Information by segment as defined by USBLS

Comparing the Spending Demographics of the Industry Segments – SIDE BY SIDE

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The first 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 2nd 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. In 2022, after the record lift in 2021, spending fell in Supplies and Veterinary but Food had a strong 12.5% increase and Services continued to surge. This combination produced a 2.7% increase in Total Pet $

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 2021 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
  • “Honorable Mention” – Only segments that received this “honor” at least twice in 2022
  • 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 2022 share of spending for each segment and the evolution over the past 30 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, +534%; annual growth rate of 6.35%. This will help put our comparisons into better perspective.

2021>2022 CHANGE IN SHARE of TOTAL PET $

Food: 37.7%; Up from 34.4%

Supplies: 21.4%; Down from 23.8%

Veterinary: 28.9%; Down from 32.7%

Services: 12.0%; Up from 9.1%

In 2022, Supplies & Veterinary lost almost 7% of share in Total Pet $ which was picked up by Food & Services. The most notable trend from 1992 to 2012 was the decline in Food share while Supplies gained in importance. Both of those have ended. 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. After falling to 8.2% in 2020, Non-Vet Services peaked at 12% in 2022. Except for the big lift in 2021 which pushed them above 30%, Veterinary has been in the 25>28% range since 2012. All are impacted by outside influences but 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 3 groups in Services (Area, Education and Income) and 1 in Veterinary (Education). However, to have a true side by side comparison we need to use the same groups for all. Since these 4 groups are a different size from our original analysis, the share of spending will be different. However, all meet or exceed our 60% share minimum.

The chart makes it especially easy to compare share and 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. The categories are listed in their order of share of Total Pet $ – from highest to lowest.

  • White, Non-Hispanic – This group has an 81+% market share in every Segment. Minorities account for 32.8% of CUs but only 14>18% of spending in any segment. Factors: Lower income for Hispanics and African Americans and lower Pet ownership in Asians and African Americans. Whites lost share in Total & Products but gained in both Service segments. Asians had the same pattern and Hispanics were down in all but Food. African Americans gained in all.
  • Homeowners – Homeownership is very important in Pet Ownership and subsequently in all Pet Spending. It also increases with age. Only the Supplies share is below 80%. The group gained 1.2% in Total Pet share. The only decrease was -0.2% in Food. The lift was driven by those w/o a mortgage. They had gains in all but Veterinary. Those with a mortgage also had a small increase in Total but their only segment gain was a 3.1% increase in Veterinary.
  • 2+ People in CU – 2+ is still the key in pet ownership. However, the results were mixed by size. Singles had more CUs but lost share in all but Services so 2+ CUs had the opposite pattern. 2 People only gained in Supplies & Services. 4 people had the opposite pattern but 3 People gained in all. 5 People was the only 2+ size to gain in share of CUs but they only gained share in Food spending and had the biggest drop in Total Pet.
  • Suburban & Rural – They lost -0.1% in Total Pet but gained in Food & Services. Both the Suburbs 2500> and Areas <2500 had drops in Veterinary but opposite patterns in Total and the other segments. The Big Suburbs were only up in Food. The areas <2500 only lost share in Food. Center City was up in Total due to gains in Veterinary & Supplies.
  • Associate’s Degree > – A huge drop in spending by College Grads caused us to expand this group to include those with an Associate’s Degree to reach our 60% minimum share. This resulted in an increase in share but a drop in performance for all segments. Despite a great year from Associate’s Degree, the new group lost share in all but Services from 2021. Overall, Higher Education is also less important. In 2021, it usually ranked 2nd. In 2022, it is still 2nd for Services but fell in Total and all other segments, even falling to 7th in Food.

  • Over $70K Income – INCOME MATTERS MOST IN PET SPENDING! Income has grown in importance in recent years and all Industry segments, but Food performed at 140+%. Over $70K gained 2.5% in CU share but lost -0.7% in Total, -2.6% in Food and -1.8% in Veterinary. The other segments gained share – Supplies, +2.6% & Services, +3.0%. The <$70K group obviously had the exact opposite pattern. Food & Veterinary spending became slightly more balanced while the income spending disparity gap widened for the discretionary Supplies & Services segments.
  • Everyone Works – Income is important, but the importance of # of Earners fell for all but Food in 2022. Despite a strong year for 3+ Earners the Everyone works group lost share in all but Food. The Food lift was strong enough to generate a gain in Total. In terms of performance, only Services is 120+%. In 2021, Supplies & Vet were also 120+%.
  • All Wage & Salary Earners– Incomes vary widely in this group, so performance is often lower. 2022 was different. The group gained 0.9% in CU share. Total Pet and all segments, but Veterinary gained in spending share. Veterinary lost -0.5% in share and -2.6% in performance. Supplies had the biggest lift – +7.8% in share and +11.4% in performance. The increase was driven by a combination of Managers/Professionals and Blue Collar workers.
  • Married Couples – Marriage is 1st in importance to spending in Food, 2nd in Total, Supplies & Veterinary but falls to 3rd in Services. In 2022 their share & performance increased in Total, Food & Services but fell in Veterinary & Supplies. The best performer inside the group was CUs with a child 18>. Outside of the group, it was Single Parents.
  • 35 to 64 yrs – Includes the 3 highest income segments. They only gained share in Total Pet (+0.3%) and Food (+6.0%). The 45>54 yr-olds gained share in all segments but their lift couldn’t overcome big losses by the 35>44 yr-olds in all segments but Food. The good news is that their Food share is now above 60% (61.1%).

Now we’ll look at the Best/Worst performers in each category. Highlighted cells are different from Total Pet; * = New Winner/Loser; ↑↓ = 5+% Performance Change from 2021. The categories are divided into related groups. 1st, Income

  • Income – Income matters. All winners were $150K>. The Supplies winner was $150>199K down from $200K> in 2021 and the disparity between 1st and last place fell by 90%. The disparity gap in Veterinary narrowed by only 5% but it narrowed by at least 30% for Food, Services & Total Pet. More balanced spending.
  • # Earners – More earners = more income. The highest income 3+ Earners segment is now on top for all. Note: They are most likely Gen Xers. No Earner, Singles (70+ yr-olds) retained their position at the bottom. The spending disparity gap narrowed by only 6% for Supplies. In the other segments it shrank by at least 15%.
  • Occupation– Mgrs & Professionals are #1 in CU income and expenditures and again the best performer in all segments. Blue Collar workers had a strong year in all but Services. They were replaced at the bottom by Service Workers or Retirees. The spending disparity actually increased by 21% in Services and by 4>9% in Food, Supplies & Total Pet. It did fall slightly, -3.5% in Veterinary.

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 occupy all the bottom slots. African Americans have the lowest income and only 25% own Pets. However, they had a strong 2022. They got the performance gap below 100% in all segments, including a 24% drop to 75% in Supplies.
  • Age – The 45>54 yr-olds now “rule”. The bottom is a mixture of young & old. 75> is the worst in Products while <25 loses in Services & Total. The spending disparity increased by 10% to 110% in Veterinary, but it fell in Total and all other segments, including a 62% drop in Supplies to 75%. Now, only the disparity in Veterinary is above 100%.
  • Generation – Gen X still “rules”. Gen Z is still at the bottom in Service segments while Born <1946 is the worst in the others. The disparity gap narrowed for all. The drop was in double digits for all but Veterinary. Now, all are <100%.

In the next 6 categories, we have at least some control

  • Education – Winning is tied to higher Education which generally correlates with income. The losers are all below an Associate’s degree. The disparity gap shrank significantly for all with an average drop of 53%. Only Services is 100+%.
  • CU Composition – 7 of 10 best/worst are different from 2021. Except for Services, kids win. The oldest kid 18> aligns with the 45>54 age group. Singles are the most common worst. Disparity lessened for all – an average drop of 32%.
  • CU Size– The top CU number is mixed, but generally 3+. “1” remains solidly on the bottom. The disparity is also bigger in all but Supplies. Disparity dropped 60% in Supplies and 4% in Services but rose in Total & other segments.
  • Housing – The perennial winner and loser. Disparity dropped slightly in Products & Services but rose in Vet & Total.
  • Area– <2500 population is on top & Central City is on the bottom. The disparity dropped by 9+% for Total and all but Services, which increased by 11%. This is a surprise. Services spending usually skews towards higher population.
  • Region – A strong year for the Midwest. The South is at the bottom in all but Supplies. The disparity in Food increased by 0.3%. Total & all other segments had double digit drops, led by Supplies which fell 62%.

Here are the categories with the biggest & smallest disparities for Total Pet & each industry segment.

I’m sure the fact that income produces the biggest spending disparity for all is no surprise. Pet spending is driven by income. The Regional “wins” reflect the growing national balance in product spending. In Area Type, Services spending is expanding beyond high population areas while Veterinary spending is now growing in Center City.

Now, here are two summary charts. The first compares the averages.

The return to “normal” is very apparent as the differences for all but Supplies are below 2019 levels. Supplies did have the biggest drop from 2021 (40%) and are less than 1% above 2019. Food has the lowest disparity for the 2nd straight year. The difference grows as you move from Products to Services. Non-Vet Services is again on top. The Veterinary disparity also fell but it is back to the 2nd highest. Total Pet fell 16% from 2021 to 78%, much more balanced.

  • Food – Down 13% from 2021, 16% from 2019, but 145% from the 2020 binge. Now they are the most balanced.
  • Supplies – The record 2021 increase produced a record disparity. The drop in 2022 brought a return to normal.
  • Veterinary – Their record lift increased the difference to over 100%. The sales drop pushed them below 2019.
  • Services – Despite a record lift in 2022, the gap narrowed by 8%, but they are the only segment over 100% .

This chart shows the number of new winners/losers.

There was much less turmoil than in 2021 but Food again led the “pack” with nearly half of the winners & losers changing as their spending rebounded from the drop in 2021.

  • With a 12.5% increase in 2022, Pet Food spending returned to a more normal pattern in 2022. The biggest change in performance was that over half of the losers moved off of the bottom.
  • Supplies spending fell sharply in 2022 but the impact only changed 4 of the 12 winners and 1 loser.
  • The Veterinary spending drop was also big but there were even fewer total changes than in Supplies.
  • Services had another record increase. It was widespread but produced few significant changes in performance.

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 2021
  • ↕ = Flipped from 1st to Last or vice versa

First, the Income related categories.

