in 21 so they had the most to lose in 22 and they did. Only African Americans spent more but their lift was +70.2%.
• # in CU – 3 People flipped from last to 1^st but 5+ People was a new loser.
  • Winner – 3 People – Pet Supplies Spending: $3.71B; Up $0.44B (+13.5%)                              2021: 2 People
  • Loser – 5+ People – Pet Supplies Spending: $2.94B; Down -$1.45B (-33.1%)                         2021: 3 People
  • Comment: 5+ CUs more than doubled their spending in 2021 so a big drop was not unexpected. 3 People CUs were the only size to spend more in 2022. In 2021 all segments increased spending.
• Age – 45>54 is a new winner but 35>44 flipped from 1^st to last.
  • Winner – 45>54 yrs – Pet Supplies Spending: $4.57B; Up $0.42B (+10.0%)                                2021: 35>44 yrs
  • Loser – 35>44 yrs – Pet Supplies Spending: $4.35B; Down -$2.81B (-39.2%)                              2021: <25 yrs
  • Comment: Only the groups from 25>44 spent less and the drop by 25>34 was only -$0.06B. The lifts were widespread but small. The <25 & 75> groups were both up over 20% but their combined lift was only +$0.32B.
• Generation – Our 4^th dual flip as the youngsters stepped up.
  • Winner – Gen Z – Supplies: $0.87B; Up $0.37B (+73.4%)                                   2021: Gen X
  • Loser – Gen X – Supplies: $7.04B; Down -$2.36B (-25.1%)                                 2021: Gen Z
  • Comment – Gen X had the biggest drop but they’re still up $1.5B from 2020. Gen Z had the biggest increase, especially in percentage. Millennials, Boomers and Born <1946 all spent more but the biggest lift was only +2.3%.

We’ve now seen the winners and losers in Pet Supplies Spending $ for 12 Demographic Categories. In 2020, only 18 of 96 segments spent more and 1 category had no segments with an increase. In 2021, 93 segments spent more, and 9 categories had no segments that spent less. In 2022, despite the -$1.86B decrease, 52% of demographic segments spent more but there was no category where all segments were positive. In performance, there were no surprise winners and 8 of 12 were the same as 2021. All of the winners were either 1^st or 2^nd in CU income in their category, which reflects the importance of income in Supplies spending. However, not every good performer can be “the” winner and some of these “hidden” segments should be recognized for their performance. They don’t win an award, but they deserve…

HONORABLE MENTION

Supplies spending is driven by income, but Pet Parenting is widespread. This is very apparent in the strong performance of these segments. All have below average incomes, with many at or near the bottom in their category. Their spending increases were even more impressive because 2022 was a year of strong inflation. The <HS Grad group spends the least on Supplies in the Education category, The Midwest finished 2^nd to the South but they only “lost” by $0.06B and had the biggest % increase. The $40>49K group had the only spending increase by any income segment below $70K. The 75> group obviously has many financial and health concerns, but they are still committed Pet Parents. This is very evident by their 21.8% spending increase in this more discretionary segment. Married couples with children spend the most on Supplies but kids are not “required”. Married couples with additional adults, but no kids had the 2^nd biggest $ and %  increases of any CU composition segment. Finally, Service Workers. These low income “pink” collar workers make up 12.5% of all CUs. In 2022, they increased Supplies spending by 21.3% and had the 2^nd highest lift in $ in Occupations.

Summary

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

That brought us to 2017. Both Supplies and Food prices deflated while the inflation rate in both of the Services segments dropped to lows not seen in recent years. Value was the “word” and it was available across the market. Perhaps the biggest impact was that the upgrade to super premium Food significantly penetrated the market. This could have negatively impacted Supplies Spending, but it didn’t. Supplies’ spending increased in 93% of all demographic segments.

2018 started out as expected with a $1B increase in Supplies and a small lift in Food. Then the government got involved. In July the FDA issued a warning on grain free dog food and spending dropped over $2B. New tariffs were implemented on Supplies and spending flattened out then turned down -$0.01B in the 2^nd half. The full retail impact of Tariffs hit home in 2019 when Supplies spending fell -$2.98B, affecting 97% of all demographic segments.

In 2020 The pandemic caused consumers to focus on needs. That resulted in big spending lifts for Food and Veterinary and big drops in Supplies and Services. Some good news was that Supplies spending became more balanced. The performance gap between best and worst narrowed by 10.25%.

In 2021 the overall Retail Market had strongly recovered but with no replication of the 2020 buying binge, Pet Food $ dropped. In Supplies, the pent-up buying desires of Pet Parents were unleashed. They bought all the Supplies items that had been on purchase “hold” for the last 2 years. The result was the biggest spending increase in history.  In 2022, the buying binge was also not repeated, and inflation took off, so spending fell -$1.86B. However, 52% of 96 demographic segments still spent more on Supplies. The results were mixed. The biggest drop came from the $200K> group followed by the lowest income groups. Supplies spending is still strongly driven by income as the $70>199K segments spent more. This meant that <$70K generated 58% of the decrease. In terms of income, Supplies spending is still far from balanced.

