Archive for category: Pet Market

The first 5 reports of our Pet Spending Demographics analysis have been very detailed and intense. We looked at the industry as a whole and each of the individual segments. Recent years have seen some turmoil. We have seen the very real impact of outside influences on the industry. In the 2^nd half of 2018, the FDA warning on grain free dog food caused a $2.3B drop in Food $ and new Tariffs flattened Supplies $, but Services had a record lift. In 2019, Food rebounded but the tariffs really hit the Supplies segment with a $3B drop. Veterinary $ grew slightly while Services $ fell a bit. The net was -0.2% drop in Total Pet. The 2020 pandemic had varied impacts as Pet Parents focused on needs. This caused a lift in Veterinary and a huge increase in Food because some demographics binge bought out of fear of shortages. Services spending plummeted due to outlet closures and restrictions while Supplies $ continued to fall because consumers saw them as more discretionary. 2021 brought a big change, Food $ fell because there was no “binge” repeat. However, Pet Parents focused on their “children” producing a widespread record lift in all other segments and a record $16B increase.

We have often referenced the similarities and differences in spending between Total Pet and the individual industry segments. Total Pet Spending is a sum of the parts and not all parts are equal. In this final report we are going to put the segments side by side to make the parallels, differences and changes from 2020 more readily apparent. We will address:

• “The big spenders” – those groups which account for the bulk of pet spending.
• The best and worst performing segments in each of twelve demographic categories
• The segments with the biggest changes in spending $ – both positive and negative
• And of course, the “Ultimate Spending CUs”

The emphasis is on “visual” side by side comparisons to allow you to quickly compare the industry segments. We’ll try to minimalize our comments. You can always reference one of the specific reports for more details. We’ll also break the charts up into smaller pieces that are demographically related to make the comparison more focused and easier.

Before we get started, let’s take a look at the current market share of the industry segments. The following 2 charts show the 2021 share of spending for each segment and the evolution over the past 29 years. 1992 was the last year that the Food Segment accounted for 50% of Total Pet Spending. By the way, Total Pet Spending was $16.2B in 1992. We have come a long way – +517%; annual growth rate of 6.48%. This will help put our comparisons into better perspective.

                                                                  Food: 34.4%; Down from 44.0%                Veterinary: 32.7%; Up from 29.7%

                                                               Supplies: 23.8%; Up from 18.1%                Services: 9.1%; Up from 8.2%

In 2021, Food lost almost 10% of share in Total Pet $ which was gained by all other segments. The most notable trend from 1992 to 2012 was the decline in Food share while Supplies gained in importance. In the 90’s Pet Owners became Pet Parents. At the same time, Pet Chains and Super Stores came to the forefront and there was a big Pet Product expansion into the Mass Market. In recent years, the Product Segments have been on a rollercoaster. Food reached 44% in 2020, the highest level since 44.8% in 1998. Supplies have been trending down since 2012, hitting bottom at 18.1% in 2020. The Services segments have been more stable. They have generally trended up since 2012. Non-Vet Services peaked at 11+% in 2018>19 then fell to 8.2% in 2020. They turned sharply up in 2021. Veterinary has been in the 25>27% range since 2012 but with a big lift in 2021, they broke the 30% mark and now trail Food by only 1.7%. Big Trends in Food and Petflation in Supplies tend to make the Product Segments more volatile than the Services Segments.

Now let’s get started with a look at the “Big Spenders”. The following 2 charts will compare the market share and performance in all Pet Industry segments by the groups responsible for the bulk of the spending in 10 demographic categories. These are the groups that we identified in our Total Pet analysis to generate at least a 60% market share of spending. As you recall, to better target the spending we altered 2 groups in Services and 1 in Food. However, to have a true side by side comparison we need to use the same groups for all. The market share dips below 60% twice, both in Food spending. One is because Food spending by Age is more balanced but skewed a little older than other segments. The other is in # of Earners, where the number of Earners in a CU mattered less. Even the low point of 55.1% is within 5% of our target and 96% of all measurements meet or exceed the 60% requirement, so the comparison is very valid.

The chart makes it especially easy to compare performance across categories. Remember, performance levels above 120% show a very high level of importance for this category in terms of increased spending. Unfortunately, it also indicates a high spending disparity among the segments within the category. There are 2 charts, each with 5 categories.

• White, Non-Hispanic – This group has an 83+% market share in every Segment. Minorities account for 32.8% of CUs but only 15>17% of spending in any segment. Factors: Lower income for Hispanics and African Americans and lower Pet ownership in Asians and African Americans. Whites lost 2>4% in share in all segments but Supplies which fell 0.1%. Hispanics made the biggest gains. Asians also had increases but African Americans generally lost ground.
• 2+ People in CU – 2+ is still the key in pet ownership. However, the results were mixed by size. Singles lost ground in all but Food so 2+ CUs had the opposite pattern. 2 People had big gains in all but Supplies. 3 People had big drops in all but Food. 4 People gained in Supplies and Veterinary but fell in Services and plummeted -18.7% in Food which produced the biggest drop in Total Pet. 5 People were up in all but Food. Truly, a mixed bag by CU size.
• Homeowners – Homeownership is very important in Pet Ownership and subsequently in all Pet Spending. It also increases with age. This group’s share of Total Pet fell below 80% for the first time in 2018. It bounced back in 2019>20 but fell 3 points in 2021. All but Services lost share with Food having the biggest drop, -5.7%. Services gained 2% and is again above 80%. Supplies remains at the bottom. Those w/o Mtge drove the big decrease.
• Suburban & Rural – They gained 0.2% in Total Pet. Both the Suburbs 2500> and Areas <2500 had strong gains in Veterinary but the other segments were divided. The Big Suburbs had strong gains in Food, Supplies & Total but lost ground in Services. The less populated areas increased share of Services but their share fell in Food, Supplies & Total.
• Over $70K Income – INCOME MATTERS MOST IN PET SPENDING! Income has grown in importance in recent years and all Industry segments performed at 140+%. Food lost 2% in share and replaced Supplies at the bottom in share and performance. It was the only segment with decreased share and performance. The other segments gained at least 5.6% in share, led by an 8.3% gain by Veterinary. Food spending became slightly more balanced while the income spending disparity gap significantly widened for the other segments. Services is still the least balanced.

• Everyone Works – Income is important, and the importance of # of Earners grew for the discretionary segments, Supplies & Services. Veterinary held its ground but Food performance fell 22%, driving Total Pet below 120%. The drop in Food was due to no binge buying while the big discretionary lifts came from the record pandemic recovery.
• College Grads – Higher education often correlates with higher income and a College degree is 2^nd in spending importance for all but Food. The group grew in share and performance in all segments, but Veterinary. Veterinary lost 4.1% in share and 6.9% in performance while the product segments, led by Food, gained 18.4% in share and 37.2% in performance. Total Pet gained 13.0% in share and 26.0% in performance. College is now a key factor.
• All Wage & Salary Earners– Incomes vary widely in this group, so performance is often lower. Supplies fell sharply in share and performance. Veterinary lost share due to fewer CUs but gained in performance. Services had slight gains in both. Food gained 12% in share and 22% in performance which pushed performance again above 100% – also for Total Pet. The group spent more in all segments, including Food but the bulk of the lifts came from White Collar.
• Married Couples – Marriage has been important to spending in all segments. In 2021 all segments but Food & Total Pet gained in share and performance. The lift was widespread in Married segments with 1 big negative exception, Married Couples with an oldest child 18 or older.
• 35 to 64 yrs – Includes the 3 highest income segments. This group had the same pattern of gains/losses as CU Composition – Food & Total down, all other segments up. The “bad guys” were 55>64 yr-olds. However, Food is a little more balanced by Age and in fact skews a little older. 35>64 only has a 55% share of the $.

Now we’ll drill a little deeper to look at the Best and Worst performing segments in each category. Color Highlighted cells are different from Total Pet; * = New Winner/Loser; ↑↓ = 5+% Performance Change from 2020. We will divide the categories into related groups. First, those related to Income.