  • Income – 3 winners & 5 losers were new with 3 flips. The winners are all over $100K but so are 2 of the losers. Only the loser in Services has a below average income. The $ drop in Vet & Supplies was driven by the big spenders in 21.
  • # Earners – All but 1 are new with 4 flips. In Food & Services, the winner & loser were driven by income. In Vet 2 Earners flipped to last & the lowest income won. 2+ CU Retirees had the smallest increase in Services but spent less in all other segments, especially Food. This flipped them to a more usual position at the bottom in Total Pet.
  • Occupation – 3 repeats while 4 flipped. The high income, Mgrs & Professionals had the biggest increase in all but Vet where they had the biggest drop – no surprise after their $2.3B lift in 21. Although not as large, Tech/Sls/Clerical had a similar spending pattern in Supplies. Blue Collar had a small increase in Services but stayed at the bottom. Petflation may have caused Retirees to downgrade their Food and pushed them to the bottom in Total & Food.

Now the Age and Racial/Ethnic Categories

  • Racial Ethnic – 3 repeats & 5 flips. White, non-Hispanics won in all but Supplies & Veterinary, where they were the big loser. In 2021 they had the biggest lifts in these segments. A strong year for African Americans while other minorities, Asians & Hispanics didn’t fare so well. Asians lost in Services & Food but Hispanics lost overall.
  • Age – All new with 5 flips. There were 3 different winners but all were over 45. In 2021, 35>44 had 3 wins. In 2022 there were 4 different losers. 35>44 lost overall and in Supplies. The 55>64 yr-olds flipped from 1st to last in Veterinary. Perhaps due to a downgrade, 75> lost in Food. <25 had a great year but it was driven by Products. They were down in both Services segments, including the only spending decrease by any age group in Non-Vet Services.
  • Generation – 2 repeats & 3 flips. Gen Z made their presence known with wins in Supplies and Total. They finished last in Services but still spent more. Gen X won Food & Veterinary but flipped to the bottom in Supplies. Millennials flipped from 1st to last in Veterinary. The Food & Total Pet losers were new – the oldest group, Born <1946.

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

  • Education – 1 repeat & 4 flips. Higher education is usually tied to increased income and pet spending but not in 2022. Services had the only “normal” pattern. It was a strong year for <BA/BS, especially for Associates Degree. Adv. College Degree had a huge lift in 2021 and the biggest drops in Total and all segments but Services.
  • CU Comp. – Married with Children were the best performers in Total Pet and all segments but Services. The success generally skewed a little older. Those with kids 6>17 lost in Total & Supplies and Unmarried CUs lost in both Service segments. Married, couple only lost in Food, a big turnaround from 2021 when they won in all but Supplies.
  • CU Size– 1 repeat & 4 flips. “3” was the magic number with wins in all but Services. The loser in Food & Veterinary was 2 People while the biggest CUs, 5+ lost in Supplies, Services & Total Pet.
  • Housing – 5 repeats, the most for any category & 3 flips. In Food & Services, all segments spent more. In Veterinary all spent less. Homeowners are on top. In Supplies & Total, it was those without a Mortgage. Except for the dual flip in Supplies which put Homeowners w/Mtges on the bottom, Renters were the biggest losers, which is the norm. However, we should note that they “lost” Food & Services while increasing their spending.
  • Area – 3 repeats with 5 flips. The big Suburbs are the normal winner. They held onto the top spot in Services & Total and won in Food. After big lifts in 2021, they dropped to last in Supplies & Veterinary. Central City also had a strong but mixed year. They flipped to the top in Supplies & Veterinary although they spent less in Vet $. They lost in Food & even in Services, despite a $0.8B lift. Rural Areas lost in Total despite a lift that was only 18% less than the winner.
  • Region – No repeats but 6 flips. The Midwest took control with wins in all but Supplies, where the South edged them out by $0.06B for the win. In an unusual situation, the West finished at the bottom in Total, Food & Supplies. However, they did have the biggest lift in 2021. The Northeast lost in both Service segments despite a lift in Non-Vet.

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.

  • Food & Services $ grew while Supplies & Veterinary $ fell. The resulting turmoil is most apparent in the $ changes.
  • With 2 straight record increases, Services led the way in stability with repeats by 83% of 2021 winners.
  • With big turnarounds in spending, Supplies (15), Veterinary (14) and Food (11) had the most flips. Veterinary & especially Supplies were mostly 1st to last while the Food flips were slightly positive. In a clear demonstration of widespread stability, Services had no flips.
  • Both patterns were evident in Total Pet as 42% flipped but 1st to last & last to 1st were equal in number.
  • There are a total of 24 winners and losers. Here’s the number different from 2021. Food: 22; Supplies: 23; Veterinary: 21; Services: 11; Total: 21. Any change in growth pattern causes more turmoil at the segment level.

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 2022…

9 segments made the list, the same as 2021. Services had the biggest increase, +36%, but had only 1 segment on the list. 5 of their honorees either won in other segments or didn’t make the honor role. Food & Total Pet both had spending increases and tied for the lead with 6 segments on the “Super” list. All segments on this year’s list are generally “low profile” but contributed notably to the industry. We should give special kudos to Single Parents and those with an income of $40>49K. These 2 groups won Honorable Mention in 2 Industry segments and Total Pet.

Although the results were mixed, with numerous individual changes, here are some trends of note:

  1. Older Youth Movement – Boomers must inevitably fade. The Gen Xers are firmly at the top with spending skewing towards their older, wealthier members. Millennials are close behind and now Gen Z is “in the game”.
  2. The “Magic” number is 3+ – As spending has skewed younger the best performers in all but Services have 3 or more people. However, 2 person CUs still have the largest share of CU’s, 32.7% and 100+% performance in Total Pet and every segment. They’re not done yet.
  3. Improved spending balance – The performance gap between the best and worst narrowed in Total Pet and all segments. The disparity is now less than in 2019 for all but Supplies. However, we should note that Supplies narrowed the gap by 40% and their current disparity is only 0.7% more than 2019.
  4. Income is still the most important factor – The gap between best and worst narrowed in Total and all segments, but the disparity is still the biggest of any category. The best performer is always $150K+, while the worst is <$30K.

And Finally, What you have all been waiting for…

THE ULTIMATE 2022 PET SPENDING CUs – Side by Side

Color Highlighted cells are different from Total Pet; * = New in 2022

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 is 3+ for all but Services.

Homeownership/Area – 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, Everyone works with 2+ Earners. These are characteristics present in all of the Ultimate Pet Spending CUs.

Generation/Age – The highest income, 45>54 yr-old Gen Xers “rule”.

Region – Take your pick – Midwest or West, just not the Northeast or South.

I hope that this Visual Comparison helped you to get a “satellite view” of Pet Industry Spending in 2022. Please refer back to the individual segment reports to get more details.

There is one consistent winner in the Pet Industry…

…OUR PET CHILDREN

 

Petflation 2024 – January Update: Down to +4.7% vs Last Year

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Inflation slowed in January. 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 turned up in January. However, the CPI actually decreased to +3.1% from +3.4% due to a big monthly price lift in 2023. Grocery inflation continues to slow. After 12 straight months of double-digit YOY monthly increases, grocery inflation is now down to +1.2%, 11 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 4.7% in January, it is still 51.6% above the national rate of 3.1%. 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 24 vs 23 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>23, 21>22, 20>21, 19>20, 18>19)
    3. Total Inflation for the current month in 2023 vs 2019 and 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 January, this month’s numbers are the YTD rate.)

In our first graph we will track the monthly change in prices for the 24 months from January 22 to January 24. 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 year-end numbers and those from 12 and 24 months earlier are included. We also included and highlighted (pink) the cumulative price peak for each segment. In January, Pet prices were up from last month as lifts in Services & Supplies overcame drops in Food & Veterinary.

In January 22, the cumulative CPI was +9.4% and Pet prices were +5.6%. 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 & Vet fell. In December Supplies & Vet  drove Total Pet prices up. In January, Food & Vet prices fell while Supplies & especially Services prices surged. Note: With cumulative inflation, all but Supplies are now at or within 0.4% of their pricing peak.

  • 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, dipped in Oct>Dec then rose in Jan. but 30% of the 22.4% increase in the 49 months since December 19 happened in the 6 months from Jan>Jun 22 – 12.2% of the time.
  • Pet Food – Prices were at or below Dec 19 levels from Apr 20>Sep 21. They turned up and grew, peaking in May 23. They have essentially stabilized at this record level. 93% of the 22.9% increase has occurred since 2021.
  • 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 in 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 lifts in Dec>Jan.
  • Pet Services– Normally inflation is 2+%. Perhaps due to closures, the rate slowed in 2020. In 2021 consumer demand increased but there were fewer outlets. Inflation grew in 2021 with the biggest lift in Jan>Apr. It was stronger in 2022 but it got on a rollercoaster in Mar>Jun. It turned up again Jul>Mar 23 but the increase slowed in April. Prices fell -0.3% in May, turned up Jun>Aug, fell in Sep>Dec. then surged to a new record high in January.
  • 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 even with dips, they have stayed above the CPI since July 22. In 23 prices grew Jan>May, stabilized Jun>Jul, fell in Aug, grew Sep>Dec (Record high) then fell in January.
  • 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, fell in Nov then grew in Dec>Jan to a new record high. The January lift came from Services (+5.6%) and Supplies (+0.7%) which overcame drops in Food & Vet. However, the YOY CPI fell from 5.1% to 4.7%.

Now, 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 will also show total inflation from 21>24 & 19>24. Petflation slowed to 4.7%, down from 5.1% in December but it is still 1.5 times higher than the National rate. The chart will allow you to compare the inflation rates of 23>24 to other years but also see how much of the total inflation since 2019 came from the current pricing surge which took off in 2022. Again, we’ve included some human categories to put the pet numbers into perspective.

Overall, Prices were +0.5% from December but were +3.1% vs January 23, down from +3.4% last month. Grocery inflation is down again, to +1.2% from +1.3%. 7 of 9 categories had a price increase from last month – only Vet & Pet Food prices fell. There were 5 increases in December. Pet Services had a big turnaround. After 4 monthly drops, prices rose 5.6%. The national YOY monthly CPI rate of 3.1% is only 48% of the 22>23 rate and 41% of 21>22. The 23>24 inflation rate is below 22>23 for all categories but Veterinary Services. In our 2021>2024 measurement you also can see that over 65% of the cumulative inflation since 2019 occurred in all but 2 segments – Medical Services & Haircuts – both Services categories. Service Segments have generally had higher inflation rates so there was a smaller pricing lift in the recent surge. Pet Products have a very different pattern. The 21>24 inflation surge provided 95.6% of their overall inflation since 2019. This happened because Pet Products prices in 2021 were just starting to recover from a deflationary period. Services expenditures now account for 64.1% of the National CPI so they are very influential. Their current CPI is +4.9% while the CPI for Commodities is +0.1%. Services are driving virtually all of the current 3.1% inflation.