Finally – The “Ultimate” Pet Supplies Spending CU consists of 5 people – a married couple, with an oldest child over 18. They are 45>54 yrs old. They are White, but not of Hispanic origin. They both work and at least one has an Advanced College Degree and is a Manager or Professional. Their oldest child also works, and their household income is $150>199K. They live in a small suburb in the Western U.S. and are still paying off the mortgage on their home.

Inflation turned up in December. The monthly Consumer Price Index peaked back in June 2022 at 9.1% then began to slow until turning up in Jul/Aug 2023. Prices fell in Oct>Dec, but in December the CPI actually increased to +3.4% from +3.1% due to a big monthly price drop back in 2022. However, Grocery inflation continues to slow. After 12 straight months of double-digit YOY monthly increases, grocery inflation is now down to +1.3%, 10 consecutive months below 10%. As we have learned, even minor price changes can affect consumer pet spending, especially in the discretionary pet segments, so we will continue to publish monthly reports to track petflation as it evolves in the market.

Petflation was +4.1% in December 2021 while the overall CPI was +7.0%. The gap narrowed as Petflation accelerated and reached 96.7% of the national rate in June 2022. National inflation has slowed considerably since June 2022, but Petflation generally increased until June 2023. It passed the National CPI in July 2022 and at 5.1% in December, it is still 50.0% above the national rate of 3.4%. We will look deeper into the numbers. This and future reports will include:

• A rolling 24 month tracking of the CPI for all pet segments and the national CPI. The base number will be pre-pandemic December 2019 in this and future reports, which will facilitate comparisons.
• Monthly comparisons of 23 vs 22 which will include Pet Segments and relevant Human spending categories. Plus
  1. CPI change from the previous month.
  2. Inflation changes for recent years (21>22, 20>21, 19>20, 18>19)
  3. Total Inflation for the current month in 2023 vs 2019 and now vs 2021 to see the full inflation surge.
  4. Average annual Year Over Year inflation rate from 2019 to 2023
• YTD comparisons (Since it is December, this month’s YTD numbers are the annual inflation rate.)
  1. YTD numbers for the monthly comparisons #2>4 above

In our first graph we will track the monthly change in prices for the 24 months from December 21 to December 23. We will use December 2019 as a base number so we can track the progress from pre-pandemic times through an eventual recovery. This chart is designed to give you a visual image of the flow of pricing. You can see the similarities and differences in segment patterns and compare them to the overall U.S. CPI. The current year-end numbers from 12 and 24 months earlier are included. We also included and highlighted (pink) the cumulative price peak for each segment. In December, Pet prices were up from last month as lifts in Vet & Supplies overcame drops in Food & Services.

In December 21, the CPI was +8.5% and Pet prices were +4.5%. Like the CPI, prices in the Services segments generally inflated after mid-2020, while Product inflation stayed low until late 21. In 22 Petflation took off. Food prices grew consistently but the other segments had mixed patterns until July 22, when all increased. In Aug>Oct Petflation took off. In Nov>Dec, Services & Food prices continued to grow while Vet & Supplies prices stabilized. In Jan>Apr 23, prices grew every month except for 1 dip by Supplies. In May Products prices grew while Services slowed. In June/July this was reversed. In August all but Services fell. In Sep/Oct this was reversed. In November, all but Food & Veterinary Services fell. In December Supplies & Vet  drove Total Pet prices up 0.7% vs Nov. Petflation has been above the CPI since Nov 22.

• U.S. CPI – The inflation rate was below 2% through 2020. It turned up in January 21 and continued to grow until flattening out in Jul>Dec 22. Prices turned up Jan>Sep, then dipped in Oct>Dec, but 35% of the 19.4% increase in the 48 months since December 2019 happened in the 6 months from January>June 2022 – 12.5% of the time.
• Pet Food – Prices were at or below Dec 2019 levels from Apr 20>Sep 21. They turned up and grew, peaking in May 23. In Jun>Aug they dipped, grew Sep>Nov, then fell in Dec. 93% of the 23% increase has occurred since 22.
• Pet Supplies – Supplies prices were high in Dec 19 due to added tariffs. They then had a “deflated” roller coaster ride until mid-2021 when they returned to Dec 19 prices and essentially stayed there until 2022. They turned up in January and hit an all-time high, beating the 2009 record. They plateaued Feb>May, grew in June, flattened in July, then turned up in Aug>Oct setting a new record. Prices stabilized in Nov>Dec but turned up in Jan>Feb 23. They fell in March, peaked at a new record in May, then continued their rollercoaster ride with a big lift in Dec.
• Pet Services– Normally inflation is 2+%. Perhaps due to closures, prices increased at a lower rate in 2020. In 2021 consumer demand increased but there were fewer outlets. Inflation grew in 2021 with the biggest lift in Jan>Apr. Inflation was stronger in 2022 but it got on a rollercoaster in Mar>June. It turned up again July 22>Mar 23 but the increase slowed to +0.1% in April. Prices fell -0.3% in May, turned up again, peaking in Aug, then fell in Sep>Dec.
• Veterinary – Inflation has been consistent. Prices turned up in March 20 and grew through 21. A surge began in December 21 which put them above the overall CPI. In May 22 prices fell and stabilized in June causing them to fall below the National CPI. However, prices rose again and despite some dips they have stayed above the CPI since July 22. In 23 prices grew Jan>May, stabilized Jun>Jul, fell in Aug, then grew Sep>Dec to a new high.
• Total Pet – Petflation is a sum of the segments. In Dec 21 the price surge began. In Mar>Jun 22 the segments had ups & downs, but Petflation grew again from Jul>Nov. It slowed in Dec, grew Jan>May 23 (peak), fell Jun>Aug, grew in Sep/Oct, then fell in Nov. In December big increases in Veterinary & Supplies overcame drops in Food & Services to push Total Pet close to their May 23 high point. Petflation has been above the CPI since Nov 22