• Income – Income matters, and its importance is growing in the Industry. The Food winner was up $150>199K from $100>149K in 2020 but the disparity between first and last place fell by 80%. The disparity in Services and Veterinary was 40+% more but Supplies was up 100+%. This pushed Total Pet up +50%. Income Matters the Most.
• # Earners – More earners = more income. 2+ Earners is the usual winner and reflects the importance of Gen X and Millennial CUs. The turmoil in Food is reflected by the No Earner, 2+ CU win. In all segments but Food & Total Pet the disparity and importance of the number of Earners grew. The biggest gain occurred in Veterinary.
• Occupation– Mgrs & Professionals and Self-Employed are #1 and #2 in CU income and expenditures. Self-Employed binge bought food in 2020 so they were replaced by Mgrs/Professionals in 2021. The bottom spots are again occupied by either Retirees or Blue-Collar workers. No Binge in 2021 caused the disparity to drop by 100+% in Food and Total Pet. It also decreased in all but Services. Income is important in Pet Spending but how you earn it is less so.

Next are demographics of which we have no control – Age, Generation and Racial/Ethnicity

• Racial/Ethnic– As expected, White Non-Hispanics are the top performer in all segments and African Americans replaced Asians in Food so they occupy all the bottom slots. They have the lowest income and only 25% own Pets. The disparity grew sharply in Supplies so now it is basically a 100% performance difference in Total & all segments.
• Age – The winners are all new. 35>44 had a strong year, but the winners are mixed. At the bottom in all but Supplies are <25 yr-olds. Food and Veterinary spending skew a little older. There are still big disparities in all segments but Food, which has more balanced spending at least by age, as all age groups over 35 have at least 95% performance.
• Generation – Gen X now rules. Gen Z is at the bottom in all but Supplies, which skews younger. The disparity gap closed significantly in Food but increased by 20% in Services & Supplies. It grew by 4% in Veterinary and Total Pet.

• Education – Winning and losing is closely tied to more and less Education which generally correlates with income. The disparities are huge. The biggest change is in Food which skewed towards lower education in the 2020 binge.
• CU Composition – In 2021 Pet Spending was all about CUs with kids, except for Food. The oldest kid 6>17 aligns with the middle age groups. Single Parents remain at the bottom in all but Supplies and the disparities are huge, 100+%.
• CU Size– The top CU number in Pet is now 4+ but “1” remains solidly on the bottom. 2 people CUs are still important as they replaced 4 people CUs at the top in Food & Services. The disparity is also smaller in all but Supplies.

• Housing – We’re back to normal as Homeowners w/Mortgage and Renters are the perennial winner and loser.
• Area– Areas <2500 population performed the best. This is surprising in Services as that usually skews towards higher population. Another surprise is Suburbs 2500> replaced Center City at the bottom in Food with a huge disparity.
• Region – 3 new winners, but no surprises. The South is again at the bottom in all but Food.

Here are two summary charts. The first compares the averages.

The big changes in Food & Supplies are immediately apparent. The 2021 difference in Food is less than half of 2020 while it increased by 40+% in Supplies. Pre-pandemic, the performance difference grew as you moved from Products to Services, peaking in the most discretionary, Non-Vet Services. In 2021, Food flipped from highest to lowest disparity, while Supplies moved to the top. However, both Veterinary and Supplies now have a difference of 100+%. Spending became significantly less balanced in every segment but Food. While the Total Pet disparity fell, it is still high at 94%.

• Food – After the 2020 binge, the disparity gap returned to a more normal, pre-pandemic level.
• Supplies – The record increase produced a record disparity between best and worst.
• Veterinary – The Winners performance grew while the losers fell pushing the difference over 100%.
• Services – The performance gap widened but essentially returned to a normal level for this segment.

This chart shows the number of new winners/losers.

Total Pet had many changes, especially in winners. Total Pet is a sum of the segments. However, you see how influential the Pet Food segment is with the turmoil from the drop in 2021 $ after the binge buying by specific segments in 2020.

• Pet Food spending fell because there was no repeat of the 2020 panic buying. As a result, over 80% of the winners changed and almost half of the losers are new.
• Even with a record increase, Supplies is the most stable with very little change in top or bottom performers.
• The Veterinary spending increase was also huge but there was also only a small number of changes.
• Services had a strong spending recovery and some turmoil mostly on the “losing” side.

Now, let’s look at the Demographic Segments with the Biggest Changes in $. We’ll truly see some differences between the Industry Segments. We have color highlighted differences from Total Pet.  Plus:                                                                                                                                                                                         ↔ = Winner/Loser same as 2020            ↕= Flipped from 1^st to Last or vice versa

• Income – All winners & losers were new with 3 flips from 1^st to last. The winners returned to high income groups and the losers to low income, with 2 exceptions. In Food & Total, $100>149K lost due to Food binge buying in 2020.
• # Earners – All new with 4 flips. In Non-Food Segments, the winner & loser were driven by income. In Food, 2+ CU Retirees finally upgraded which put them on top. They also spent more in other segments which led to a Total win.
• Occupation – 2 were repeats while 3 flipped. In a pattern similar to # Earners, the Non-Food winners (Managers & Professionals) were high income while the losers were low income. In Food & Total we saw the winning efforts by Retirees as well as the loss for Self-Employed as they didn’t repeat their 2020 extreme Food binge buy in 2021.

Now the Age and Racial/Ethnic Categories

• Racial Ethnic – White, non-Hispanics won in all but Food, where they were the big loser. They have high income & pet ownership and drove the 2020 Food binge so this is no surprise. African Americans have low income and Pet ownership and lost 3 times (2 were small increases). Asians have high income but had the smallest Services increase.
• Age – All new with 3 flips. 35>44 had 3 wins while 55>64 won in Veterinary and the 75+ Retirees won in Food. <25 lost in 2 segments and 55>64 paid for their 2020 Food binge, no surprise. 45>54 was an unexpected loser in Services.
• Generation – Gen X won Food, Supplies & Total and Millennials won Veterinary. Boomers did have the biggest increase in Services but lost in Food & Total Pet. Those born before 1946 came in last in Veterinary and Services. Gen Z did finish last in Supplies, with the smallest increase. However, winning skewed younger while losing skewed older.

Now, here are more Demographic Categories in which the consumers can make choices.

• Education – Higher education, especially a College degree is tied to increased income and pet spending. We had 4 flips which returned this demographic to a more normal pattern of winners & losers.
• CU Comp. – While CUs with Children were the best performers in Total Pet and all segments but Food, 2021 was also a strong year for Married Couple Only. They had the biggest increase in Total and all segments but Supplies.
• CU Size– Bigger CUs performed best, but with 4 last to 1st flips, 2 person CUs had the biggest increases across the board.

• Housing – 6 flips returned Housing to a more normal pattern with Homeowners w/Mtges at the top. Renters are often at the bottom, but in 2021 those w/o Mtges had 3 losses. Food & Total Pet came from their 2020 Food Binge.
• Area – The flip winner with 8. Big Suburbs flipped to their normal spot on top in Total and 3 segments. Center City was a surprise winner in Food but the 2020 Binge put <2500 at the bottom in 2021 Food & Total. Center City losses in Supplies & Veterinary are no surprise. The <2500 loss in Services is usual, but a loss with +$0.65B lift is surprising.
• Region – 6 flips and a more normal pattern with some exceptions. The South is an unusual Food winner and the 2020 Food binge flipped Midwest to the bottom in Food & Total. However, the strangest situation was that losers in 3 categories spent more, 2 with lifts of a $B or more. The big winner was the West and Midwest was the big loser.

The next chart compares the number of repeats, “flips” and new segments among the 12 winners and 12 losers for each industry segment. The idea is to look for patterns in the data that cross segments. Let’s take a look.

• 3 Segments were up a lot while Food $ fell. The overriding pattern was turmoil.
• In terms of repeats Supplies (5) and Veterinary (8) led the way while Food and Services had NONE!
• Due to the 2020 binge, Food led the way in flips (17) with all 2020 winners flipping to last in 2021. Services was 2nd (12). Veterinary had the fewest flips (3) while Supplies had (6) but 5 of the Supplies flips were from last to 1^st.
• You can see how the combined segments put Total Pet in turmoil – 17 flips and only 1 repeat
• There are a total of 24 winners and losers. The number different from 2020 was: Food: 24; Supplies: 19; Veterinary: 16; Services: 24; Total: 23. It appears that the record recovery caused as much or more turmoil than the pandemic.