  • U.S. CPI– Prices are +0.5% from December. The YOY increase is 3.1%, down from 3.4%. It peaked at +9.1% 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 2 lifts – not good news! The current rate is 52% below 22>23 but the 21>24 rate is still 17.9%. That is 79.6% of the total inflation since 2019. Inflation was very low in early 2021.
  • Pet Food– Prices are -0.1% vs December and +4.8% vs January 23, down from 5.1%. However, they are still 4 times the Food at Home inflation rate. The YOY increase of 4.8% is being measured against a time when prices were 17.3% above the 2019 level, but that increase is still 4 times the pre-pandemic 1.2% increase from 2018 to 2019. The 2021>2024 inflation surge has generated 90.2% of the total 26.5% (Now: 2nd highest) inflation since 2019.
  • Food at Home – Prices are up +0.7% from December, but the monthly YOY increase is 1.2%, down from 1.3% last month and radically lower than Jul>Sep 2022 when it exceeded 13%. The 26.4% Inflation for this category since 2019 is 17% more than the national CPI and is in 3rd place behind Vet & Pet Food. 79.5% of the inflation since 2019 occurred from 2021>24. This mirrors the national CPI, but we should note that Grocery prices began inflating in 2020>21 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 0.7% from December and 0.5% vs January 2023. They still have the lowest increase since 2019. As we noted, prices were deflated for much of 2021. As a result, the 2021>24 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 Dec>Jan.
  • Veterinary Services – Prices are -0.1% from December, but they are +9.6% from 2023, again the highest rate in the Pet Industry. Plus, they are still the leader in the increase since 2019 with 36.5% compared to Pet Food, 26.5% and Groceries, 26.4%. For Veterinary, relatively high annual inflation is the norm. However, the rate has increased during the current surge, especially in 23 & now 24, so 68% of the cumulative inflation since 2019 occurred from 2021>24.
  • 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 1.0% from December and after 8 straight months of deflation are now +0.6% vs last year. Medical Services are not a big part of the current surge as only 42% of the 2019>24 increase happened from 21>24.
  • Pet Services – Inflation slowed in 2020 but began to grow in 2021. January 24 prices surged, +5.6% from December and were +4.8% vs last year, a big change from +0.7% last month, but well below the 8.0% back in March. Now, 77% of their total 2019>24 inflation has occurred since 2021. Last month it was only 49%.
  • Haircuts/Other Personal Services – Prices are +0.7% from December and +4.2% from 23, after 2 consecutive months below 4.0%. Inflation has been rather consistent as 59% of the inflation from 19>23 happened in 60% of the time.
  • Total Pet– Petflation is 56% lower than the 22>23 rate, but still 1.5 times the U.S. CPI. For January, +4.7% is the 4th highest rate since 1997 (2023: 10.6%; 2009: 10.3%; 2008: 5.2%). Vs December, prices fell -0.1% for Pet Food & Veterinary Services but grew strongly in Non-Vet Services, +5.6% and Supplies, +0.7% so Total Pet was +0.4%. A Dec>Jan price increase has happened 9 straight times and in 25 of the last 27 years with an average lift of 0.4%. In terms of Petflation, 2024 started just as we should have expected. Veterinary & Food are still the Petflation leaders, but all segments have an influence. Pet Food has largely been immune to inflation as Pet Parents are used to paying a lot, but inflation can reduce purchase frequency in the other segments.

Petflation is slowing, but it is still strong, with the 4th highest rate for January and 2023 had the 2nd highest annual rate in history. It is also 1.5 times the National CPI. In 2021 it was only 75% of that rate. Even if it slows to 0%, you can’t ignore the fact that inflation is cumulative. Pet prices are 20.9% above 2021 and 26.1% 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 Non-Vet Services segment will be the least impacted as it is the most 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.

In fact, one impact of high cumulative inflation will be very visible soon at the industry’s preeminent trade show, Global Pet Expo 2024. There are over 1100 exhibitors with 120+ actively soliciting OEM (Private Label) customers. Because many have expertise in OEM this private label trend has caused a record surge in Foreign Exhibitors, 36% of all booths including 250 from China. Inflation has further enhanced  the importance of “Value” to consumers.

2022 Veterinary Spending was $29.71B – Where did it come from…?

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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 4th from 5th 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 6th from 7th 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 1st 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 1st 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 2nd 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 1st 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 1st 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 1st 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.

2022 Pet Services Spending was $12.36B – Where did it come from…?

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Next, we will look at Pet Services. It is still by far the smallest Segment, but like Supplies and Veterinary, it had a record increase in 2021. However, unlike them, there was no $ drop in 2022. The lift grew stronger, up $3.26 (+35.8%). 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 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%), 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 trend didn’t end in 2022. It accelerated with a new record increase.

Services spending is the most discretionary, but its reach is expanding. Let’s look deeper into the demographics.

Let’s start by identifying the groups most responsible for the bulk of Services spending in 2022 and the $3.26B 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 3 categories – income, area & education. The performance level should also be noted as 6 of 10 groups have a performance level above 120%. This is 1 less than 2021 but the 2nd most for any segment only behind Supplies with 7. Veterinary and Total Pet have 5 and Food has only 4. This indicates that the disparity between the best and worst performing segments shrank a little in 2022, but it is still the highest of any segment. Income is still the biggest factor in Services Spending. The categories are presented in the order that reflects their share of Total Pet $ which highlights the differences of the 7 matching groups. For Services, the share ranking differences from Total Pet are small. The # of Earners and Occupation are more important in Services.

  1. Race/Ethnic – White, not Hispanic (84.9%) up from 84.6%. This big group accounts for most of the spending in all segments. Their performance grew from 125.9% to 126.3% and they moved up from 5th to 4th place in importance. All groups spent more. The Hispanics’ increase was below average which produced the gains in share & performance
  2. Housing – Homeowners (80.8%) up from 80.5%. Homeownership is a big factor in spending in all industry segments. Their performance fell from 124.5% to 124.1% but they moved up from #6 to #5 in importance. All segments spent more. Homeowners gained share because of more CUs. This and a big % lift by Renters made Performance drop.
  3. # in CU – 2+ people (80.0%) down from 82.2% Their performance also decreased from 118.3% to 116.0% but they moved up from #8 to #7 in importance. All sizes spent more. The drop in share and performance is due to a spectacular 52.5% increase by Singles while spending for 5+ CUs grew only +0.1%.
  4. Area – City/Suburbs >2500 (77.8%) down from 80.0% in share, and performance fell from 98.1% to 96.2%. Again they are the only group not earning its share of $pending. Services is an Urban Segment. All Areas spent more but Suburbs had the biggest lift, +$1.48B. Center City “lost” with a $0.83B, 27.1% increase. Areas <2500 were +53.1%.
  5. Education – College Grads (69.8%) down from 71.7%. Income generally increases with education so Services spending grows with increasing education. Performance fell from 151.5% to 149.3% but education stayed #2 in importance. Only HS Grads spent less but the <College group was +45.3% while College Grads were only +32.1%.
  6. Income – $100K> (64.2%) up from 63.3% This group’s performance rating is 193.6%, down from 211.4%. CU income is still by far the most important factor in increased Pet Services Spending. Only the $30>39K and $50> 69K income groups spent less, They gained in share but their performance fell. The biggest factor in this situation was a change in CU count. The number of CUs <$100K fell -4.2% while those $100K> increased by 11.1%.
  7. # Earners – “Everyone Works” (72.2%) down from 72.8%. All adults in the CU are employed. Income is important so a high market share is expected. Their performance dropped to 123.7% from 128.3% and they fell from #4 to #6 in importance. All CUs, with or without Earners spent more. Spending became slightly more balanced but again the big change was in # of CUs. The Everyone Works group grew by 2.5 million CUs causing the big performance drop.
  8. Occupation– All Wage & Salaried (70.3%) up from 67.6% and their performance rating increased from 114.0% to 116.5%. – #9 to #8. Only All Other/Unemployed spent less on Services in 2022. Managers & Professionals had the biggest increase, +$1.75B (+46.0%). Tech/Sls/Cler were up 25.7% but all other segments were up at least 38.9%. Spending within the group became a little more balanced. The Wage and Salary group had a 1.6 million increase in CUs which increased share but slowed the performance lift.
  9. CU Composition – Married Couples (63.6%) up from 63.3%. Married couples are a big share of $ and have 127+% performance in all segments. Their performance fell slightly to 133.1% from 133.6% but they stayed #3 in importance in Services spending. All CU types spent more. The biggest $ increase came from Married Couple Only, +$1.18B. The performance of the Married group fell because of a $0.85B, 52.5% increase by Singles.
  10. Age – 35>64 (60.0%) down from 63.9%. Their performance fell from 122.0% to 115.0%. They dropped out of the 120+% club and fell to 9th in importance. Only <25 spent less. 35>64 was up $1.60B, +27.5%. The other age groups spent $1.66B more, +50.6%. This produced the drop in share and the big decrease in performance.

We changed 3 of the groups for Services – Income, Area & Education, 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. Only Race/Ethnic and Occupation gained in both share and performance. Also, Services now has 6 groups performing at 120+%, down from 7 in 2021. Overall, in 2022 Services spending became slightly more demographically balanced.

Now, we’ll look at 2022’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 3 that are different from 2021, all in the best group, 7 less than last year. Area shows the continued move away from high population. Income is a big factor for almost all categories. Gen X is still on top, but spending shifted towards their older members, 45>54. The average difference between Best & Worst is 100.3%, the highest of any segment. However, it is better than 108.5% in 2021. Pet Services spending became slightly more balanced in 2022. Changes from 2021 are “boxed”. We should note:

  • Income is even more important to Pet Services. The $200K> group has its best performance in this segment.
  • # Earners – 3+ Earners replaced 2 Earners on top but No Earner, Singles stayed on the bottom. No Surprises.
  • Age – 45>54 is all Gen X and the highest income group. All groups from 35>74 performed at 100+%. 25>34 was close at 94.6%. The lowest performers were at both ends of the age spectrum.
  • Area – Services $ are still skewed towards population density. However, the performance of Rural areas has tripled from 2019 and Center City has been below 100% for 3 straight years.
  • CU Composition – Married, Couple Only barely edged out last year’s winner Married, Oldest child 6>17 – 142.8% to 142.5%. This was basically a tie. Single Parents remain firmly entrenched at the bottom.
  • Generation – Gen X retained the Top Spot and Gen Z stayed at the bottom. Both Boomers and Millennials earned their share with 103.6% performance. Born <1946 was next to last with 54.5%.

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 got on board. In 2022, spending skewed a little towards the older Gen Xers – 45>54.