Next, we’ll turn our attention to the Year Over Year inflation rate change for December and compare it to last month, last year and to previous years. We will also show total inflation from 21>23 & 19>23. Petflation rose to 5.1%, up from 4.3% in November and it is now 1.5 times the National rate. The chart will allow you to compare the inflation rates of 22>23 to 21>22 and other years but also see how much of the total inflation since 2019 came from the current pricing surge. Again, we’ve included some human categories to put the pet numbers into perspective.

Overall, Prices were -0.1% from November but were +3.4% vs December 22, up from +3.1% last month. Grocery inflation is down again, to +1.3% from +1.7%. 4 of 9 categories had a price decrease from last month – National CPI, Groceries, Pet Food & Services. There were 5 in November. That’s 4 months in a row for Pet Services. The national YOY monthly CPI rate of 3.4% is up but still only 52% of the 21>22 rate. The 22>23 inflation rate is below 21>22 for all categories but Veterinary Services. In our 2021>2023 measurement you also can see that over 65% of the cumulative inflation since 2019 occurred in only 4 segments – Total Pet, Pet Food, Pet Supplies and Veterinary – All Pet. We should also note that the segments with the lowest percentages are Haircuts, Pet Services and Medical Services. Service Segments have generally had higher inflation rates so there was a smaller pricing lift in the recent surge. Services expenditures account for 62.3% of the National CPI so they are very influential. We also see that Pet Products have a very different pattern. The 21>23 inflation surge provided 94.1% of their overall inflation since 2019. This happened because Pet Products prices in 2021 were just starting to recover from a deflationary period.

• U.S. CPI– Prices are -0.1% from November. The YOY increase is 3.4%, up from 3.1%. It peaked at +9.1% back in June 2022. The targeted inflation rate is <2% so we are still 55% higher than the target. After 12 straight declines, we had 2 lifts, a stable month, 2 consecutive drops, now another lift – not good news! The current rate is 48% below 21>22 but the 21>23 rate is still 10.0%. That is 51.5% of the total inflation since 2019, but down from 54% last month.
• Pet Food– Prices are -0.1% vs November and +5.1% vs December 22, down from 5.6%. However, they are still 3.9 times the Food at Home inflation rate. The YOY increase of 5.1% is being measured against a time when prices were 17.0% above the 2019 level, but that increase is still 1.5 times the pre-pandemic 3.4% increase from 2018 to 2019. The 2021>2023 inflation surge has generated 91.3% of the total 23.0% inflation since 2019.
• Food at Home – Prices are down -0.5% from November. The monthly YOY increase is 1.3%, down from 1.7% in November and radically lower than Jul>Sep 2022 when it exceeded 13%. The 25.3% Inflation for this category since 2019 is 30% more than the national CPI and remains 2^nd to Veterinary. 52% of the inflation since 2019 occurred from 2021>2023. The pattern mirrors the national CPI, but we should note that Grocery prices began inflating in 2020>2021 then the rate accelerated. It appears that the pandemic supply chain issues in Food which contributed to higher prices started early and foreshadowed problems in other categories and the overall CPI tsunami.
• Pets & Supplies– Prices were up 1.4% from November and 0.1% vs December 2022. They still have the lowest increase since 2019. As we noted, prices were deflated for much of 2021. As a result, the 2021>2023 inflation surge accounted for 100% of the total price increase since 2019. They reached an all-time high in October 2022 then prices deflated. 3 months of increases pushed them to a new record high in February. Prices fell in March, bounced back in Apr/May to a new record high, fell in Jun>Aug, grew in Sep>Oct, fell in November, then grew sharply in December.
• Veterinary Services – Prices are up +1.2% from They are +10.8% from 2022, again the highest rate in the Pet Industry. Plus, they are still the leader in the increase since 2019 with 30.9% compared to Food at home at 25.3%. For Veterinary Services, relatively high annual inflation is the norm. However, the rate has increased during the current surge, especially in 23, so 66% of the 4 years’ worth of inflation occurred in the 2 years from 2021>2023.
• Medical Services – Prices turned sharply up at the start of the pandemic but then inflation slowed and fell to a low rate in 20>21. Prices grew 0.4% from November but are -0.5% vs 22. Prices have now deflated for 8 straight months. Medical Services are not a big part of the current surge as only 39% of the 2019>23 increase happened from 21>23.
• Pet Services – Inflation slowed in 2020 but began to grow in 2021. December 23 prices were -0.02% from November and only +0.7% vs 22, which is down 50% from 1.4% last month but an amazing 91% drop from 8.0% in March. Now, only 49% of their total 17.0% inflation since 2019 occurred from 21>23.
• Haircuts/Other Personal Services – Prices are up 0.1% from November and +3.7% from 2022, 2 consecutive months below 4.0%. Inflation has been rather consistent as 48% of the inflation from 19>23 happened from 21>23.
• Total Pet– Petflation is 53% lower than the 21>22 rate, but still 1.5 times the U.S. CPI. For December, +5.1% is the 4th highest rate since 1997 (2022: 10.9%; 2008: 9.7%; 2007: 5.5%). Vs November, prices grew in Vet & Supplies so Total Pet was +0.7%. An Nov>Dec price increase has happened in 6 of the last 7 years so it was no surprise. Veterinary & Food are still the Petflation leaders, but all segments have an influence. Pet Food has been immune to inflation as Pet Parents are used to paying a lot, but inflation can reduce purchase frequency in the other segments.