Next, there were so many positive contributors that in each individual report we recognized 6 segments that didn’t win but still performed so well that they deserved Honorable Mention. I reviewed that list again and came up with segments that won Honorable Mention at least twice. Here are the 9 “SUPER Honorable Mentions” for 2021…

You can immediately see that it was an unusual year as 9 segments made the list. Supplies had the biggest increase, +57% and led the way with 6 segments on the list. Supplies became more skewed towards higher income but 97% of demographic segments spent more. Except for Millennials, the segments on the list are generally “low profile” but contributed notably to the industry. We should give special kudos to Millennials, Renters and Unmarried 2+ All Adult CUs. These 3 groups won Honorable Mention in 2 Industry segments and Total Pet.

Although the results were mixed, with numerous individual changes, I saw these trends of note:

1. Youth Movement – Boomers must inevitably fade. The Gen Xers have stepped up, with the Millennials close behind.
2. Sub-Urbanization – The Suburbs are the key. Areas <2500 are the top performers but the Suburbs 2500> spend the most. With the exception of pandemic 2020, they are the only area that increased $ every year since 2016.
3. The “Magic” number is 4+ – As spending skews younger the best performers in all but Food tend to be larger CUs. However, 2 person CUs still have the largest share of $ in every segment and Total Pet. They’re not done yet.
4. Changes in spending balance – The performance gap between the best and worst narrowed in Food but expanded in the other segments, especially in Supplies. This happened despite a demographically widespread increase.
5. Income is still the most important factor – The gap between best and worst narrowed in Food, but widened in all other segments, again especially in Supplies. The best performer is always $150K+, while the worst is <$30K.

And Finally, What you have all been waiting for…

THE ULTIMATE 2021 PET SPENDING CUs – Side by Side

Color Highlighted cells are different from Total Pet; * = New in 2021

Methodology – The segments are chosen because they have the highest annual CU spending of any segment in the category. They may or may not have the most total dollars. That would depend upon the number of CUs in the group.

Final Comment – These “winners” further reinforce the key factors in increased pet spending:

Marriage– A commitment to another person demonstrates that you can make a commitment to your pet “children”.

CU Size – The “magic” number continues to increase. It’s now 4+ people in a CU

Homeownership – Owning and controlling your own space has long been a key factor in Pet Parenting.

More space – Small suburbs near a big metro area offer the convenience of the city, plus room for more pets.

Income Matters Most – High Income, A High Paying Occupation, A College Degree, At least 2 Earners. These are characteristics present in all of the Ultimate Pet Spending CUs.

Generation– Boomers have passed the torch to Gen X. Age Note: All 45>54, 50% of 35>44 and 20% of 55>64 are Gen X.

I hope that this Visual Comparison helped you to get a “satellite view” of Pet Industry Spending in 2021. Please refer back to the individual segment reports to get more details.

Inflation continues to make headlines. The YOY increases in the monthly Consumer Price Index (CPI) are larger than we have seen in decades but are slowing a little. January prices grew 0.8% from December and the CPI was still up +6.4% vs 2022, but down from +6.5% last month. The grocery price surge also slowed but they’re still up 11.3% over 2022. That’s 11 straight months of double-digit YOY monthly percentage increases. These are the first 10+% increases since 1981. As we have seen in recent years, 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.

Total Pet prices were 4.1% higher in December 2021 than in December 2020, while the overall CPI was up 7.0%. The gap narrowed as Petflation accelerated and reached 96.7% of the national rate in June 2022. National inflation has slowed since July, but Petflation has generally increased. It passed the National CPI in July and is +10.6% in January, 65.6% higher than the national rate of 6.4%. 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 (22>21, 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
• Since January data is YTD, we won’t have separate YTD data until next month. It will include:
  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 January 2021 to January 2023. We will use December 2019 as a base number so we can track the progress from pre-pandemic times through an eventual recovery. Inflation is a complex issue. This chart is designed to give you a visual image of the flow of pricing. You can see the similarities and differences in patterns between segments and compare them to the overall U.S. CPI. The current numbers plus yearend and those from 12 and 24 months earlier are included. For all but Supplies, cumulative inflation peaked in January. I have added and highlighted the month that Supplies peaked. This will give you some key waypoints.

The pandemic hit home in 2020. In January 21, the national CPI was only +1.8% and Pet prices were +1.2%. Veterinary and Services prices generally inflated after mid-2020, similar to the overall CPI while Food and Supplies prices generally deflated until late 2021. After that time, Petflation took off. Pet Food prices consistently increased but the other segments had mixed patterns until July 2022, when all increased. In August>October Petflation accelerated, except for a small October dip in Veterinary. In Nov>Dec, Services & Food prices continued to grow while Veterinary & Supplies prices stabilized. In January, all inflated and Total Petflation since Dec 2019 has been above the U.S. CPI since November.

• U.S. CPI – The inflation rate was below 2% through 2020. It turned up in January 2021 and continued to grow until flattening out in Jul>Dec 2022. Prices turned up again in January but 41% of the overall 16.4% increase since 2019 happened from January>June 2022.
• Pet Food – Prices stayed generally below December 2019 levels from April 2020 to September 2021, when they turned up. There was a sharp increase in December 2021 but 89% of the 17.3% increase occurred in 2022.
• Pet Supplies – Supplies prices were high in December 2019 due to the added tariffs. They then had a “deflated” roller coaster ride until mid-2021 when they returned to December 2019 prices and essentially stayed there until 2022. They turned up in January and hit an all-time high, beating the 2009 record. They plateaued from Feb> May, turned up in June, flattened in July, then turned up in Aug>Oct to a new record high. Prices stabilized in Nov>Dec but turned up again in January.
• 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 has turned up again July>Jan and passed Food for 2^nd place among Pet Industry Segments.
• Veterinary – Inflation has been pretty consistent in Veterinary. Prices turned up in March 2020 and grew through 2021. A pricing surge began in December 2021 which put them above the overall CPI. In May 2022 prices fell and stabilized in June causing them to briefly fall below the National CPI. However, prices turned up again and despite Oct & Dec dips they have stayed above the National CPI since July and hit a new record in January.
• Total Pet – The blending of patterns made Total Pet appear calm. In December 2021 the pricing surge began. In Mar>June 2022 the segments had ups & downs but Petflation grew again from Jul>Nov. It slowed in December then turned up again in January as all segments increased prices. It has been ahead of the cumulative U.S. CPI on our 2019>2023 chart since November.

Next, we’ll turn our attention to the Year over Year inflation rate change for January and compare it to last month, last year and to previous years. We also added a new measurement, showing the total inflation from 2021 to 2023. Although inflation is slowing, it’s not over. This will allow you to see the cumulative amount of the current pricing surge. You can compare the annual inflation rates of 22>23 to 21>22 but also see how much of the total inflation since 2019 came from the ongoing trauma. Again, we’ve included some human categories to put the pet numbers into perspective.

Overall, Prices were +0.8% vs December and were up 6.4% vs January 2022. The Grocery increase is down to 11.3% but is still a big negative. January prices generally rise from December so it’s not surprising that 8 of 9 categories had increased prices from last month. 5 of the increases were over 0.5%. Last month there was only 1. 2 of the increases were over 1.0% and the Pet Industry again led the way – Pet Services +1.5% and Veterinary Services +1.0%. The overall national YOY monthly inflation rate is slightly down from December but it is significantly down vs the 21>22 rate. No other category has that pattern. The 22>23 inflation rate is higher than the 21>22 rate in all other categories. In all but 2 – Medical Services and Haircuts/Personal Services, it is the highest rate in any year since 2019. In our new 21>23 measurement you also can see that over 75% of the cumulative inflation since 2019 occurred in the current surge for all categories but Veterinary, Medical Services and Haircuts & Personal Services. The Pet Supplies Segment has a very interesting situation. The 21>23 inflation surge provided 113% of the overall inflation since 2019. This happened because Pet Supplies prices strongly deflated in 20>21.