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 2022 you first notice stability. There were 13 repeats. In 2021 there were none. Also, no segments flipped from 1st to last or vice versa. In 2021 there were 13 flips. While 2021 brought a record increase, the lift in 2022 was even stronger and more widespread. In 9 categories all segments spent more compared to 5 in 2021. Also 93% of 96 demographic segments spent more, up from 90% In 2021. One thing is slightly worse. The biggest drop was -$0.12B. In 2021 it was only -$0.07B. 😊

Here are the specifics:

  • Race/Ethnic – Both the winner and loser are the same as 2021.
    • Winner – White, Not Hispanic – Services: $10.50B; Up $2.80B (+36.3%)                       2021: White, Not Hispanic
    • Loser – Asian – Services: $0.31B; Up $0.09B (+43.8%)                                                        2021: Asian
    • Comment– All segments spent more. Minorities were up $0.46B, +32.8%.
  • Housing – Both winner and loser are the same as 2021. All segments spent more.
    • Winner – Homeowner w/Mtge – Services: $7.01B; Up $1.82B (+35.2%)                          2021: Homeowner w/Mtge
    • Loser – Renter – Services: $2.37B; Up $0.60B (+34.1%)                                                       2021: Renter
    • Comment – Homeowners w/o Mtges had the biggest percentage increase, +39.0%.
  • Occupation – For the 3rd and last time, no change in winner and loser.
    • Winner–– Mgrs & Professionals – Pet Services Spending: $5.56B; Up $1.75B (+46.0%)         2021: Mgrs & Profess.
    • Loser – Blue Collar – Pet Services Spending: $0.44B; Up $0.14B (+48.9%)                                2021: Operators/Laborers
    • Comment – Self-Employed had the 2nd biggest $ lift and the highest % increase, +$0.47B (+60.1%)..
  • Area Type – Suburbs 2500> stayed on top while Center City replaced Rural at the bottom.
    • Winner – Suburbs 2500> – Pet Services Spending: $5.72B; Up $1.48B (+34.9%)                 2021: Suburbs 2500>
    • Loser – Center City – Pet Services Spending: $3.90B; Up $0.83B (+27.1%)                          2021: Areas <2500
    • Comment – Center City “lost” with an $0.83B increase. This shows how well the Services segment is doing.
  • # in CU – 2 People won again but 5+ People is a new loser.
    • Winner – 2 People – Pet Services Spending: $5.15B; Up $1.40B (+37.3%)                         2021: 2 People
    • Loser – 5+ People – Pet Services Spending: $1.01B; Up $0.001B (+0.1%)                          2021: 3 People
    • Comment: All segments spent more. The 2 People lift was primarily driven by the Married Couple Only segment.
  • Education – College Degree returned as #1. HS Grads replaced those with no HS Diploma at the bottom.
    • Winner – Adv. College Degree – Pet Services Spending: $4.77B; Up $1.32B (+38.1%)              2021: Adv. College Degree
    • Loser – HS Grads – Services Spending: $0.47B; Down $0.12B (-20.5%)                                       2021: <HS Grads
    • Comment – Only HS Grads spent less. College Grads have 46.7% of CUs but generated 64.3% of the increase. However, those with an Associate’s degree more than doubled their spending, +$0.81B (+116.3%).
  • # Earners– 2 Earners held their spot at the top while No Earner, 2+ CUs replaced No Earner, Singles at the bottom.
    • Winner – 2 Earners – Pet Services Spending: $5.49B; Up $1.22B (+28.7%)                                  2021: 2 Earners
    • Loser – No Earner, 2+ CU – Pet Services Spending: $0.82B; Up $0.15B (+21.9%)                      2021: No Earner, Single
    • Comment – All segments spent more. The biggest % lifts were in Singles – 1 Earner: +52.9%; No Earner: +51.6%
  • CU Composition – Married, Couple Only stayed on top. Single Parents were a new loser.
    • Winner – Married, Couple Only – Services: $3.80B; Up $1.19B (+45.5%)                       2021: Married, Couple Only
    • Loser – Single Parents – Services: $0.27B; Up $0.02B (+6.0%)                                           2021: Married, Oldest Child <6
    • Comment – All groups spent more. Last year only Married, Oldest Child <6 spent less. This year they spent 33.9% more. Single Parents don’t spend much on Services. They spent 6% more, slightly less than the 6.3% inflation rate
  • Region – Both the winner, Midwest, and loser, Northeast, are new.
    • Winner – Midwest – Pet Services Spending: $2.82B; Up $1.17B (+71.5%)                            2021: West
    • Loser – Northeast – Pet Services Spending: $1.90B; Up $0.14B (+7.8%)                              2021: South
    • Comment – In 2020 all Regions spent less. In 2021 & 2022, all spent more. The South finished a close 2nd, +$1.15B
  • Generation – Boomers won again but the youngsters, Gen Z, replaced the oldsters, Born <1946, at the bottom.
    • Winner – Baby Boomers – Services: $4.15B; Up $1.10B (+35.9%)                                        2021: Baby Boomers
    • Loser – Gen Z – Services: $0.27B; Up $0.16B (+143.5%)                                                          2021: Born <1946
    • Comment – In 2021, only Gen Z and those Born <1946 spent less. In 2022, all generations spent more, but the strongest lifts again came from Boomers (+$1.10B), Millennials (+$1.00B) and Gen X (+$0.74B).
  • Income – $200K> won again but $30>39K replaced $40>49K at the bottom.
    • Winner – $200K> – Pet Services Spending: $3.66B; Up $1.07B (+41.6%)                           2021: $200K>
    • Loser – $30 to $39K – Pet Services Spending: $0.37B; Down $0.04B (-9.4%)                   2021: $40 to $49K
    • Comment – The $50>69K group also spent-$0.02B less but <$30K spent 30% more and $40>49K doubled their spending. All income groups over $70K had 31+% increases, led by $70>99K at +60.9%.
  • Age – Both winner and loser are new.
    • Winner – 65>74 yrs – Pet Services Spending: $2.20B; Up $0.83B (+61.1%)                        2021: 35>44 yrs
    • Loser – <25 yrs – Pet Services Spending: $0.17B; Down $0.02B (-8.4%)                            2021: 45>54 yrs
    • Comment: In 2021, only the high-income 45>54 yr-olds spent less. In 2022 only the low income <25 group had a drop in spending. The lift skewed a little older, but it was actually pretty balanced among big age ranges. 25>44 was up +$0.90B; 45>64 was +$1.24B; 65> was +$1.13B.

We’ve seen the winners and losers in terms of change in Services Spending $ for 12 Demographic Categories. The lift set another new record and was even more widespread than 2021. Here’s some data which shows the evolution from 2018 to 2022. Services were hit hard by the pandemic but recovered stronger than ever with 2 record lifts. They were the only segment to do this which reflects an attitudinal change by Pet Parents. You see the differences in the big swings.

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

HONORABLE MENTION

As usual this group is an eclectic mix. The Associate’s degree group immediately stands out as they more than doubled their Services’ spending. While spending skewed a little older, it also became a little more balanced among age groups which is shown by the strong performances of 25>34 yr-olds and those Born <1946. The Self-Employed group is often a winner, so they are no surprise. Their big lift didn’t happen until 2022 but their Services spending has generally grown every year, including aa 24% increase in 2020. Singles are often at the bottom in spending. They too had a small, 8% increase in spending in 2021 and followed it up with a 52% lift in 2022. Finally, the $70>99K group. Their income is below average and they have big CUs. However, they still managed to have a huge 60.9% lift in spending. In 2022, 93% 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, producing a record increase. In 2022 Services showed that it was different from other segments. All had record lifts related to the Pandemic followed by drops, except for Services. 2022 spending didn’t decrease, it grew even stronger, +$3.26B and more widespread as 93% of demographics increased spending. However, Services is the segment where spending is the most driven by income, so it has always had a big disparity between segments. This improved slightly in 2022. Performance differences are a key measurement of disparity. Let’s consider the performance of the big groups. There were 6 categories with a 120+% performing big group, down 1 from 2021, and now 1 less than Supplies (7) but more than Veterinary (5) and Food (4). There is an even better measure of the improvement. In 2021, the average difference between best & worst performers was 108.5%. In 2022 it was 100.3%.

Another key trend in 2022 was that Gen X & Boomers are still the top 2 spenders, but their older members drove the lift.

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 the 6.3%  inflation in 2022 had less of an impact. It affected the spending of some specific, financially challenged groups, but the 2022 lift was even bigger and more widespread than 2021.

At Last – The “Ultimate” Pet Services Spending Consumer Unit consists of 2 people – a married couple with no kids at home. They are 45>54 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.

 

2022 Pet Supplies Spending was $21.94B – Where did it come from…?

/in /by

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 3rd to 2nd 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 2nd 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 1st 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 1st  and 10 flipped from 1st 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 1st 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 1st 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 1st 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 1st 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 1st 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 4th 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 1st or 2nd 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 2nd 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 2nd 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 2nd 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 2nd 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.

Petflation 2023 – December Update: Turns up to +5.1% vs 2022

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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 2nd 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 3rd 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 2nd 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 1st 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 3rd 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%, 6th highest since 1997. 1st 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 2nd 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 2nd 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%, 2nd place all time to 8.9% in 2022. It only finished 2nd because the rate slowed significantly in the 2nd half of the year. In the 1st 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 2nd  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 4th highest rate for December and the 2nd 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.

2022 Pet Food Spending was $38.69B – Where did it come from…?

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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. In 2022 spending returned to more “normal” behavior with a strong $4.29B, +12.5% increase to $38.69B, a new record high. Let’s take a closer look.

First, we’ll see which groups were most responsible for the bulk of Pet Food spending and the $4.29B increase. 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). All are the same as Total Pet. The categories are presented in the order that reflects their share of Total Pet Spending. The big difference is that $70K> income has the smallest share of Food $. This difference is magnified in performance. Being Married is the most important factor in Food spending. In Total Pet and other segments, Income is the most important. Food spending is also a little more balanced than Total Pet Spending. This is evident by the fact that the Performance of only 4 groups exceeds 120%. In Total Pet and Pet Products there were 5. In 2022, Pet Food accounted for 63.8% of Pet Products $ and 37.7% of Total Pet. This is better than 59.1% and 34.4% in 2021 but still far below 70.8% of Pet Products and 44.0% of Total Pet in 2020 and even 65.0% and 39.5%  in pre-pandemic 2019. Spending is a little more balanced between industry segments.