Now, let’s look at the YTD (Year-End) numbers

The inflation rate for 22>23 is the highest for 2 of 9 categories – both Pet, Pet Food and Veterinary Services. The 22>23 rates for Haircuts, Pet Services & Total Pet are slightly below 21>22. However, the CPI, Pet Supplies, Medical Services and Food at Home are significantly down from 21>22. The average annual national inflation in the 4 years since 2019  is 4.5%. Only 2 of the categories are below that rate – Medical Services (2.7%) and Pet Supplies (2.4%). It comes as no surprise that Veterinary Services has the highest average rate (6.5%), but 3 other categories are over 5% – Groceries (5.8%), Pet Food (5.3%) & Total Pet (5.1%).

The U.S. government began tracking inflation in 1913. It is a critically important measurement as pricing affects spending behavior and the economy. Moreover, the income of over 90 million people is directly tied to changes in the CPI. The US BLS began tracking pricing in Total Pet and the individual industry segments in 1997. Here are some 2023 comments.

• U.S. CPI – The 2023 rate was 4.1%, the 3^rd highest since 1997, trailing 2022 (8.0%) and 2021 (4.7%). It was down 49% from 21>22 and 8.9% less than the average increase from 2019>2023, but it’s 60% more than the average annual increase from 2018>2021. 65% of the 19.2% inflation since 2019 occurred from 2021>23. Inflation is a big problem that started recently.
• Pet Food – Inflation was 10.6% in 2023, edging out 2022 (10.2%) for 2^nd place. The top spot still belongs to 2008 (11.1%). Pet Food has the highest 22>23 & 21>23 rates on the chart. Deflation in the 1^st half of 2021 kept YTD prices low then prices surged in 2022. 96% of the inflation since 2019 occurred from 2021>23.
• Food at Home – The 2023 inflation rate slowed from 11.2% in 2022 to 5.0% but was the 3^rd highest rate since 1997 (also trailing 2008’s 6.4%) It also still beat the U.S. CPI by 22%. You can see the impact of supply chain issues on the Grocery category as 67% of the inflation since 2019 occurred from 2021>23.
• Pets & Pet Supplies – Prices increased in December, but the 2023 inflation rate was only 2.6%, 6^th highest since 1997. 1^st place belongs to 2022 (7.7%). Supplies’ prices deflated significantly in both 2020 & 2021 which helped to create a very unique situation. Prices are up 10.1% from 2019 but 105% of this increase happened from 2021>23. Prices are up 10.6% from their 2021 “bottom”.
• Veterinary Services – At 9.4%, 2023 beat 8.8% in 2022 and is now the highest inflation rate in history for Veterinary Services. On the chart they are #1 in inflation since 2019 but they have only the 2^nd highest rate since 2021. At +6.5%, they have the highest average annual inflation rate since 2019. Inflation was high and consistent, around 4% from 2019>2021. It took off in 2022 & worsened in 2023. Strong Inflation is the norm in Veterinary Services.
• Medical Services – Prices went up significantly at the beginning of the pandemic, but inflation slowed in 2021. In 2023 prices have generally been deflating and finished the year at -0.3%, the only deflation in any segment. It was also the only deflationary year since the US BLS began tracking this category in 1935.
• Pet Services – The January 2023 increase of 8.4% set a new monthly record. Prices have dropped Sep>Dec and they finished the year at 5.7%, tied for 2^nd place with 2008. 2022 is the winner at 6.3%. Their price surge started in 2021 when inflation jumped to 4.7% from 2.5% in 2019 & 2020. It appears to have ended in late 2023 but prices are still +20.6% vs 2019.
• Haircuts & Personal Services – The services segments, essential & non-essential, were hit hardest by the pandemic. The industry responded by raising prices. The 4 highest inflation years since 1997 were 2022 (5.4%), 2021 (5.1%), 2023 (4.9%) and 2020 (4.4%). Consumers are paying 21% more than in 2019, which usually reduces the frequency.
• Total Pet – The Nov>Dec price lift was normal, so it had little impact on the annual numbers. Petflation in 2023 was 8.0%, 2^nd place all time to 8.9% in 2022. It only finished 2^nd because the rate slowed significantly in the 2^nd half of the year. In the 1^st half it was 44% higher than the 2022 rate. There was a mixture of roller coaster patterns, but inflation slowed somewhat for all segments during the 2^nd  half. However, all did end up with high annual inflation rates and Veterinary even set a new record. 2023 Petflation is about double the CPI. In 2021 it was 43% below the CPI.