Now Some Specific Observations

• U.S. CPI– Prices are +0.8% from December. The YOY increase is down to +6.4%. It peaked at +9.1% back in June. The targeted inflation rate is <2% so we are still over 3 times higher than the target. However, a 7th straight slight decline is good news. It is also good that the current inflation rate is below 21>22 but the 21>23 rate is 14.4%, 76% of total inflation since 2019. How many households “broke even” by increasing their income by over 14% in 2 years?
• Pet Food– Prices are +0.2% vs December and 15.1% vs January 2022. They are also 34% higher than the Food at Home inflation rate – not good news! The YOY increase is being measured against a time when prices were only 1.9% above the 2019 level, but that increase is still an incredible 12.5 times the pre-pandemic 1.2% increase from 2018 to 2019. The 2021>2023 inflation surge generated 88% of the total 20.7% inflation since 2019.
• Food at Home – Prices are up 8% from December. The monthly YOY increase is 11.3%, down slightly from 11.8% in December but considerably lower than Jul>Sep 2022 when it exceeded 13%. The 24.9% Inflation for this category since 2019 is the highest on the chart and is 32% more than the national CPI. 79% of their inflation since 2019 occurred from 2021>2023 but their pattern is different from the national CPI. 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 are up +0.4% from December. That’s 2 straight monthly increases after a dip in November. They still have the lowest increase since 2019 and now have fallen to last place in terms of the monthly increase vs last year for Pet Segments. As we noted earlier, prices deflated in 2020>2021 so the 2021>2023 inflation surge accounted for 100+% of the total price increase since 2019. They reached an all-time high in October then prices deflated. However, 2 straight months of increases has put them within 0.4% of the record high.
• Veterinary Services – January prices are +1.0% from They are +8.4% from 2022 and are tied with Services for 2^nd place behind Food in the Pet Industry. They also remain 2^nd in the increase since 2019 with 24.5% compared to Food at home at 24.9%. For Veterinary Services, relatively high annual inflation is the norm. The rate did increase during the current surge but only 57% 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. In January prices fell -0.1% from December but were +3.0% vs 2022, the 2^nd highest rate since 2019. Medical Prices are not a big part of the current surge as only 40% of the 2019>23 increase happened from 21>23.
• Pet Services – Inflation slowed in 2020 but began to grow in 2021/2022. January prices were up +1.5% from December, the biggest increase on the chart, and +8.4% vs 2021, a new rate record and an all-time pricing high. Their inflation is tied to the current surge as 72% of total since 2019 occurred from 2021>2023.
• Haircuts & Other Personal Services – Prices are +0.2% from December and +5.2% from 2022, but this is only 2^nd to +5.7% in 20>21. Inflation began to grow in 20>21 and 50% of the inflation from 19>23 happened from 21>23.
• Total Pet– Petflation is strong, 2.4 times the rate of last year, 65.6% ahead of the National CPI and the +10.6% is also the highest January rate in history. Prices increased in all segments vs December so Total Pet was up 0.8%, which is actually the norm. A Dec>Jan increase in Petflation has happened in 25 of the last 26 years. Food is the runaway leader, but inflation is becoming more balanced as all other segments have aa YOY rate of 7.2>8.4%. Inflation can cause reduced purchase frequency in Supplies, Services and Veterinary. Super Premium Food has been generally immune as consumers are used to paying a lot and it is needed every day.

YOY Petflation slowed slightly in January from December but still set a new record for the month. Will it impact spending? Let’s put it into perspective. The 10.6% January 2023 increase in Total Pet beat the 10.3% record set in 2009 and is 6+ times more than the 1.5% average rate from 2010>2021. Pet spending continues to move to higher income groups, but the impact of inflation varies by segment. Supplies is the most affected as many categories are price sensitive. Super Premium Food has become widespread because the perceived value has grown. Higher prices generally just push people to value shop. Veterinary prices have strongly inflated for years, resulting in a reduction in visit frequency. The Services segment is the most driven by higher incomes, so inflation is less impactful. The US BLS recently decided to update the CPI annually rather than every 2 years based upon each expenditure’s share of total expenditures. I worked with them to update the CPI of my specially created aggregates. During our conversations, they noted that Pet expenditures had one of the biggest share gains of any group. Apparently, Pet Parents are just reallocating their $ to prioritize their “children’s” needs. This is not unexpected. We’ll see if it is impacted by continued high inflation.

Next, we will look at Pet Services. It is still by far the smallest Segment, but like Supplies and Veterinary, it too had a record increase in 2021, up $2.21B (+32.0%). After the great recession, Services’ annual spending slowly but steadily increased. During this time, the number of outlets offering Services strongly grew as brick ‘n mortar retailers looked for a way to combat the growing influence of online outlets. After all, you can certainly buy products, but you can’t get your dog groomed on the Internet. This created a highly price competitive market for Pet Services. In 2017 there was a slight increase in visit frequency, but Pet Parents just paid less. This resulted in a 1.0% decrease in Services spending. In 2018 consumer behavior changed as a significant number decided to take advantage of the increased availability and convenience of Pet Services and spending literally took off, +$1.95B (+28.9%), by far the biggest increase in history. In 2019 Pet Parents, especially the younger ones, value shopped, and spending turned down $0.10B. In the 2020 pandemic Services outlets were often deemed nonessential and were subject to restrictions and closures which drove a huge drop in $. In 2021 things opened up again and Pet Parents came back to Services generating the biggest $ increase ever.

The Pandemic had a radically different impact depending on whether a segment was necessary or discretionary. Services  spending is arguably the most discretionary of any Pet Expenditure. Let’s look deeper into 2021 spending demographics.

Let’s start by identifying the groups most responsible for the bulk of Services spending in 2021 and the $2.21B increase. The first chart details the biggest Pet Services spenders for each of 10 demographic categories. It shows their share of CU’s, share of Services spending and their spending performance (Share of spending/share of CU’s). In order to better target the bulk of the spending we had to alter the groups in two categories – income and area. The performance level should also be noted as 7 of 10 groups have a performance level above 120%, equaling their previous high set in 2018. This is the most for any segment – 6 for Supplies and Veterinary and only 5 for Food and Total Pet. Last year they had only 5 over 120%. This indicates that the disparity between the best and worst performing segments grew in 2021. Income is still the biggest factor in Services Spending and its importance is growing. The categories are presented in the order that reflects their share of Total Pet $ which highlights the differences of the 8 matching groups. For Services, the share ranking differences from Total Pet are small. Married Couples replaced 35>64 at the bottom.

1. Race/Ethnic – White, not Hispanic (84.6%) down from 87.9%. This big group accounts for the vast majority of spending in every segment. Services Spending became slightly more diverse in terms of race and ethnicity in 2021 as their performance decreased from 128.5% to 125.9% and they fell from 4th to 5th place in terms of importance.
2. # in CU – 2+ people (82.2%) up from 78.3% The share for 2+ CU’s is over 79% for all segments and Services is 2^nd to Supplies’ 83.3%. Their performance also increased from 111.6% to 118.3% but they stayed in 8^th place in importance. All sizes spent more, with the biggest lift, +$1.3B from 2 Person CUs. Singles were only up $0.12B, +28%.
3. Housing – Homeowners (80.5%) up from 78.3%. Homeownership is a big factor in spending in all industry segments. The Homeowners’ share of Services grew and Supplies replaced them at the bottom. Their performance grew from 119.3% to 124.5% and they rejoined the 120+% club at #6. Those w/Mtges led the way, up $1.4B, +36.4%.
4. Area – City/Suburbs >2500 (80.3%) down from 83.3% in share, and performance fell from 102.7% to 98.1%, the only big group not earning its share of $pending. Services is an Urban Segment. All Areas spent more but Center City had only a small increase which drove down the group’s share and performance.
5. Income – $100K> (63.3%) up from 57.2% This group’s performance rating is 211.4%, up from 201.0%. CU income is still by far the most important factor in increased Pet Services Spending. Only the $40>49K income group spent less, -$0.14B. However, the spending increase was strongly skewed towards higher incomes. The over $100K group has 30.0% of all CUs but generated 82.4% of the $2.21B lift in $pending.
6. # Earners – “Everyone Works” (72.8%) up from (69.9%) All adults in the CU are employed. Income is important so a high market share is expected. Their performance grew to 128.3% from 122.0% and they moved up to #4 from #5 in importance. Only No Earner, Single CUs spent less. Households with 2+ Earners account for 39.3% of all CUs but they generated 73.8% of the increase. Retirees are important to Services but overall, more workers = more $.
7. Education – College Grads (71.7%) up from 68.5%. Income generally increases with education so Services spending grows with increasing education. College Grads spend the most so they were hit hardest by the pandemic and then had the strongest recovery. Performance grew from 146.6% to 151.5% and education stayed #2 in importance.
8. Occupation– All Wage & Salaried (67.6%) up from 66.8% and their performance rating increased from 108.7% to 114.0%. – Only Operators/Fabricators/Laborers spent less on Services. Managers & Professionals had the biggest increase, +$1.02B (+36.5%). Most Occupational segments had an increase in the 25>40% range. The exception was Self-Employed, only +12%. This drove the increase in share and performance for the big group. Services spending became a little more balanced among Salaried/Wage Workers but a little less balanced in terms of Occupation.
9. CU Composition – Married Couples (63.3%) up from 62.8%. Married couples are a big share of $ and have 128+% performance in all segments. Their performance increased to 133.6% from 129.4% and they stayed in 3rd place in terms of importance to Services spending. Only Married, Oldest Child <6 spent less. The biggest $ increase came from Married Couple Only, +$0.81B but the biggest % lift was in Unmarried, 2+ Person, All Adult CUs, +66.7%.
10. Age – 35>64 (63.9%) up from 62.5%. Their performance grew from 117.1% to 122.0% and they entered the 120+% club at #7. Only 45>54 spent less, -$0.02B. All other groups had double digit % increases. The 35>44 group led the way, up $0.78B (+61.3%) but they were closely followed by 55>64, +$0.75B (+56.3%).