  1. Race/Ethnic – White, not Hispanic (83.4%) – down from 84.2%. This large group accounts for the vast majority of spending in every segment. They lost share and their performance decreased to 124.1% from 125.2%, but this category moved up from #4 to a tie for #3 in terms of importance in Pet Food Spending demographic characteristics. Hispanics, African Americans and Asians account for 32.8% of U.S. CU’s, but they spend only 16.6% of Pet Food $. Asians were the only minority to spend less on Food. Hispanics and African Americans spent $1.2B more.
  2. Housing – Homeowners (80.8%) – down from 81.0%. Homeownership is a huge factor in pet ownership and pet spending. In 2022, homeowners lost a little share and their performance fell from 125.1% to 124.1%. However, homeownership moved up from 5th to a tie for 3rd in importance. Renters were +13.8%. Homeowners were +12.1%
  3. # in CU – 2+ people (80.2%) – up from 79.1%. The share of market grew for 2+ CUs and is again back over 80% for Pet Food. Their performance also grew from 113.8% to 116.3% but their rank stayed at #6. Only 2 person CUs spent less, but 79% of the increase in Food $ came from a $2.3B lift from 3 people CUs and a $1.1B lift by 4 people CUs. Although Singles spent more, their increase was only 6.1%, less than half of the 14.1% for 2+ CUs. This drove the increase in share and performance. Singles are the only CU size performing below 100% – 63.7%.
  4. Area – Suburban + Rural (74.1%) up from 69.4%. Their performance grew from 107.6% to 113.1%. (still 8th) Only Center City spent less but 98% of the Food increase came from a $4.2B, +33.0% lift by Suburbs over 2500 population.
  5. Education – Assoc. Degree> (66.6%) – down from 71.5%. College Grads share fell below 60% due to a big lift by <College Grads. The group now includes Associate’s degrees. Performance fell from 123.9% to 115.4% (No longer in the 120+% Club) and higher education fell from 3rd to 7th in importance in increased Pet Food Spending.
  6. Income – Over $70K (60.5%) – down from 63.1%. Their performance also dropped from 140.9% to 127.9% and they fell from 1st to 2nd in importance. High income is still very important in Pet Food Spending but the bar was lowered slightly in 2022. The 50/50 $ divide fell from $92K in 2021 to $91K in 2022. The <$100K group was up $2.2B while $100K> was up $2.09B – pretty balanced. The only spending decrease came from $70>99K, -$0.4B. This caused the drop in share and performance. Pet ownership is common across all income levels but only groups with an income over $70K perform at 100+%.
  7. # Earners – “Everyone Works” (62.9%) – up from 57.6%. This was a huge increase from last year and their performance also increased from 101.7% to 107.8%. They moved up from 10th (last) to 9th in importance. No Earner, 2+ CUs spent $2.2B less while 2+ Earners CUs spent $4.5B more. This drove the lift in share & performance.
  8. Occupation – All Wage & Salaried Workers (62.4%) – up from 60.5% – Only Retirees spent less so this workers group’s performance also grew slightly from 102.0% to 103.4%. However, Occupation is now last in importance in Pet Food spending.
  9. CU Composition – Married Couples (61.3%) – down from 64.8%. They lost share and their performance fell from 136.8% to 128.3%, but they moved up to #1 in importance. Married, Couples Only and those with an oldest child 6>17 years old were the only segments that spent less so Married CUs had a smaller increase than Unmarried CUs.
  10. Age – 35>64 (61.1%) – up from 55.0%. This younger group replaced 45>74 yr-olds. Their performance grew from 105.0% to 117.2% and age moved up from #7 to #5 in importance. 45>64 is in both groups. The change happened because the 35>44 share is 18.6% while 65>74 is 17.2%. Only 25>34 and 75> spent less on Pet Food in 2022.

All of the big spenders for Pet Food are the same as Total Pet. Last year there was 1 special group and in 2020 there were 3. 2022 brought a return to a more normal spending pattern and spending became slightly more balanced. This is best illustrated by the fact that in 2022 the performance for only 4 groups exceeds 120% with the highest at 128.3%. In 2021 there were 5, with 3 over 130%. In 2020 there were 8 at 120+%, 5 of which had a performance level above 130%.

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

Almost all of the best and worst performers are the ones that we would expect. 2022 produced just 1 surprise – Married, Oldest Child <6 won in CU Composition. There are 4 different winners from 2021 and 7 different losers. This is much different from 2021, which had 10 new winners and 5 new losers. This reflects a more stable environment among the winners. Changes from 2021 are “boxed”. We should also note the performance gap between winner and loser narrowed in 9 categories. Overall, the average gap fell from 82.8% in 2021 to 73.5%. More evidence of increased spending balance. Here are some more performance specifics:

  • Income No changes. Although the gap narrowed from 141% to 112%, this is the only category with a gap over 100%.
  • # Earners – The highest income group moved to the top, but the gap narrowed from 90% to 71%.
  • Occupation – Mgrs/Prof. stayed on top, but Service Workers replaced Blue Collar & the gap widened – 45% to 54%
  • Age, Generation- The high income, 45>54 Gen Xers stayed on top. The oldest replaced the youngest on the bottom.
  • Race – The usual winner and loser. The gap narrowed from 103.2% to 93.9%.
  • Education – Higher education with its higher income mattered in Pet Food Spending but the gap was only 53.7%.
  • Housing – Owning a home is always important. The usual winner & loser returned. The gap narrowed by only 4.1%.
  • CU Comp., CU Size– Married, Oldest Child <6 was a surprise. Singles replaced Single Parents. 3 replaced 5+ CUs.
  • Region – Midwest flipped from Worst to Best and the South took their place at the bottom.
  • Area – The areas <2500 population stayed on top and Center City regained its usual position as the worst performer.

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

There are 2 repeats from 2021. 6 losers won last year and 7 of the winners were 2021 losers. 54% flipped from 1st to last or vice versa, down from 71% in 2021. Almost all of the winners are expected. The only Surprise winner was HS Grad or Less. The surprising losers were Adv. College Degree, 2 People and Married Couple Only. Spending grew 12.5% as 82% of 96 demographic segments spent more. Plus, all segments in the Housing category had increases. Here are the specifics:

  • Area Type – Center City, the 2021 surprise winner, had the only spending decrease, and flipped to last.
    • Winner – Suburbs 2500> – Pet Food Spending: $16.86B; Up $4.19B (+33.0%)          2021: Center City
    • Loser – Center City – Pet Food Spending: $10.05B; Down $0.49B (-4.7%)                  2021: Areas <2500
    • Comment – The Areas <2500 also spent a little more, +$0.59B (+5.3%).
  • Race/Ethnic – White, Not Hispanics flipped to the top and Asians replaced them at the bottom.
    • Winner – White, Not Hispanic – Pet Food Spending: $32.26B; Up $3.28B (+11.3%)            2021: Hispanic
    • Loser – Asian – Pet Food Spending: $0.84B; Down $0.16B (-15.9%)                                        2021: White, Not Hispanic
    • Comment – The U.S. is becoming more racially/ethnically diverse but White, Not Hispanics are by far the biggest spender in every Pet Segment. Asian Americans had the only decrease, but it was not surprising after growing 130% in 2021. Pet Food spending became more balanced. Both African Americans & Hispanics were up 20+%.
  • Education – Higher education fell in importance in Pet Food spending as HS Grads or Less flipped to the top.
    • Winner – HS Grads or less – Food Spending: $7.78B; Up $3.04B (+64.0%)                        2021: BA/BS Degree
    • Loser – Adv College Degree – Food Spending: $10.03B; Down $0.36B (-3.5%)                 2021: HS Grads or less
    • Comment – The $3.04B lift was almost equally divided between those with only a HS Diploma and those without. Those with an Associate’s Degree finished in 3rd place with a $1.14B, 36.5% increase. In fact, only those with an Advanced College Degree spent less on Pet Food in 2022. Note: In 2021 they were up $2.63B, +33.9%
  • Region – The Midwest flipped from last to 1st.
    • Winner – Midwest – Pet Food Spending: $9.58B; Up $2.99B (+45.5%)                           2021: South
    • Loser – West – Pet Food Spending: $8.56B; Down $0.43B (-4.7%)                                   2021: Midwest
    • Comment – In 2021, only the Midwest spent less. In 2022, it was only the West, but their decrease was only -4.7%.
  • # Earners – The winner and loser flipped putting both in a more normal position.
    • Winner –– 2 Earners – Pet Food Spending: $15.08B; Up $2.99B (+24.7%)                     2021: No Earner, 2+ CU
    • Loser – No Earner, 2+ CU – Pet Food Spending: $3.13B; Down $2.22B (-41.5%)          2021: 2 Earners
    • Comment – 1 Earner, Singles were the only other segment to spend less, and their drop was only -$0.01B (-0.3%). All other segments were up at least 17.5%. The number of earners is definitely less important than income.
  • # in CU – 2 People CUs flipped to the bottom.
    • Winner – 3 People – Pet Food Spending: $7.17B; Up $2.26B (+46.1%)                       2021: 2 People
    • Loser – 2 People – Pet Food Spending: $14.23B; Down $0.34B (-2.3%)                     2021: 4 People
    • Comment: Only 2 People CUs spent less on Pet Food in 2022. While 3 People CUs had the biggest increase, 4 People CUs were also up $1.11B (+25.5%) and 5+ CUs grew by $0.82B (+24.3%).
  • Housing – Homeowners w/Mtges held onto their expected position on top.
    • Winner – Homeowners w/Mtge – Food: $20.90B; Up $2.13B (+11.3%)                        2021: Homeowners w/Mtge
    • Loser – Renters – Food: $7.44B; Up $0.90B (+13.8%)                                                       2021: Homeowners w/o Mtge
    • Comment – All segments spent more so Renters “lost” with a $0.90B increase. Homeowners w/o Mtge, also spent $1.3B more so they are at $10.05B, +22.5% vs 2019. They have recovered from the binge & drop in 20/21.
  • Occupation – After 4 years away, Managers & Professionals returned to the Top. Retirees flipped to the bottom.
    • Winner – Mgrs & Professionals – Pet Food Spending: $12.97B; Up $2.12B (+19.6%)               2021: Retired
    • Loser – Retired – Pet Food Spending: $7.13B; Down $1.31B (-15.5%)                                          2021: Self-Employed
    • Comment – Only Retirees spent less. All occupations including A/O & Unemployed spent more. Mgrs/Profess. had the biggest $ lift but the highest % increase belonged to Blue Collar Workers, +40.2%.
  • Generation – Gen X held on to the top spot.
    • Winner – Gen X – Pet Food Spending: $13.08B; Up $1.96B (+17.6%)                             2021: Gen X
    • Loser – Born <1946 – Pet Food Spending: $1.88B; Down $1.73B (-47.9%)                   2021: Baby Boomers
    • Comment – Much of the 2020>21 Pet Food spending boom and bust was due to the Boomers. Gen X has now taken over and held on to the top position. Only those Born <1946 spent less on Pet Food in 2022. After their big drop in 2021 the Boomers again spent more on Pet Food. However, their $1.50B increase ranked only 3rd behind Gen X, +$1.96B and Millennials, +$1.56B. Gen Z also spent +158% more so they are now entering the “game”.
  • Age – The Winner and loser both flipped.
    • Winner – 55>64 yrs – Pet Food Spending: $8.60B; Up $1.86B (+27.5%)                        2021: 75+ yrs
    • Loser – 75+ yrs – Pet Food Spending: $2.23B; Down $1.53B (-40.8%)                            2021: 55>64 yrs
    • Comment: Only 25>34 & 75> spent less. The big drop by 75> may have been from them downgrading their food due to high inflation. The 55>64 group is about 70% high income Boomers which produced most of their lift.
  • CU Composition – Again the winner and loser both flipped.
    • Winner – Married, Oldest Child 18> – Food: $4.04B; Up $1.46B (+56.7%)             2021: Married, Couple Only
    • Loser – Married, Couple Only – Food: $10.82B; Down $0.78B (-6.7%)                    2021: Married, Oldest Child 18>
    • Comment – Only Married, Couple Only and those with an Oldest Child 6>17 spent less. There were strong increases in a number of unexpected segments. Those with an Oldest Child <6 were +$1.24B. Single Parents were +$1.22B as were Unmarried, 2+ All Adult CUs. Overall, CUs with Children were +3.29B.
  • Income – In a second consecutive flip, $100>149K flipped again to the top.
    • Winner – $100 to $149K – Pet Food Spending: $6.71B; Up $1.25B (+23.0%)            2021: $150 to $199K
    • Loser – $70 to $99K – Pet Food Spending: $5.81B; Down $0.40B (-6.5%)                  2021: $100 to $149K
    • Comment – The $70>99K group was the only segment to spend less. Spending increases were widespread but $50>69K was +$1.23B, a very close 2nd. $40>49K was +40.5%. This made <$70K +20.5% compared to $70> +7.8%.