Petflation is slowing, but it is still strong, with the 4^th highest rate for December and the 2^nd highest annual rate in history. It is also double the CPI. In 2021 it was only half of that rate. Even if it slows to 0%, you can’t ignore the fact that inflation is cumulative. Pet prices are 17.7% above 2021 and 22.2% higher than 2019. Those are big lifts. Since price/value is the biggest driver in consumer spending it is likely to affect the Pet Industry. The Services segment will be the least impacted as it is driven by high income CUs. Supplies and Veterinary will likely see a reduction in purchase frequency. Food is the most needed segment so the response will be complex. It could include a movement to online shopping, switching to private label or even downgrading the quality of food. We’ll see what happens.

We looked at the Total Pet Spending for 2022 and its key demographic sources. Now we’ll start drilling down into the data. Ultimately, we will look at each individual segment but the first stop in our journey of discovery will be Pet Products – Pet Food and Supplies. Food and Supplies are the industry segments that are most familiar to consumers as they are stocked in over 200,000 U.S. retail outlets, plus the internet. Every week over 20,000,000 U.S. households buy food and/or treats for their pet children. Pet Products accounted for $60.63B (59.0%) of the $102.71B in Total Pet $ in 2022. This was up $2.42B (+4.2%) from the $58.21B that was spent in 2021. Pet Food spending rebounded after the big drop in 2021 following the binge buy in 2020. Supplies had its own spending rollercoaster. After falling during the 2020 pandemic, there was a record surge in 2021. This couldn’t be repeated so spending fell in 2022.

Overall, in 2022 Pet Food spending rose +$4.29B, while Supplies spending fell a -$1.86B. We’ll combine the data and see where the bulk of Pet Products spending comes from.

We will follow the same methodology that we used in our Total Pet analysis. First, we will look at Pet Products Spending in terms of the same 10 demographic category groups that were responsible for 60+% of Total Pet spending. Then we will look for the best and worst performing segments in each category and finally, the segments that generated the biggest dollar gains or losses in 2022.

The first chart details the biggest pet product spenders for each demographic category. It shows their share of CU’s, share of pet products spending and their spending performance (spending share/share of CU’s). Although their share of the Pet Products $ may be different from their share of the Total Pet $, the biggest spending groups are the same. The categories are shown in the order that reflects their share of Total Pet Spending. This highlights the differences. In Pet Products spending share, larger CUs and age are more important while income matters less. However, we should note that, like Total Pet Spending, Income is the highest performing demographic characteristic. In Pet Products there are only 4 groups with a performance rating of 120+%, 1 less than last year and 1 less than Total Pet in 2022. This reflects the fact that Pet Products spending, especially on Food, is spread more evenly across the category segments.