We changed 2 of the groups for Services – Income and Area, to better target the biggest spenders. We should also note that Income is still more important to spending in Services than in any other segment. Except for Race/Ethnic and Area, the big groups gained in share and performance. Also, Services now has 7 groups performing at 120+%, the most of any segment. Overall, in 2021 Services spending became slightly less demographically balanced.

Now, we’ll look at 2021’s best and worst performing Pet Services spending segments in each category.

Except for Area the best & worst performers are not a surprise. There are 10 that are different from 2020, 4 of the best and 6 of the worst, 3 more than last year. Area shows an unusual move away from high population. The high income Gen Xers stayed on top, but spending shifted towards their younger members, 35>44. However, it wasn’t a total youth movement. The youngest groups replaced the oldest at the bottom. Changes from 2020 are “boxed”. We should note:

• Income is even more important to Pet Services. The $200K> group has its best performance in this segment.
• # Earners – 2 Earners replaced 3 Earners and No Earner, Singles replaced No Earner, 2+ CUs. No Surprises.
• Generation – Gen X retained Top Spot and the youngest group, Gen Z replaced the oldest, born before 1946 at the bottom. Boomers also earned their share with 102.8% performance and Millennials were close at 97.8%.
• Age – 35>44 is mostly Gen X and the 2^nd highest income group. All groups from 35>64 performed at 100+%. The lowest performers were at both ends of the age spectrum with <25 replacing 75> at the bottom.
• Area – Two Surprises. The <2500 Area flipped from Last to First. Services $ are skewed towards population density. The big Suburbs 2500> are the normal winners but Center City also usually performs above 100%.
• Region – The usual Winner but Northeast performance was also strong, 111.8%. The biggest change was the huge difference between 1^st and Last. Normally, regional performance is more balanced with all performing above 88%.
• CU Size – 2 Person CUs edged out last year’s winner, 4 People and returned to the top spot. Only Singles performed below 100% and they returned to their usual spot at the bottom.

In Pet Services spending performance, income is still the major factor. Spending began skewing younger in 2018. They slipped a little in 2019 but they basically held their ground during the 2020 pandemic. In 2021, Boomers, Millennials and the younger Gen Xers all got on board to drive the record rebound in Supplies Spending.

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

In this chart you immediately see the difference from last year. In 2020 there were 3 categories in which all segments spent less on Services. In 2021 there were 5 where all segments spent more. The changes by the winners were also radically larger than the losers. The tumult of 2020 continued but it was all positive. There were no repeats and 9  segments switched from last to first. 3 segments flipped from 1^st to last but they all had spending increases. In fact, 90% of 96 demographic segments spent more on Services. Here are the specifics:

• Race/Ethnic – Last year’s big loser, White, Not Hispanic, flipped to the top.
  • Winner – White, Not Hispanic – Services: $7.70B; Up $1.64B (+27.1%)                             2020: Hispanic
  • Loser – Asian – Services: $0.21B; Up $0.06B (+43.5%)                                                           2020: White, Not Hispanic
  • Comment– All groups spent more. Hispanics finished 2^nd , up $0.36B (+69.8%).
• # Earners– 2 Earners went from last to first.
  • Winner – 2 Earners – Pet Services Spending: $4.26B; Up $1.40B (+49.0%)                       2020: 3+ Earners
  • Loser – No Earner, Single – Pet Services Spending: $0.43B; Down $0.05B (-9.6%)          2020: 2 Earners
  • Comment – Only No Earner, Singles spent less, but No Earner, 2+ CUs doubled their spending, +100.7%.
• Housing – Both winner and loser flipped back to their “usual” positions.
  • Winner – Homeowner w/Mtge – Services: $5.18B; Up $1.38B (+36.4%)                             2020: Renter
  • Loser – Renter – Services: $1.77B; Up $0.29B (+19.7%)                                                           2020: Homeowner w/Mtge
  • Comment – All spent more as Homeowners w/o Mtges had a 33.1% increase.
• # in CU – The winner flipped from last place in 2020 but the loser is new.
  • Winner – 2 People – Pet Services Spending: $3.75B; Up $1.26B (+50.8%)                    2020: 4 People
  • Loser – 3 People – Pet Services Spending: $1.31B; Up $0.08B (+6.4%)                          2020: 2 People
  • Comment: All segments spent more. The 2 person lift was primarily driven by the Married Couple Only segment.
• Education – Advanced College Degree flipped from last to 1^st, back to their normal spot.
  • Winner – Adv. College Degree – Pet Services Spending: $3.45B; Up $1.20B (+53.3%)    2020: HS Grads
  • Loser – <HS Grads – Services Spending: $0.14B; Down $0.02B (-13.2%)                            2020: Adv. College Degree
  • Comment – Only those without a HS Diploma spent less but College Grads drove the lift. They have 47.4% of CUs but they provided 81.9% of the Services spending increase.
• Income – Both winner and loser are new.
  • Winner – $200K> – Pet Services Spending: $2.58B; Up $1.02B (+65.5%)                            2020: $50>69K
  • Loser – $40 to $49K – Pet Services Spending: $0.28B; Down $0.06B (-18.7%)                    2020: $100 to $149K
  • Comment – No surprises. The $40>49K group had the only spending decrease. Lower income groups normally occupy this position. The $200K> group makes the most $ and in 2021 they used some of those $ for Services.
• Occupation – Mgrs & Professionals flipped from last back to their usual position on top.
  • Winner–– Mgrs & Professionals – Pet Services Spending: $3.81B; Up $1.02B (+36.5%)        2020: Self-Employed
  • Loser – Operators & Laborers – Pet Services Spending: $0.18B; Down $0.02B (-12.1%)       2020: Mgrs & Profess.
  • Comment – Only Operators/Laborers spent less. Retirees also had a good year, up $0.41B (+43.5%).
• Region – The South flipped from 1^st to last.
  • Winner – West – Pet Services Spending: $2.96B; Up $0.96B (+48.2%)                                    2020: South
  • Loser – South – Pet Services Spending: $2.73B; Up $0.08B (+3.0%)                                         2020: Midwest
  • Comment – In 2020 all Regions spent less. In 2021 all Regions spent more – a major turnaround.
• Area Type – Both the winner and loser flipped positions. All areas spent more.
  • Winner – Suburbs 2500> – Pet Services Spending: $4.24B; Up $0.91B (+27.3%)                 2020: Areas <2500
  • Loser – Areas <2500 – Pet Services Spending: $1.79B; Up $0.65B (+56.3%)                         2020: Suburbs 2500>
  • Comment – Two straight years with Center City not either winning or losing – surprising!
• Generation – Boomers flipped from last to first. No Food binge in 2021, so they spent more in other segments.
  • Winner – Baby Boomers – Services: $3.06B; Up $0.86B (+39.5%)                                         2020: Gen Z
  • Loser – Born <1946 – Services: $0.35B; Down $0.07B (-16.4%)                                               2020: Baby Boomers
  • Comment – Last year only Gen Z spent more. In 2021 they spent less along with those born <1946. Boomers had the biggest increase but both Gen X and Millennials spent $0.7B+ more.
• CU Composition – Married, Couple Only flipped from last to first.
  • Winner – Married, Couple Only – Services: $2.61B; Up $0.81B (+44.9%)                        2020: Married, Oldest Child 6>17
  • Loser – Married, Oldest Child <6 – Services: $0.29B; Down $0.02B (-7.9%)                    2020: Married, Couple Only
  • Comment – Only Married, Oldest Child <6 spent less. Married, Couple Only won, but Married, Oldest Child 6>17 was +$0.47B and 2+ Unmarried, All Adult CUs spent $0.59B more.
• Age – Both winner and loser are new.
  • Winner – 35>44 yrs – Pet Services Spending: $2.05B; Up $0.78B (+61.3%)                              2020: <25 yrs
  • Loser – 45>54 yrs – Pet Services Spending: $1.68B; Down $0.02B (-1.2%)                               2020: 75+ yrs
  • Comment: In 2020, all age groups spent less on Services. In 2021, only the high income 45>54 yr-olds spent less. The 55>64 yr-olds finished a close 2^nd to 35>44 with a $0.75B (+56.3%) increase. Together, these 2 groups generated 69.2% of the $2.21B increase in Services Spending.