We’ve now seen the “winners” and “losers” in terms of increase/decrease in Pet Food Spending $ for 12 Demographic Categories. In 2020, very specific segments binge bought Pet Food. In 2021, their pets “ate up” the overstock so Pet Food spending fell. 2022 brought a new challenge, strong inflation. However, most of America remains firmly committed to high quality Pet Food. Super premium Food already had high prices, so income is still very important in Pet Food spending. The pandemic and inflation have accelerated value shopping, especially on the internet. The result was 82% of all demographic segments spent more on Pet Food in 2022 producing a $4.29B, 12.5% increase. 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

This group clearly demonstrates that the lift in Pet Food spending was very demographically widespread. The first thing that you notice is that the youngest Americans have become much more committed to Pet Parenting. Gen Z and the <25 group (All Gen Z) more than doubled their Pet Food spending in 2022. Also, Super Premium Pet Food prices are high and inflated in 2022 but lower income groups still “found a way”. Single Parents, African American, Blue Collar Workers and $40>49K CUs all have low incomes and are under tremendous financial pressure. They often finish at the bottom in performance, but not in 2022. Single Parents more than doubled their Pet Food spending and the other groups increased spending over 40%. Pet Parenting is widespread, and all are committed to the welfare of their children.

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 2nd  half of 2014. In 2015, many more groups began to upgrade. The result was a $5.4B spending increase. These consumers were generally more educated and had higher incomes. Unfortunately, they often paid for the upgrade by spending less in other segments. In 2016 the anticipated drop in spending happened. Many 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”. However, due to a price competitive market, what we got was a deeper penetration of Super Premium. These upgraders were mostly middle-income and not college educated. The result was a $4.6B increase but this time there was no trading of segment $.

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 2nd  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 FDA warning was false, so Pet Parents returned to Super Premium or even pricier options. Supplement $ also grew as the health 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 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 didn’t increase usage, so Pet Food spending fell by $2.44B. 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.

In 2022 the situation returned to a more normal, balanced pattern in spending. Pet Parents renewed their commitment to high quality food for their children. Despite strong inflation, 82% of demographic segments increased spending generating a $4.29B (+12.5%) lift and reaching a new record high of $38.69B – even exceeding the 2020 binge by $1.85B.

Finally – The Ultimate Pet Food Spending CU is 3 people – a married couple with a child over 18. They are 45>54 years old and White, but not Hispanic. Everyone works 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 Midwest.

2022 Pet Products Spending was $60.63B – Where did it come from…?

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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 2nd 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 4th to 3rd 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 5th to 4th 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 3rd to 2nd 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 7th 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 1st 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 1st 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 1st 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 1st 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.

Petflation 2023 – November Update: Down to +4.3% vs 2022

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Inflation continues to slow but is still far above the target rate. The huge YOY increases in the monthly Consumer Price Index peaked in June 2022 at 9.1% then began to slow until turning up in Jul/Aug 2023. Prices dropped in Oct & Nov and the November CPI  fell to +3.1% from +3.2% vs 2022. Grocery inflation also continued to slow. After 12 straight months of double-digit YOY monthly increases, grocery inflation is now down to +1.7%, 9 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 4.3% in November, it is still 38.7% above the national rate of 3.1%. 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
    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 November 21 to November 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 numbers plus yearend and those from 12 and 24 months earlier are included. We also included and highlighted (pink) the cumulative price peak for each segment. In November, Pet prices were down from last month overall and in all segments but Food & Vet Services.

In November 21, the CPI was +8.2% and Pet prices were +3.5%. 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 driving down Total Pet prices, -0.2% vs October. 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/Nov, but 35% of the 19.5% increase in the 47 months since December 2019 happened in the 6 months from January>June 2022 – 13% 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 but grew again in Sep>Nov. 93% of the 23.2% 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, a new record. They fell in March, peaked at a new record in May, fell in Jun>Aug, grew in Sep>Oct, then fell in Nov.
  • 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>Nov.
  • 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>Nov 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. Except for 5 monthly dips, prices in all segments increased monthly Jan>Jun 23. In Jul/Aug there 5 more dips, 2 in Sep/Oct, then 2 big ones in Nov. Petflation has been above the CPI since Nov 22

Next, we’ll turn our attention to the Year Over Year inflation rate change for November and compare it to last month, last year and to previous years. We will also show total inflation from 21>23 & 19>23. Petflation fell again to 4.3% in November, but it is still almost 1.4 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 -0.2% from October but were +3.1% vs November 22, down from +3.2% in October. Grocery inflation is down again, to +1.7% from +2.1%. 5 of 9 categories had a price decrease from last month – National CPI, Total Pet, Groceries, Pet Supplies & Services. There were only 2 in October. That’s 3 months in a row for Pet Services. The national YOY monthly CPI rate of 3.1% is only 44% of the 21>22 rate. The 22>23 inflation rate is below 21>22 for all categories for the 3rd consecutive month. 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 61.8% 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 97.8% 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 -0.2% from October. The YOY increase is 3.1%, down from 3.2%. 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, then a stable month and now 2 consecutive drops – good news! The current inflation rate is 56.3% below 21>22 but the 21>23 rate is still 10.5%. That is 54% of the total inflation since 2019, but down from 57% last month.
  • Pet Food– Prices are +0.01% vs October and +5.6% vs November 22, down from 6.5%. However, they are still 3.1 times the Food at Home inflation rate. The YOY increase of 5.6% is being measured against a time when prices were 16.3% above the 2019 level, but that increase is still 1.5 times the pre-pandemic 3.7% increase from 2018 to 2019. The 2021>2023 inflation surge has generated 96.9% of the total 22.9% inflation since 2019.
  • Food at Home – Prices are down -0.5% from October. The monthly YOY increase is 1.7%, down from 2.1% in October and radically lower than Jul>Sep 2022 when it exceeded 13%. The 25.4% Inflation for this category since 2019 is 31% more than the national CPI and remains 2nd to Veterinary. 54% 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 down -0.5% from October and -1.2% vs November 2022. They still have the lowest increase since 2019. As we noted, prices were deflated for much of 2021. However, even with recent price drops the 2021>2023 inflation surge accounted for 82% 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, then fell in November.
  • Veterinary Services – Prices are up +1.0% from October. They are +9.0% from 2022, again the highest rate in the Pet Industry. Plus, they are still the leader in the increase since 2019 with 30.0% compared to Food at home at 25.4%. For Veterinary Services, relatively high annual inflation is the norm. The rate did increase during the current surge so 70% 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 0.3% from October but are -0.9% vs 22. Prices have now deflated for 7 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. November 23 prices were -2.1% from October and only +1.4% vs 22, which is down 70% from 4.7% last month and 84% lower than 8.0% in March. Now, only 50% of their total 17.8% inflation since 2019 occurred from 21>23.
  • Haircuts/Other Personal Services – Prices are up 0.3% from October and +3.9% from 2022, down sharply from 5.0% last month. Inflation has been rather consistent as 51% of the inflation from 19>23 happened from 21>23.
  • Total Pet– Petflation is now 64% lower than the 21>22 rate, but still 1.4 times the U.S. CPI. For November, +4.3% is the 4th highest rate since 1997 (2022: 12.0%; 2008: 10.0%; 2007: 5.3%). Vs October, prices fell for Supplies & Services so Total Pet was -0.3%. An Oct>Nov drop has only happened in 6 of the last 24 years so it was a 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 numbers

The increase from 22>23 is the biggest for 2 of 9 categories – both Pet, Pet Food & Veterinary. 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 increase since 2019 is 4.5%+ for all but Medical Services (2.7%) and Pet Supplies (2.5%).

  • U.S. CPI – The current increase is down 48% from 21>22 and 6.7% less than the average increase from 2019>2023, but it’s 72% more than the average annual increase from 2018>2021. 66% of the 19.2% inflation since 2019 occurred from 2021>23. Inflation is a big problem that started recently.
  • Pet Food – Strong inflation continues with the highest 22>23 & 21>23 rates on the chart. Deflation in the 1st 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 YTD inflation rate has slowed but still beat the U.S. CPI by 29%. You can see the impact of supply chain issues on the Grocery category as 69% of the inflation since 2019 occurred from 2021>23.
  • Pets & Pet Supplies – Prices fell in November and the YTD inflation rate is down to 2.9%. Prices deflated significantly in both 2020 & 2021 which helped to create a very unique situation. Prices are up 10.2% from 2019 but 105% of this increase happened from 2021>23. Prices are up 10.7% from their 2021 “bottom”.
  • Veterinary Services – They are still #1 in inflation since 2019 but they have only the 2nd 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. Regardless of the situation, 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 are now at -0.3% YTD, the only current deflation in any segment.
  • Pet Services – May 22 set a record for the biggest year over year monthly increase in history. Prices fell in June but began to grow again in July, reaching record highs in Sep>Apr 23. The January 2023 increase of 8.4% set a new record. Prices have dropped Sep>Nov and YTD November fell to 6.1% from 6.6% in October and 7.0% in August. Their price surge started in 2021 when inflation jumped to 4.7% from 2.5% in 2019 & 2020.
  • Haircuts & Personal Services – The services segments, essential & non-essential, were hit hardest by the pandemic. After a small decrease in March 22, prices turned up again. Since 2021 inflation has been a consistent 5+%, 89% higher than 18>19. Consumers are paying 21% more than in 2019, which usually reduces the purchase frequency.
  • Total Pet – There were two patterns. After 2019, Prices in the Services segments increased, and the rate grew into 2021. Pet products – Food and Supplies, took a different path. They deflated in 2020 and didn’t return to 2019 levels until mid-year 2021. Food prices began a slow increase, but Supplies remained stable until near yearend. In 2022, Food and Supplies prices turned sharply up. Food prices grew until Jun>Aug 23. Supplies prices stabilized Apr>May, grew Jun>Oct, fell in Nov, rose in Dec>Feb, fell in Mar, rose in Apr>May then fell in Jun>Aug. Both grew Sep/Oct. In November, Food was stable & Supplies fell. The Services segments have also had ups & downs but have generally inflated. The net is a YTD Petflation rate vs 2022 of 8.3%, about double the CPI. In May 22 it was 5.8% below the CPI.