1. Race/Ethnic – White, not Hispanic (82.7%) down from 83.8%. They are the 2^nd largest group but still account for the vast majority of spending in every segment. Their performance fell from 124.8% to 123.1% but they moved up from 4^th to 3^rd in terms of importance in Pet Products Spending demographic characteristics. Hispanics, African Americans and Asian American account for 32.8% of U.S. CU’s, but they only spend 17.3% of Pet Products $. Although the minority share of Pet Poducts $ is low, it has improved considerably from 12.8% in 2020. Pet ownership is relatively high in Hispanic households, but it is significantly lower for African Americans and Asians.
2. Housing – Homeowners (80.0%) up from 79.3%. Controlling your “own space” has long been the key to pet ownership and more pet spending. Their performance grew from 122.6% to 123.0% and they officially moved up from 5^th to 4^th in terms of importance for increased pet products spending. Although both Homeowners and Renters spent more on Pet Products in 2022, 76% of the increase came from Homeowners w/o a Mortgage. Those with a Mortgage spent $0.51B, +1.6% more but that was much better than Renters. Overall, Homeowneers were +5.2% while Renters were +0.6%. This disparity caused the positive change in Share & Performance for Homeowners.
3. # in CU – 2+ people (81.4%) up from 80.8%. The share for Pet Products is higher than for Total Pet, 80.8%. If you put 2 people together, pets very likely will follow. If you have a pet, you must spend money on food and supplies. Their performance of 117.9% is up from 116.2%. Only 2 & 5 People CUs spent less but this was overcome by a 33% lift from 3 People CUs. Singles were only +1.0%. This combination improved share & performance for 2+ People CUs.
4. Area – Suburban & Rural (72.7%) up from 72.1%, but their performance fell from 111.8% to 111.0%. Suburban households are the biggest pet spenders and they are growing in popularity. The increase in the number of CUs is what pushed the group performance down. Rural CUs alone grew by 1331, +5.5%.
5. Education – Assoc Degree> (68.6%) down from 73.4%. Their performance level also dropped sharply from 127.2% to 118.9%. They fell from 2nd to 5th in importance and are no longer in the 120+% club. The drops in share and performance are only due to a $3.5B decrease in spending by College Grads. All groups with less than a College Degree spent more on Pet Products. The Associates Degree group did especially well, +46.5%.
6. Income – Over $70K (64.3%, down from 65.3%). Pet Parenting is common in all income groups but money is a big driver in the spending behavior for all industry segments. Although their performance fell to 136.0% from 145.7%, CU income continues to be the single most important factor in increased Pet Products Spending. As a general rule,  Higher Income = Higher Pet Products Spending. In 2022 there was an up & down rollercoaster in Pet Products spending but performance grew with income. All and only, income segments over $70K perform at 100+%.
7. # Earners – “Everyone Works” (65.3%) up from 64.1%. Their performance is 111.9%, down from 113.0%. In this group, all adults in the CU are employed. While 1 Earner, Singles spent $0.44B less, 2+ Earner CUs spent $2.75B more. This produced the increase in share. The drop in performance was due to a 2.45 million increase in CUs (Note: other groups were down -1.98 million CUs) along with a $2.14B spending lift from 1 Earner, 2+ People CUs. Income is the top priority in Pet Products Spending, but how many people work to get it is less important.
8. Occupation – All Wage & Salary Earners (64.7%) up from 60.7%. Their performance also grew from 102.2% to 107.2%. Mgrs/Professionals had the biggest lift but only Tech/Sls/Cler spent less among the employed. Blue Collar $ were +32.5%. Retirees & A/O,Unemployed spent $2.1B less. Together, this produced the lift in share & performance.
9. CU Composition – Married Couples (61.1%) down from 63.7%. Their performance fell from 134.4% to 127.8% but they went from 3^rd to 2^nd in importance. Only Married, Couple Only & CUs with a Child 6>17 spent less, -$4.1B. Single Parents & Unmarried, 2+ Adult CUs were +$2.3B. These were key factors in the drops in share & performance.
10. Age – 35>64 (61.3%) up from 59.7%. Their performance also grew from 113.9% to 117.7%. Even with a -$1.26B drop by 35>44, their spending grew by +$2.49B. Outside of the group the combined change was -$0.07B. This produced the big gains in share and performance. However, they stayed in 7^th place in terms of importance.

The biggest spending groups are the same for Pet Products as for Total Pet, but there are subtle differences in market share and performance. Money matters most but how many earners, their occupation and education matters less. It also appears that Pet Products Spending is becoming more balanced  across almost all demographic categories.

Now, let’s drill deeper and look at 2022’s best and worst performing Products spending segments in each category.

Most of the best and worst performers are the ones that we would expect. However, there are 9 that are different from 2021. That is 2 less than last year but 2 more than Total Pet this year. Changes from 2021 are “boxed”. We should note: Only 2 of the Product winners are different from Total Pet – $150>199K rather than $200K> and 3 People CUs rather than 4 people CUs. These differences are slight, and both reinforce the importance of Income & Family in Pet Spending.

The average performance of the 2022 Product winners was 136.1%, down from 148.6% – 10 were down. The average for the losers was 60.7%, up from 56.3% – 10 were up. The gap between best and worst narrowed from 92.3% to 75.4% indicating that Pet Products spending became more balanced across America in 2022. We should also note:

• Generation – Gen X continues to hold their spot at the top. However, Gen Z has “awakened” which has pushed the oldest group, those Born <1946 to the bottom.
• Income, # Earners – The new winners are still at or near the top In CU income. The importance of income is also reinforced by a number of other winners, including Mgrs/Prof., 45>54, Adv. College Degree & Gen X.
• CU Composition, CU Size – Families and children remain important. Married, w/Children now outperforms Married, Couple Only. All Married CUs perform at 100+% but even Single Parents are up to 97%.
• Age – The high-income 45>54 group replaced 35>44. After the “youth” spending surge in 2021, especially on Supplies, spending is skewing towards older Gen Xers.
• Region – The Midwest took the top spot from the West, and they are the only 2 Regions performing at 100+%. However, the “under performers” are from 91>93% so spending is still relatively regionally balanced.