We’ve seen the winners and losers in terms of change in Services Spending $ for 12 Demographic Categories. The lift set a record and was widespread. Here’s some data which shows the evolution from 2018 to 2021 as Services worked their way back up and even exceeded their last peak in 2018. You see the difference between the big down & up swings.

Total Spending:       2018: $8.72B       2019: $8.62B       2020: $6.89B       2021: $9.10B

% Segments w/↑$:  2018: 88%            2019: 49%            2020: 21%            2021: 90%

Avg Biggest ↑$:        2018: $1.04B       2019: $0.25B       2020: $0.05B       2021: $1.10B

Avg Biggest ↓$:        2018:-$0.02B      2019: -$0.27B      2020: -$0.89B      2021: $0.07B

We found the winners in performance and $, but there were others who performed well but didn’t win. They deserve….

Honorable Mention

A big change from the 2020 chart. This year the worst performer was +42.9%. Last year’s worst was +0.9%. 5 People CUs had the 2^nd biggest increase but they more than doubled their Services Spending. Services $ usually follows income $ but the low income No Earner, 2+ CUs also doubled their spending. The West was the leader in the lift and performance, but the Northeast was a strong second in both, including a performance level of 111%. Married Couples led the way, but kids were a little less important. Unmarried, 2+ All Adult CUs had a bigger increase than all Married, w/kids CUs combined. No Food Binge for 55>64. They spent more in other Segments, including Services. Gen X won the awards, but Millennials also were strong. Their 2020>21 increase matched their previous biggest lift in 2017>18. In 2021, 90% of all segments increased Services spending. That means that we could have added many more to this honored group.

Summary

For years, Services’ spending slowly but steadily increased. However, the number of outlets offering Services was radically increasing. In 2017, this competitive pressure caused Pet Parents to shop for value and spending fell 1%. In 2018, the abundance of outlets and competitive prices finally had their intended impact. Many more consumers took advantage of the convenience of Pet Services and spending literally took off with a record increase to a new all-time spending high. In 2019 Consumers held their ground at the new higher level but we saw turmoil similar to 2017. Again, value shopping likely contributed to the small decrease.

In 2020 pandemic Services outlets were often deemed nonessential so they were subject to restrictions and closures. Services are definitely needed by some groups. However, for most demographics, Services are a convenience and spending is very discretionary in nature. The reduced availability and the pandemic driven focus on the “needed” segments – Food and Veterinary caused a 20% drop in Services $.

In 2021 the Retail Marketplace opened up again and many Pet Parents strongly returned to their previous Services mantra, “I need help with my Pet “children” and I have the money to pay for it!”. This behavior was widespread as 90% of all demographics spent more on Services. This produced a record $2.21B increase and Services spending exceeded $9B for the first time.  While the lift was widespread, unfortunately, the spending disparity increased. Performance differences are a key measurement of disparity. Let’s consider the performance of the big groups. There were 7 categories with a 120+% performing big group, up 2 from 2020, the most of any segment – Food (5), Supplies & Veterinary (6). This clearly indicates more disparity in Services Spending.

• Income   · Higher Education     · CU Composition    · # Earners    · Race/Ethnic   · Housing    · Age

The Housing category returned to the 120+% Club and Age was added. Gen X and Boomers are still the top 2 spenders and the younger members of these groups drove the increase. Income remains the key factor in Services spending. The best performing segments and those with the biggest increase almost without exception rank 1^st or 2^nd in income.

Services were hit the hardest by the pandemic in 2020 but they had a record, widespread recovery in 2021. They are the segment most driven by high income so inflation has less of an impact. We’ll see if the record price increases in 2022 negatively affect Services Spending.

At Last – The “Ultimate” Pet Services Spending Consumer Unit consists of 4 people – a married couple with 2 kids. The oldest child is 6>17. They are 35>44 yrs-old and White, but not of Hispanic origin. They both work and at least one of them has an Advanced College Degree and is a Manager or Professional. They have an income of over $200K. They live in a small suburb of a metropolitan area of 2.5>5 MM in the Western U.S. and are still paying off their home mortgage.

As we continue to drill ever deeper into the demographic Pet spending data from the US BLS, we have now reached the level of individual Industry segments. We will start with Pet Food, the largest and arguably most influential of all. We have previously noted the trendy nature of Pet Food Spending. In 2018 we broke a pattern which began in 1997 – 2 years up then spending goes flat or turns downward for a year. We expected a small increase in 2018 but what we got was a $2.27B decrease (-7.3%). This was due to the reaction to the unexpected FDA warning on grain free dog food. A pattern of 20+ years was broken by 1 statement. The grain free warning lost credibility and spending rebounded in 2019, +$2.35B (+7.1%). In 2020 the market was hit by an even bigger outside influence – the pandemic. The impact varied by segment. In Pet Food, it created a wave of panic buying out of fear of shortages, resulting in a $5.65B (18.1%) lift. The panic buying wasn’t repeated in 2021 resulting in a $2.44B (-6.6%) drop in spending.

First, we’ll see which groups were most responsible for the bulk of Pet Food spending and the $2.44B decrease. The first chart details the biggest pet food spenders for each of 10 demographic categories. It shows their share of CU’s, share of pet Food spending and their spending performance (Share of spending/share of CU’s). 1 group is different from Total Pet – 45>74, as food spending skews slightly older. The categories are presented in the order that reflects their share of Total Pet Spending. There are other differences from Total Pet. First, being Married is more important in Food spending than in Total Pet. Income is the most important factor in both, but the # of earners in a CU matters very little in Pet Food spending. Food spending is also a little more balanced than Total Pet Spending. This is evident in the fact that the Performance of all groups but Homeowners, Married Couples and White, Not Hispanic is significantly lower for Food. Also, Age & # Earners do not reach the 60% targeted market share for Food. In 2020, Pet Food accounted for 70.8% of Pet Products $ and 44.0% of Total Pet. In 2021 the Food share fell to 59.1% in Products and 34.4% of Total Pet. After the Food binge in 2020, Pet Parents caught up on their children’s needs in other industry segments.