Petflation is slowing, but still strong. Petflation dropped from 5.2% in October to 4.3% in November. This is 64% below the record 12.0% set in November 22, but still the 4th highest rate for the month. The last 6 months have all been <10% but 9 of 16 have been 10+%. The current 4.3% rate is still 2.7 times the 1.6% average rate from 2010>2021 and also 1.4 times the national rate. There is no doubt that the current pricing tsunami is a significant event in the history of the Pet Industry, but will it affect Pet Parents’ spending. In our demographic analysis of the annual Consumer Expenditure Survey which is conducted by the US BLS with help from the Census Bureau we have seen that Pet spending continues to move to higher income groups. However, the impact of inflation varies by segment. Supplies is the most affected as since 2009 many categories have become commoditized which makes them more 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 decrease in visit frequency. Spending in the Services segment is the most driven by higher incomes, so inflation is less impactful. This spending behavior of Pet Parents suggests that we should look a little deeper. Inflation is not just a singular event. It is cumulative. Total Pet Prices are up 4.3% from 2022 but they are up 16.9% from 2021 and 21.5% from 2019. That is a huge increase in a very short period. It puts tremendous monetary pressure on Pet Parents to prioritize their expenditures. We know that the needs of their pet children are always a high priority but let’s hope for a little relief – stabilized prices and even deflation. This is not likely in the Service segments, but it has happened before in Products. Pet Food inflation has slowed for 7 straight months, and Supplies prices have deflated in 3 of the last 4 months. It’s just a start. Let’s hope that it accelerates “down”.

2022 Total Pet Spending was $102.71B – Where did it come from…?

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Total Pet Spending in the U.S. was $102.71B in 2021, a $2.73B (2.7%) increase from 2021. These figures and others in this report are calculated from data in the annual Consumer Expenditure Survey conducted by the US BLS. 2021 was tumultuous but it was almost all positive. The Food binge couldn’t be repeated so Food $ fell slightly but all other segments had record increases which produced the biggest Pet spending lift in history. 2022 had mixed results. Like the Food segment, the binge spending on Supplies and Veterinary Services was not repeated, so spending fell in both segments. However, Pet Food bounced back with a 12.5% increase and Services continued their spectacular growth. This produced only a small increase in Total Pet $ Spending but it certainly deserves a closer look.

The first question is, “Who is spending most of the $103 billion dollars?” There are of course multiple answers. We will look at Total Pet Spending in terms of 10 demographic categories. In each category we will identify the group that is responsible for most of the overall spending. Our goal was to find demographic segments in each category that account for 60% or more of the total. To get the finalists, we started with the biggest spending segment then bundled it with related groups until we reached at or near 60%.

Knowing the specific group within each demographic category that was responsible for generating the bulk of Total Pet $ is the first step in our analysis. Next, we will drill even deeper to show the best and worst performing demographic segments/groups and finally, the segments that generated the biggest dollar gains or losses in 2022.

In the chart that follows, the demographic categories are ranked by Total Pet market share from highest to lowest. We also included their share of total CU’s (Financially Independent Consumer Units) and their performance rating. Performance is their share of market vs their share of CU’s. This is an important number, not just for measuring the impact of a particular demographic group, but also in measuring the importance of the whole demographic category in Spending. All are large groups with a high market share. A performance score of 120+% means that this demographic is extremely important in generating increased Pet Spending. I have highlighted the 5 groups with 120+% performance.

The only group change from 2021 is that College Grads lost 6% in share and fell below the 60% threshold so Associate’s Degree> returned to the list. There were changes in the numbers and rankings. Homeowners moved up from 3rd to 2nd and the new Education group is 5th. College Grads were 7th in 2021. Again only 5 made the 120%+ club. Associate’s Degree> replaced College Grads in the club. Formal higher education matters. However, higher income remains the single most important factor in Total Pet Spending.

  1. Race/Ethnic – White, not Hispanic (83.9%) down from 84.2%. This is the 2nd largest group and has the largest share of Pet Spending. Their performance was down from 125.3% to 124.9% but they moved up from #4 to #3 in importance. Although this demographic, along with age, are 2 areas in which the consumers have no control, spending disparities within the group are enhanced by differences in other areas like Income, CU Composition and homeownership. There are also apparently cultural differences which impact Pet Spending. Asian Americans are first in income, education and total CU spending but they’re last in Pet Spending as a percentage of total spending – 0.40% vs a national average of 1.05%.
  2. Housing – Homeowners (81.2%) up from 80.0%. Controlling your “own space” is a key to larger pet families and more pet spending. 2022 was a good year for Homeowners, with & without Mtges. Homeowners spent $3.5B more and the group’s performance grew from 123.6% to 124.8%. Contributing to the increase was a 3.6% drop in spending by Renters. Homeowners moved up from 5th to 4th place in importance. The homeownership rate grew slightly to 65.1%. The lift came entirely from younger CUs as homeownership remained stable in the older groups.
  3. # in CU – 2+ people (80.8%) up from 80.6%. Singles remain the only group with under 100% performance. In 2022, there was a big increase in the number of singles, but they spent even less on their pets. At the same time, 3 person CUs spent $3.2B more. This explains the change in share and a performance increase from 115.9% to 117.1%.
  4. Area – Suburban & Rural (71.7%) down from 71.8% Homeownership is high and they have the “space” for pets. All areas spent more but Center City had the biggest % lift. This, in conjunction with more CUs, pushed Suburban/Rural’s performance down from 111.4% to 109.5%. Center City still has the worst performance at 82.1%
  5. Education – Associates Degree or more (71.5%) down from 74.7%. Higher Education is usually tied to higher income and Pet spending. It can also be a key factor in recognizing the value in product improvements. In 2021 College Grads binge spent $21.6B more on their pets. This was not repeated in 2022 so we returned to the Associates Degree or higher group. This group’s performance fell from 129.6% to 123.9% but they are #5 in importance. The drops are all due to College Grads. In 2022, the Associates Degree segment increased their share of Pet $ from 9.1% to 12.1% and their performance grew from 88.3% to 110.2%. They earned their spot.
  6. Income – Over $70K (67.5%) down from 68.2%. They lost a little share and their performance fell to 142.8% from 152.3%. However, CU income is still by far the most important factor in increased Pet Spending. Spending was again on a roller coaster: <$40K: -$0.5B; $40>69K: +$2.1B; $70>99K: -$1.2B; $100>199K: +$2.7B; $200K>: -$0.4B. Higher income is important. Consider: $100K> = 33.2% of CUs, 53.3% of Pet $; $150K> = 17..7% of CUs, 32.9% of Pet $
  7. # Earners – “Everyone Works” (66.8%) up from 66.4%. These are CUs of any size where all adults are employed. They gained share but their performance fell again, from 117.0% to 114.5%. They dropped out of the 120+% club in 2021 and are now only the 8th most important category. Income is important but # of Earners is less so. They gained share due to a +$2.77B lift from 2+ Earner CUs but their performance fell because they added 2.5 million more CUs.
  8. Occupation – All Wage & Salary Earners (65.7%) up from 63.2%. Their performance also grew from 106.5% to 109.0%. All but Service Workers spent more on their pets in 2022. Managers and Professionals (+$2.98B) and Blue Collar (+$1.43B) had the biggest spending increases. Blue Collar workers actually spent 30.2% more on their pets. Their gains were enhanced by a -$0.98B drop by Retirees and a -$1.2B decrease by “All Other”, which includes unemployed and those not working because of illness or attending school.
  9. CU Composition – Married Couples (61.8%) down from 62.7%. 2 people, committed to each other, is an ideal situation for Pet Parenting. In 2022, they lost share and their performance fell from 132.4% to 129.3%, but they moved up from 3rd to 2nd place in importance because College Grads dropped out. Their drops in share and performance were due to a -$2.6B decrease from those with an oldest child 6>17 and a big lift by single parents.
  10. Age – 35>64 (61.1%) up from 60.9%. They gained share and their performance grew from 116.2% to 117.2%. A $4.3B increase from 45>64 overwhelmed the $2.3B drop by the 35>44 yr-olds. <25 was +$0.77B while the 65> lift and 25>34 drop cancelled each other out. Pet Spending is slightly more balanced, and age stayed 7th in importance.

Total Pet Spending is a sum of the spending in all four industry segments. The “big demographic spenders” listed above are determined by the total pet numbers. The share of spending and performance of these groups varies between segments. In fact, in the Veterinary & Services segments we altered some groups to better reflect where most of the business is coming from. There’s was some turmoil but in 2022 Pet Spending returned to more normal behavior.

Performance is an important measurement. Any group that exceeds 120% indicates an increased concentration of the business which makes it easier for marketing to target the big spenders. Income over $70K is again the clear winner, but there are other strong performers. High performance also indicates the presence of segments within these categories that are seriously underperforming. These can be identified and targeted for improvement. However, 2022 is a bit more complicated. Many of the big drops in spending came from segments that binge bought Supplies & Vet Services in 2021. These big moves, up or down can affect the total group performance. We’re not there yet but we’re closer to normal.

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

Most of the best and worst performers are expected but there are 4 winners & 3 losers that are different from 21. Last year there were 9 new winners and 1 loser. The situation is becoming more normal. Changes from 2021 are “boxed”.

  • Income is important in Pet Spending, which is shown by the 195.5% performance by the $200K> group and wins by the high income 3 Earners, Mgrs/Prof, 45>54 and Adv College Degrees. All groups over $70K performed at 100+%.
  • Occupation – Mgrs/Professionals & Self-Employed are the only occupations with 100+% performance. Retirees edged out Service Workers (76.9%) for the bottom spot.
  • Age/Generation – Gen X won again but spending skewed towards their older members with the 45>54 win.
  • Region – The Midwest returned to the top. The West (the usual winner) also had 100+% performance.
  • CU Size/Composition – The importance of children was maintained with wins by 4 People and those with an Oldest Child over 18. Single Parents had a strong year and moved off the bottom. The “magic” CU number fell from 5 to 4.