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

In this section we’ll see who drove Pet Products spending up. There are 2 repeats from 2021 and 12 Segments switched positions – from first to last or vice versa. This is slightly less turmoil than 2021 which had only 1 repeat but 16 flips. There is only 1 truly surprising winner, High School Grads or Less. In 2 categories, all spent more. Here are the specifics:

• Region – Both the 2021 winner and loser flipped in 2022.
  • Winner – Midwest – Products Spending: $14.93B; Up $4.05B (+37.2%)                     2021: West
  • Loser – West – Products Spending: $14.54B; Down $3.83B (-20.9%)                           2021: Midwest
  • Comment – The West had drops in both Food & Supplies. The NE had the only other decrease – in Supplies only.
• Education – Both winner and loser flipped.
  • Winner – HS Grad or Less – Products Spending: $10.45B; Up $3.37B (+47.5%)                        2021: Adv College Degree
  • Loser – Adv College Degree – Products Spending: $15.87B; Down $3.36B (-17.5%)                2021: Less than HS Grad
  • Comment – There was a clear dividing line in the 2022 Pet Products spending pattern. Those with at least a BA/BS degree spent less. All segments without a college degree spent more.
• # in CU – Both the winner and loser are new. Only 3 People CUs spent more on both Food & Supplies.
  • Winner – 3 People – Products Spending: $10.88B; Up $2.70B (+33.1%)                      2021: 2 People
  • Loser – 5+ People – Products Spending: $7.14B; Down $0.64B (-8.2%)                       2021: 4 People
  • Comment: All but 3 people CUs spent less on Supplies but only 2 and 5+ CUs spent less on Pet Products.
• Occupation – Retirees flipped from 1^st to last.
  • Winner – Mgrs & Professionals – Products Spending: $21.33B; Up $2.70B (+14.5%)                        2021: Retired
  • Loser – Retired – Products Spending: $10.23B; Down $1.13B (-9.9%)                                                   2021: Self-Employed
  • Comment – All but Retirees, Tech/Sls/Cler and All Other/Unemployed spent more. Retirees $ were down due to a big drop in Food. The other drops came because of a big decrease in Supplies spending.
• CU Composition – Again, both the winner and loser flipped.
  • Winner – Married, Oldest child 18> – Products: $6.96B; Up $2.63B (+60.8%)                     2021: Married, Oldest Child 6>17
  • Loser – Married, Oldest Child 6>17 – Products: $8.08B; Down $3.40B (-29.6%)                 2021: Married, Oldest Child 18>
  • Comment – Married Couple Only and Married, Oldest Child 6>17 were the only segments to spend less on Pet Products, but their drop was enough to turn Total Married Couples negative. Most segments were up in Food but down in Supplies. Only Oldest Child 18> and Married, plus Adults, but no kids were up in both Food & Supplies $.
• # Earners – The winner is new but No Earner, 2+ People CUs flipped to the bottom spot.
  • Winner – 1 Earner, 2+ CU – Products Spending: $12.22B; Up $2.14B (+21.2%)                             2021: No Earner, 2+ CU
  • Loser –– No Earner, 2+ CU – Products Spending: $4.47B; Down $2.58B (-36.6%)                          2021: 2 Earners
  • Comment – While income matters most, the # of Earners is still not a major factor in Pet Products spending as 1 Earner, 2+ CUs won. Only 1 Earner, Singles and No, Earner, 2+ People CUs spent less.
• Age – The 55>64 yr-olds flipped from last to first and 75> moved to the bottom due to a big drop in Food $
  • Winner – 55>64 yrs – Products Spending: $13.25B; Up $2.04B (+18.2%)                                   2021: 35>44 yrs
  • Loser – 75> yrs – Products Spending: $3.41B; Down $1.32B (-27.9%)                                         2021: 55>64 yrs
  • Comment: The only spending drops came from 25>44 and over 75. The 45>74 yr-olds spent more in both Food & Supplies. Only 25>34 yr-olds spent less on both – minor decreases. Supplies $ drove the 35>44 group down.
• Income – Both winner and loser flipped.
  • Winner – $100 to $149K – Products Spending: $11.67B; Up $1.86B (+19.0%)                          2021: $200K>
  • Loser – $200K> – Products Spending: $9.77B; Down $1.88B (-16.1%)                                        2021: $100>149K
  • Comment – A spending rollercoaster: <$40K = -$0.63B; $40>69K = +$2.07B; $70>99K = -$0.32B; $100>199K = +$3.19B; $200K> = -$1.88B. Most Impressive: $40>49K was +34.6% and spent more on both Food & Supplies.
• Housing – Homeowners w/o Mtge flipped from last to 1^st but all segments spent more on Pet Products.
  • Winner – Homeowner w/o Mtge – Products: $15.93B; Up $1.84B (+13.1%)                           2021: Homeowner w/Mtge
  • Loser –– Renter – Products Spending: $12.10B; Up $0.07B (+0.6%)                                          2021: Homeowner w/o Mtge
  • Comment– Wealthier Homeowners who have paid off their homes, but are not retired, were the big drivers.
• Generation – Both the winner and loser are new.
  • Winner – Millennials – Products Spending: $15.14B; Up $1.59B (+11.8%)                              2021: Gen X
  • Loser – Born <1946 – Products Spending: $2.77B; Down $1.71B (-38.2%)                              2021: Baby Boomers
  • Comment – There were only 2 Pet Products negatives – Gen X had a strong lift in Food, but it was overcome by a huge drop in Supplies $ and Born <1946, who were up slightly in Supplies but had a big drop in Food $.
• Area Type – The larger Suburbs held their spot on top. Center City is a new loser, but all Area Types spent more.
  • Winner – Suburbs 2500> – Products Spending: $26.70B; Up $1.44B (+5.7%)                         2021: Suburbs 2500>
  • Loser – Center City – Products Spending: $16.56B; Up $0.31B (+1.9%)                                    2021: Population <2500
  • Comment – <2500 was the only area to spend more on Supplies & Food. Center City had the only drop in Food $.
• Race/Ethnic – White, Non-Hispanic held their spot on top while Asians replaced African Americans at the bottom.
  • Winner – White, Not Hispanic – Products Spending: $50.14B; Up $1.34B (+2.7%)                       2021: White, Not Hispanic
  • Loser – Asian – Products Spending: $1.50B; Down $0.29B (-16.4%)                                                 2021: African American 
  • Comment – African Americans didn’t win but they spent 59.7% more overall and were the only group to spend more on Supplies – and on both Food & Supplies. On the flip side, Asians were the only group to spend less on both Food & Supplies. White, Not Hispanic “won” because a $3.28B Food lift overcame a $1.94B drop in Supplies.