1. Race/Ethnic – White, not Hispanic (84.2%) – down from 88.8%. This large group accounts for the vast majority of spending in every segment. They lost share and their performance decreased to 125.4% from 129.9%, but this category moved up from #6 to #4 in terms of importance in Pet Food Spending demographic characteristics. While Hispanics, African Americans and Asian Americans account for 32.8% of U.S. CU’s, they spend only 15.8% of Pet Food $. However, this is up from 11.2% in 2020. African Americans were the only minority to spend less on Pet Food in 2021. Hispanics and Asians spent $1.9B more.
2. # in CU – 2+ people (79.1%) – down from 82.5%. The share of market for 2+ CU’s is no longer over 80% for Pet Food but is at that high level for Supplies, Services and Total Pet. Their performance fell from 117.5% to 113.8% but their rank increased from 9^th to 6^th. In a reversal from 2020, 4 & 5+ CUs drove the decrease (-$8B). However, both still performed above 100%. 2 person CUs had a $3.8B lift and 3 Person CUs spent $1B more. Singles also had a $0.8B (+11.7%) increase which was a big factor in the drop in share and performance by 2+ CUs.
3. Housing – Homeowners (81.0%) – down from 86.7%. Homeownership is a huge factor in pet ownership and pet spending. In 2021, homeowners lost the share gained in 2020 and their performance fell from 131.7% to 125.1%. However, homeownership stayed in 5th place in terms of importance for pet Food spending. Those w/mtge spent $4B more but it was not enough to overcome the $8B drop from those w/o mtge. Renters also had a $1.6B increase.
4. Area – Suburban + Rural (69.4%) down from 77.8%. Their performance fell from 123.4% to 107.6%. (8^th) While the big (2500>) suburbs and center city spent $3.9B more, areas <2500 spent $6.3 less – another big reversal.
5. Income – Over $70K (63.1%) – down from 65.3%. Their performance rating also fell from 150.2% to 140.9% but they moved from 2nd to 1st in importance. High income is very important in Pet Food Spending but the bar was lowered slightly in 2021. The biggest factor was the $8.9B spending drop by the $100>149K group. They led the way in 2020 binge buying. The $150K> group spent $4.1B more and the $70>99K group had a good year, +$2.5B. In fact, the only other income group besides $100>149K to spend less on Pet Food was $30>49K, -$1B. Pet ownership is common across all income levels but in 2021 higher income is still critically important in Pet Food Spending.
6. # Earners – “Everyone Works” (57.6%) – down from 70.7%. This was a huge decrease from last year and their performance also fell sharply from 123.3% to 101.7%. They are no longer in the 120+% club and now rank last. No Earner CUs of all sizes spent $3.3B more while 2+ Earner CUs spent $6.5B less. It was a strong year for Retirees.
7. Education – College Grads (62.4%) – up from 42.1%. Higher Education skyrocketed in importance in Pet Food Spending as college grads had a 50% increase in share and their performance grew from 90.1% to 131.7%. Higher education, specifically a college degree, jumped from last to 3rd in importance in increased Pet Food Spending.
8. Occupation – All Wage & Salaried Workers (60.5%) – up from 48.1% – Spending by all white collar workers took off while it dropped sharply for self-employed. Their performance grew from 78.2% to 102.0% and they replaced the “Bosses” in the list of big groups. However, the new group caused occupation to fall from #1 to #9 in importance.
9. CU Composition – Married Couples (64.8%) – down from 71.1%. They lost share and their performance fell from 146.6% to 136.8%, but they moved up from 3rd to 2nd. In Married segments, only Couples Only and those with an oldest child 6>17 years old spent more. Singles and all adult, unmarried CUs also increased spending by $1.6B.
10. Age – 45>74 (56.5%) – down from 68.6%. This older group replaced 35>64 yr-olds in 2020. Their performance fell from 132.2% to 110.3% and they fell from 4 to 7 in importance. 45>64 is in both groups. The change stayed in place because the 65>74 share is 17.8% while 35>44 is 16.3%. 55>64 was the big driver in the 2020 lift and the 2021 fall.

Only 1 of the big spenders for Pet Food is different from Total Pet. Last year there were 3 special groups. 2021 brought a return to a more normal spending pattern and spending became slightly more balanced. This is best illustrated by the fact that in 2021 the performance for only 5 groups exceeds 120%. Last year there were 8 groups at $120+%, 5 of which had a performance level above 130+%.

Now, we’ll look at 2021’s best and worst performing Pet Food spending segments in each category.

Most of the best and worst performers are the ones that we would expect but 2021 produced one surprise winner – No Earner 2+ CUs, and 1 surprise loser – Suburbs with a population over 2500. There are 10 different winners from 2020 and 5 different losers. This is even more than the total of 10 last year and the 9 new winners this year in Total Pet. This reflects the return to normal after the binge buying in 2020. Changes from 2020 are “boxed”. We should note:

• Income The Food winner makes slightly less than the winner in other segments and Total Pet but is still over $150K.
• # Earners – The No Earner, 2+ CUs win reflects a strong year by Retirees, especially the 65>74 yr-old Boomers.
• Occupation – Mgrs/Professionals & Blue Collar returned to their normal spots, again reflecting income’s importance.
• Age, Generation- The high income, 45>54 Gen Xers moved to the top. Gen X was the big winner in 2021.
• Race – The usual winner, but African Americans replaced the traditionally low pet owning Asian CUs at the bottom.
• Education – Once again having a College Degree and the resulting higher income mattered in Pet Food Spending.
• Housing – Owning a home is always important. Those with a mortgage returned to their usual place at the top.
• CU Composition, CU Size – Married, Couples Only and 2 people CUs returned to their “normal” top spots.
• Region – The West returned to the top and was the only region with 100+% performance.
• Area – The big suburbs were a surprise loser. Usually, that spot belongs to Center City.

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

There are no repeats from 2020 so all are new. All 12 losers won last year which shows the impact of the 2020 binge. 5 of the winners were 2020 losers. That means that 71% flipped from 1^st to last or vice versa. Half of the winners are expected while most losers are not. The Surprise winners are Retirees, No Earner, 2+CUs, Center City, 75+ and Hispanics. The losers that came as no surprise were HS Grads or less, Homeowners w/o Mtge and the Midwest. The biggest surprise was that spending fell -$2.44B while 65% of all demographic segments spent more. Here are the specifics:

• Housing – The 2020 winner and loser both flipped
  • Winner – Homeowners w/Mtge – Food: $18.77B; Up $4.02B (+27.3%)                                     2020: Homeowners w/o Mtge
  • Loser – Homeowners w/o Mtge – Food: $9.10B; Down $8.09B (-47.1%)                                   2020: Homeowners w/Mtge
  • Comment – Renters also spent more so the Food decrease came solely from Homeowners without a mortgage.
• Region – Another dual flip.
  • Winner – South – Pet Food Spending: $13.07B; Up $3.88B (+42.2%)                                         2020: Midwest
  • Loser – Midwest – Pet Food Spending: $6.58B; Down $9.14B (-58.1%)                                      2020: South
  • Comment – Last year only the West and Midwest spent more. This year only the Midwest spent less.
• # in CU – The 3^rd dual flip as 2 person CUs return to the top for the 1^st time since 2017.
  • Winner – 2 People – Pet Food Spending: $14.57B; Up $3.80B (+35.2%)                               2020: 4 People
  • Loser – 4 People – Pet Food Spending: $4.35B; Down $7.21B (-62.4%)                                 2020: 2 People
  • Comment: Although Singles again had an increase, there was a turnaround from 2020. This year 2 & 3 person CUs spent more while all CUs over 4 spent less – the exact opposite of 2020.
• Education – Higher education returned to the forefront in importance in Pet Food spending.
  • Winner – BA/BS Degree – Food Spending: $11.07B; Up $3.32B (+42.8%)                                 2020: < HS Grads
  • Loser – HS Grads or less – Food Spending: $4.74B; Down $10.02B (-67.9%)                           2020: HS Grad w/some College
  • Comment – The biggest lift came from those with a BA/BS degree but all segments with any college experience spent more on Pet Food in 2021. Those without a HS diploma binge bought Food in 2020. In 2021 the situation flipped, but in fact all groups with a HS diploma or less spent a lot less on Pet Food, -$10B.
• Occupation – After 3 years at the top, Self-Employed flipped to the bottom.
  • Winner – Retired – Pet Food Spending: $8.44B; Up $3.16B (+59.8%)                                         2020: Self-Employed
  • Loser – Self-Employed – Pet Food Spending: $2.09B; Down $9.19B (-81.5%)                           2020: Tech, Sales, Clerical
  • Comment – Retirees led the way. However, in wage & salary earners, only Construction Workers/Mechanics spent less. Tech/Sls/Clerical was +$1.8B and Service Workers were +$1.1B.
• CU Composition – CU’s with children became markedly less important.
  • Winner – Married, Couple Only – Food: $11.60B; Up $2.95B (+34.0%)                                 2020: Married, Oldest Child 18>
  • Loser– Married, Oldest Child 18> – Food: $2.58B; Down $9.16B (-78.0%)                            2020: 2+ Adults, No Kids
  • Comment – Married, oldest child 18> flipped from 1^st to last. CUs with an oldest child 6>17 spent more. All other CUs with children, including Single Parents spent less. Adults only was a different story. All adult CUs – Singles & 2+ CUs, married or unmarried – just no kids, spent more on Pet Food.
• # Earners – The winner and loser flipped leaving a truly surprising segment at the top, No Earner, 2+ People CUs.
  • Winner –– No Earner, 2+ CU – Pet Food Spending: $5.36B; Up $2.88B (+116.1%)                 2020: 2 Earners
  • Loser – 2 Earners – Pet Food Spending: $12.09B; Down $6.19B (-33.8%)                                 2020: No Earner, 2+ CU
  • Comment – All No Earner and 1 Earner CUs of any size spent more on Pet Food in 2021, but all CUs with 2+ earners spent less. Income is important but the number of people earning the money didn’t matter as much.
• Generation – Boomers and Gen X flipped positions.
  • Winner – Gen X – Pet Food Spending: $11.12B; Up $2.82B (+34.0%)                                           2020: Baby Boomers
  • Loser – Baby Boomers – Pet Food Spending: $11.82B; Down $7.49B (-38.8%)                         2020: Gen X
  • Comment – Much of the 2020 Pet Food spending lift was the Boomers’ emotional reaction to the pandemic. In 2021 we returned to reality with Gen X leading the way. Actually, all generations but Boomers spent more with the Silent Generation (born <1946) having the 2^nd biggest increase, +$1.4B.
• Income – Last year’s binge leader, $100>149K flipped to the bottom while the $150>199K group took the top spot.
  • Winner – $150 to $199K – Pet Food Spending: $4.81B; Up $2.73B (+130.7%)                          2020: $100 to $149K
  • Loser – $100 to $149K – Pet Food Spending: $5.46B; Down $8.92B (-62.1%)                            2020: $70 to $99K
  • Comment – The $30>49K group was the only other segment to spend less. Spending increases were widespread but $150K> was up $4.1B. <$30K: +$0.1B; $50>69K: +$0.9B; $70>99K: +$2.5K; $200K>: +$1.4B.
• Area Type – Areas <2500 population flipped from 1^st to last, with another surprise winner, Center City.
  • Winner – Center City – Pet Food Spending: $10.54B; Up $2.36B (+28.8%)                              2020: Areas <2500
  • Loser – All Areas <2500 – Pet Food Spending: $11.19B; Down $6.35B (-36.2%)                     2020: Suburbs 2500>
  • Comment – The Big Suburbs (2500>) also spent more, and the Center City lift was widespread across America. In fact, only Cities with a population above 5 million spent a little less, -$0.1B.
• Age – The 55>64 year olds flipped from 1^st to last and we had a truly surprising winner, 75+ years old.
  • Winner – 75+ yrs – Pet Food Spending: $3.76B; Up $1.76B (+88.3%)                                         2020: 55>64 yrs
  • Loser – 55>64 yrs – Pet Food Spending: $6.75B; Down $7.89B (-53.9%)                                    2020: 45>54 yrs
  • Comment: In 2020 the 55>64 yr olds drove almost all of the increase. In 2021 they were responsible for all of the decrease as every other age group spent more. The 75+ group won but 35>44 was +$1.2B and 45>54 was +$1.1B.
• Race/Ethnic – White, Not Hispanics flipped to the bottom and Hispanics had a huge, +62% lift to take the top spot.
  • Winner – Hispanic – Pet Food Spending: $3.43B; Up $1.31B (+62.0%)                                      2020: White, Not Hispanic
  • Loser – White, Not Hispanic – Pet Food Spending: $28.98B; Down $3.74B (-11.4%)            2020: Asians
  • Comment – The U.S. is becoming more racially/ethnically diverse but White, Not Hispanic is still by far the biggest spender in every Pet Industry Segment. In 2021 Pet Food spending became a little more balanced. African Americans spent less on Pet Food but Asians spent a truly amazing 131% more, +$0.6B.

We’ve now seen the “winners” and “losers” in terms of increase/decrease in Pet Food Spending $ for 12 Demographic Categories. In 2020, the big spending lift due to the pandemic occurred in very specific segments. In 2021 those same segments generally had the biggest drops in $. This created an unusual situation. Pet Food spending decreased by -$2.44B while 65% of all demographic segments actually spent more. Most of America remains firmly committed to high quality Pet Food. However, super premium Food comes with high prices, so income is very important in Pet Food spending. The pandemic has accelerated value shopping, especially on the internet. We have identified the winning segments in performance and $ increase but they were not alone. Not every good performer can be a winner. Some “hidden” segments should also be recognized for performance. They don’t win an award, but they get…

Honorable Mention

Asians have a low % of pet ownership, but it is undoubtedly growing as their Pet Food $ more than doubled in 2021. The oldest Americans are generally short on $ but they are committed to their Pets. In 2021, many of them likely committed to Super Premium Pet Foods as their spending increased by 66%. The highest income groups had the biggest increase in spending, but “middle America” also opted in. This is evident by the big lifts from $70>99K and lower-level White Collar workers. Gen Xers had a great year and they are the most likely group to have an oldest child between 6 and 17 years old. Homeownership has always been a key factor in Pet Parenting and Pet Spending, but it is not a necessity. This is made very clear by the 33% increase in Pet Food Spending from Renters.

Summary

Pet Food has been ruled by trends over the years. The drop in 2018 due to the FDA grain free warning broke a pattern of 2 years up followed by 1 year of flat or declining sales which had been going on since 1997. This trendy nature increased with the first significant move to premium foods in 2004. The Melamine crisis in 2007 intensified the pattern and resulted in a series of “waves” which became a tsunami with the introduction of Super Premium Foods.

The 25 to 34 yr old Millennials were the first to “get on board” with Super Premium in the 2^nd  half of 2014. In 2015 a substantial portion of consumers began to upgrade. The result was a $5.4B spending increase. These consumers were generally more educated and had higher incomes. One negative was that they often paid for the upgrade by spending less in other segments. In 2016 the anticipated drop in spending happened. The upgraded group value shopped for their new food and found great deals, especially online. They spent some of the $3B “saved” Food $ in other segments but not enough to make up for the drop in Food. Total Pet Spending was down $0.46B. In 2017 we were ready for a new “wave”. Thanks to a very price competitive market, what we got was a deeper penetration of Super Premium foods. This group of upgraders was mostly middle-income, not college educated and often Blue-collars workers. Most also were in the 55>64 yr-old age group. The result was a $4.6B increase but this time there was no trading $ with other segments.

In 2018 we were “due” a small annual increase in Pet Food. Spending in the 1st half was +$0.25B but then the bottom dropped out as spending fell $2.51B in the 2^nd  half in reaction to the FDA warning on grain free dog food. The big decrease in spending came directly from the groups who had fueled the 2017 increase. In fact, 71% of the demographic groups with the biggest change in Pet Food $ switched from first to last or vice versa from their position in 2017.

That brought us to 2019. The impact of the FDA warning faded as there was little evidence to back it up. Pet Parents returned to Super Premium or chose even higher priced options. Supplement $ also grew as the health and wellbeing of their Pet Children remained the #1 priority. Pet Food $ grew $2.35B with 75% of demographic segments spending more. Income and related categories mattered more and Pet Food Spending became a less demographically balanced. In 2020 the Pandemic accelerated this trend. Fear of shortages led to binge buying and a $5.65B increase. This behavior was driven by very specific groups. This spending disparity was manifested in the fact that the performance of 8 of 10 big spending groups exceeded 120% while 49% of all segments spent less.

In 2021, the retail market strongly recovered but the turmoil in Pet Food continued. The 2020 binge buying was unnecessary and didn’t increase usage, so Pet Food spending fell by $2.44B. The 2021 Turmoil exceeded that of 2018 as every segment with the biggest increase in 2020 had the biggest decrease in 2021. The resulting drop in $ hid the fact that 65% of all demographic segments spent more on Pet Food. 2021 was actually a pretty good year for Pet Food.

Finally – 2021’s “Ultimate” Pet Food Spending CU is 2 people – a married couple. They are 45>54 years old and White, but not of Hispanic origin. They both work and at least one has an Advanced College Degree and is a Manager or Professional. They earn $150>$199K but are still paying the mortgage on their house in a small suburb in the West.