The winners reflect the continued move back towards more normal spending patterns from slightly older CUs. In the next section we’ll look at the segments which literally made the biggest difference in spending in 2022.

We’ll “Show you the money”! This chart details the biggest $ changes in spending from 2021.

Like 2021, in 1 category, all segments spent more – Area Type. In 2021, it was # of Earners. Only 3 segments held their spot from 2021 while 9 switched from winner to loser or vice versa. There was considerable internal turmoil but much less than in 2021 when 17 flipped. However, 87.5% were different from last year, just a little better than 96% in 2021.

  • Region – The winner and loser both flipped. This only happened in the Region Category.
    • Winner – Midwest – Pet Spending: $25.36B; Up $6.39B (+33.7%)                                2021: West
    • Loser – West – Pet Spending: $26.32B; Down -$3.99B (-13.2%)                                     2021: Midwest
    • Comment – In 2021 the Midwest had the only decrease in Total Pet $. In 2022 they had double digit increases in all segments. The South also spent more, +$1.9B. The West spent less in all but Services.
  • Education – Adv College degrees flipped to last, but all College Grads spent less in every industry segment.
    • Winner – Associates Degree – Pet Spending: $12.41B; Up $3.33B (+36.7%)                       2021: Adv. College Degree
    • Loser – Adv. College Degree – Pet Spending: $28.70B; Down -$3.74B (-11.5%)                 2021: < HS Grads
    • Comment – All segments w/o a College Degree spent more but those with an Associate’s Degree had an especially strong year. Their Vet spending was only +5.8% but Services was +116.3% and Products was +47.5%.
  • Age – The 35>44 yr-olds flipped to the bottom as they “gave back” the 2021 big lifts in Supplies & Veterinary.
    • Winner – 45>54 yrs – Pet Spending: $21.80B; Up $3.29B (+17.8%)                              2021: 35>44 yrs
    • Loser – 35>44 yrs – Pet Spending: $19.05B; Down $2.34B (-10.9%)                             2021: 55>64 yrs
    • Comment: The high-income 45>54 yr-olds are back on top but only the 25>44 and 75+ groups spent less.
  • # in CU – A new winner and loser but no flips.
    • Winner – 3 People – Pet Spending: $17.73B; Up $3.23B (+22.2%)                                2021: 2 People
    • Loser – 5+ People – Pet Spending: $10.27B; Down -$1.21B (-10.6%)                            2021: 4 People
    • Comment: All groups spent more on Services but less on Veterinary. Only 2 People CUs spent less on Food while only 3 People CUs spent more on Supplies. However, only 2 & 5+ people CUs spent less Total Pet $.
  • Occupation – Retirees flipped from 1st to last.
    • Winner –– Managers & Professionals – Pet Spending: $37.57B; Up $2.98B (+8.6%)           2021: Retired
    • Loser – Retired – Pet Spending: $17.32B; Down -$0.98B (-55.3%)                                           2021: Self-Employed
    • Comment– Only Retirees, Service Workers & Unemployed/All other spent less. Blue & White collar spent more.
  • CU Composition – With big lifts in all but Veterinary, Married with an oldest child over 18 flipped from last to 1st.
    • Winner – Married, Oldest Child 18> – Pet Spending: $11.498; Up $2.70B (+30.7%)                       2021: Married, Couple Only
    • Loser – Married, Oldest Child 6>17 – Pet Spending: $14.52B; Down -$2.58B (-15.1%)                  2021: Married, Child 18>
    • Comment – Married, oldest child 6>17 spent more on Services but were the only group with a drop in Total Pet $
  • Income – With double digit increases in all but Veterinary, $100>149K flipped to the top.
    • Winner – $100>149K – Pet Spending: $20.99B; Up $2.49B (+13.4%)                              2021: $200K>
    • Loser – $70 to $99K – Pet Spending: $14.58B; Down -$1.16B (-7.3%)                             2021: $100>149K
    • Comment – There was no clear pattern. This category was on a spending rollercoaster. <$40K: -$0.54B; $40>69K: +$2.13B; $70>99K: -$1.16B; $100>199K: +$2.72B; $200K>: -$0.41B.
  • # Earners – After their surprising win in 2021, No Earner 2+ CUs flipped to the bottom.
    • Winner – 1 Earner, 2+ CU – Pet Spending: $19.01B; Up $2.17B (+12.9%)                        2021: No Earner, 2+ CU
    • Loser – No Earner, 2+ CU – Pet Spending: $7.67B; Down $2.53B (-24.8%)                      2021: 1 Earner, Single
    • Comment – 1 Earner, singles also spent less. All other groups including No Earner, Singles spent more.
  • Race/Ethnic – White, Not Hispanics stayed on top.
    • Winner – White, Not Hispanic – Pet Spending: $86.18B; Up $2.04B (+2.4%)                2021: White, Not Hispanic
    • Loser – Hispanic – Pet Spending: $9.45B; Down -$0.54B (-5.4%)                                     2021: African American
    • Comment – African Americans had a huge, +43.9% increase but Hispanics and Asians spent less.
  • Generation – In a true surprise, Gen Z is on top. They are “growing up” and Pet Parenting is radically increasing.
    • Winner – Gen Z – Pet Spending: $3.48B; Up $1.84B (+112.6%)                                          2021: Gen X
    • Loser – Born <1946 – Pet Spending: $5.19B; Down -$1.46B (-22.0%)                               2021: Baby Boomers
    • Comment – Boomers had the 2nd biggest lift and only the oldest generations, born <1946 spent less.
  • Housing – Homeowners w/o Mtge flipped from last to 1st
    • Winner – Homeowner w/o Mtge – Pet Spending: $26.94B; Up $1.79B (+7.1%)             2021: Homeowner w/Mtge
    • Loser – Renter – Pet Spending: $19.27B; Down -$0.73B (-3.6%)                                       2021: Homeowner w/o Mtge
    • Comment – The win by Homeowners w/o Mtge was driven by CUs who have paid off their home but haven’t retired. They just edged out Homeowners w/Mtge, +$1.67B. Only Renters spent less.
  • Area Type – Both winner and loser held their positions and all segments spent more.
    • Winner – Suburbs 2500> – Pet Spending: $46.46B; Up $0.99B (+2.2%)                          2021: Suburbs 2500>
    • Loser – Areas <2500 – Pet Spending: $27.18B; Up $0.81B (+3.1%)                                  2021: Areas <2500
    • Comment – The Big Suburbs stayed in their usual spot at the top. Center City had a +$0.93B lift and Areas <2500 rebounded from a drop in 2021. The increases were pretty balanced, ranging from +2.2% to +3.3%.

We’ve seen the best overall performers and the “winners” and “losers” in terms of increase/decrease in Total Pet Spending $ for 12 Demographic Categories. Now, here are some segments that didn’t win an award, but they deserve….

HONORABLE MENTION

It was not a good year for College Grads but it was a great year for those without a BA/BS. Associates had the biggest lift but those w/o a HS diploma more than doubled their Pet $. Single parents are often on the “bottom” in Pet Spending, but they spent 54% more in 2022. In 2021, African Americans had the only drop in spending by a racial/ethnic group. In 2022 they rebounded with a +43.9% increase, by far the biggest percentage lift of any group in the category. Not all Gen Zers are under 25 but all CUs below 25 are Gen Z. The <25 group have radically increased their Pet Parenting responsibility and spending. Pet Spending continues to be centered in the higher income groups but almost 70% of all CUs have pets. They are an important part of the family for all Pet Parents. Although they didn’t win any awards, the 28% Pet Spending increases by Blue Collar Workers and the low income $40>49K group clearly demonstrate the widespread importance of the Pet members of U.S. households.

Summary

To properly review 2022, we must put it into context with recent history. Total Pet Spending reached $78.60B in 2018, a $14.28B, 22.2% increase from 2014. However, it was not a steady rise, Total spending actually fell in 2016 and each segment had at least one down year. There were a number of factors driving both the growth and tumult within the industry. Two big positives were the movement to super premium pet foods and the rapid expansion of the number of outlets offering pet services. On the downside were value shopping, trading $ between segments and outside influences like the FDA dog food warning and tariffs. Pricing, inflation/deflation was also a negative/positive factor in some cases.

In 2019, the industry had another small decrease, -$0.16B (-0.2%) which was largely driven by a huge drop in spending in Supplies caused by Tarifflation. This affected virtually every demographic segment and caused Supplies $ to fall below 2014. Services spending also fell slightly as consumers value shopped. The good news was that Pet Food bounced back from the impact of the 2018 FDA warning to reach a new record high. Veterinary $ also increased 2.7%. Unfortunately, this was entirely due to a 4.1% increase in prices. The amount of Vet Services sold actually decreased.

That brings us to 2020 and the Pandemic turmoil. The effect was positive for Food and Veterinary, especially Food. Out of fear of shortages, many Pet Parents binge bought Pet Food. Spending also increased in Veterinary, as consumers focused on their Pets’ needs. The discretionary segments suffered. Supplies prices stayed high, so spending continued to decline. Services saw the biggest negative pandemic impact as many outlets were subject to closures and restrictions.

2021 was a new year and brought a change in attitude as the marketplace returned to “normal”. The Food binge buying wasn’t repeated but Pet Parents caught up with all their “children’s” wants and needs. This produced a record increase in Total Pet +$16.23B) and in all segments but Food. Gen X took back the top spot in $ and  Pet spending skewed younger and back to more traditional winners, like Homeowners w/Mtges and Incomes over $200K.

In 2022, the spending lift was much smaller. Food $ increased by 12.5% and Services had another record increase, +$3.26B. This was enough to overcome the big “binge drops” in Veterinary and Supplies and produce a 2.7% increase in Total Pet $. 72% of 96 demographic segments spent more on their pets. This is good but down considerably from 83% in 2021. The lift was not quite as widespread as 2021 but in some ways, spending became a little more balanced with strong performances by those without a college degree, Blue Collar workers, African Americans and Gen Z – to name a few. Income is still important as Gen X stayed on top. Spending also skewed a little older towards the oldest Gen Xers, 45>54 yr olds. Baby Boomers are still the “heart” of the Pet Industry, but Gen Xers are likely to stay on top in $ for a number of years, until they are eventually displaced by the Millennials.

Before we go…The Ultimate Total Pet Spending CU in 2022 has 4 people, a married couple with an oldest child 18>. They are 45>54 yrs-old. They are White, but not Hispanic. Both work and so does their oldest child. At least one has an Advanced College Degree and is a Mgr/Professional. They earn $200K+. They still have a mortgage on their house located in a small suburb in the Midwest.