We’ve now seen the winners and losers in terms of increase/decrease in Pet Products $ for 12 Demographic Categories. 2022 was a positive, but mixed year for Pet Products Spending. Food rebounded after the big 2021 drop from the binge buy in 2020. The lift was enough to overcome the drop in Supplies $ after the record post pandemic spending surge in 2021. In 2022, 52% of segments still spent more on Supplies, but 82% spent more on Food so that 70% spent more on Pet Products. Of course, not every good performer can be a winner but some of these “hidden” segments should be recognized for their outstanding effort. I’ve narrowed the group down to 6. They don’t win an award, but they deserve…

Honorable Mention

Pet Products spending was up $2.42B in 2022. A rebound in Food exceeded the big drop in Supplies. The lift in Pet Products spending was widespread as 70% of 96 demographic segments spent more. Income was still the most important factor, but spending became a little more balanced. In our honorable mention group, you see that Gen Z truly got into the game by more than doubling their Pet Products spending. Although 2022 spending skewed towards the older Gen X group, 70% lifts by the <25 group and CUs with an oldest child <6 showed that the younger groups were still “strong” pet parents. Some other low-income segments that often finish on the bottom in spending also had a good year. Single Parents and African Americans both increased their Pet Products spending by 58+%. Finally, Higher Education became a little less important. College Grads spent less on Pet Products while all demographic segments w/o a college degree spent more. Those with an Associate’s degree were a big contributor with a 46% increase. The lift in Pet Products spending was widespread and more balanced so there were many “heroes”.

Summary

Pet Products spending has seen a lot of turmoil since 2015. Many consumers upgraded to Super Premium Food and cut back on Supplies in 2015. In 2016 they value shopped for Food and Spent some of the saved money on Supplies. In 2017 there was increased availability and value in both segments. More Consumers recognized the opportunity and spent $7B more. 2018 was calm, until the second half when the FDA warning on grain free dog food caused many consumers to downgrade their food and new tariffs on Supplies flattened spending growth. The result was -$1B drop in Products $.

In 2019 Pet Food spending rebounded to a new record level but the full impact of higher prices in the Supplies segment really hit home, with a record $2.98 decrease in spending. The drop was almost universal as 93 of 96 demographic segments spent less. The result was a -$0.64B drop in Pet Products $, the second consecutive decrease.

2020 brought the COVID pandemic. Out of fear of reduced availability, Pet Parents binge bought Pet Food in the 1^st half of the year. As Pet Parents focused on “needs”, discretionary Supplies dropped significantly in importance and $. However, Pet Products spending still grew by $3.99B and exceeded $50B for the 1^st time at $52.0B.

In 2021, the Food binge was not repeated and pets “ate down” the overstock so Pet Food spending fell. However, Pet Parents caught up on purchasing all the Supplies that they had postponed buying due to the pandemic. The result was a record increase in Supplies and a $6.21B increase in Pet Products $.

2022 brought a return to more normal spending behavior. Pet Food spending increased $4.29B, +12.5%. Obviously, the binge was not repeated but Supplies spending only fell -7.8% and 52% of demographic segments still spent more. The net was a $2.42B, +4.2% increase which pushed Pet Products $ up to $60.63B. Overall, the lift was widespread as 70% of 96 demographic segments spent more. While the Spending leader remained Gen X, the $ moved towards their older members in the 45>54 yr-old age group. However, the youngsters also made their presence felt as Gen Z more than doubled their Pet Products spending. Spending also became more demographically balanced. The most visible feature of this change was in the big groups doing at least 60% of the dollars. In order to reach the 60% minimum, the Education group was downgraded from College Grads to those with an Associate’s Degree or more. However, the balancing act was not limited to Education. 10 of 12 categories narrowed the gap between their best and worst performing segments. Overall, the average gap narrowed from 92.3% in 2021 to 75.4% in 2022. It’s still big but definitely improving.

Finally,… The “Ultimate” 2022 Pet Products Spending CU is 3 people, a married couple with a child over 18. They are in the 45>54 age range and are White, but not Hispanic. At least one has an Advanced College Degree and is a Mgr/Professional. Everyone works, including their child, producing a CU income of $150>199K.They still have a mortgage on their house located in a small suburb  in the Midwest.