Archive for category: Pet Market Segments

The pandemic had a huge impact on consumers, including spending on Pet Food. We’ll do a more detailed historical review of recent years but at Mid-year in 2022 things finally seem to be returning to a more normal situation. Pet Food Spending for the 12 months ending June 30, 2022 was up $4.79B (+15.2%) from a year ago. Let’s put that into proper perspective. In pre-pandemic, Mid-2019 Pet Food spending was $28.90B. That means that the average annual growth rate from 2019>22 is +7.9%. This is 42% better than the average growth rate of +5.6% from 1984 to 2019. This industry segment is doing well. Of course, we’re starting to face what may be a new challenge – radically high inflation in Pet Food prices. Here’s what it was in mid-year 2022:

• Mid-yr 22 vs 21: +4.0%
• 2^nd Half 21 vs 20: +1.6%
• 1^st Half 22 vs 21: +6.5%

You can see that the inflation rate in early 2022 was over 4 times higher than the rate in late 2021. It hit 10+% in June 2022 and continued at historic high levels. Prices in the 2^nd half of 2022 were 14% higher than in 2021. Traditionally, “normal” inflation increases have had little impact on Pet Food spending. However, these increases are historic. We’ll get a better indication of their current impact when the 2022 yearend Pet Food spending numbers are released  in early September. I just wanted you to be aware of the situation as we review the mid-year data.

If inflation was 4.0% for Mid-Yr 2022, then 73.7% of the increase in Pet Food spending was real. Good, but not great. We’ll see what the situation looks like at yearend. Also, 59% of the $4.79B lift occurred when inflation was lower.

Now, let’s get started with our Pet Food spending update for Mid-Year 2022. As we stated earlier, Pet Food (& Treat) Annual Spending was $36.35B, up +$4.79B (+15.2%). The following charts and observations were prepared from calculations based upon data from the current CEX report and earlier ones. The first chart will help put the current numbers into historical perspective and truly show you the roller coaster ride that continues in Pet Food Spending.

Here are the current numbers:

Mid-Yr 2022: $36.39B; ↑$4.79B (+15.2%) from Mid-Yr 2021. The net gain of $4.79B came from

◦  Jul>Dec 2021: Up $2.85B from 2020.          ◦  Jan>Jun 2022: Up $1.94B from 2021.

Historical research has shown that Pet Food spending has been on a roller coaster since 2000, generally with 2 years up, followed by a flat or even declining year. This up and down “ride” was primarily driven by a succession of Food trends like Made in the USA, Natural and Super Premium”. The 2 yrs up then 1 yr flat/down pattern has been broken on a couple of occasions due to outside influences – the FDA grain free warning in 2018 and now the COVID pandemic in 2020. We may see another major influence on spending – recent skyrocketing inflation. The timing may be affected  but the Pet Food spending rollercoaster ride is likely to continue.

2013 was definitely a game changer for this segment as it began an extended period of deflation which continued through 2018. Midway through 2018, Pet Food prices were still 2.3% lower than in 2013. The spending drops in 2013 and 2016 were driven by pet parents value shopping for their recently upgraded pet food. As it turns out, 2014 brought out yet another new factor in Pet Food spending.

For over 30 years Baby Boomers were the leaders in Pet Food, both in spending and in adopting new products. Even in 2022, they still spend the most, but it turns out that the 25>34 yr-old Millennials led the movement to Super Premium in late 2014. The older groups, especially Boomers followed in 2015 and spending rose $5.4B. At the same time, the Pet Food spending of the 25>34 yr olds dropped. At first, we thought they had rolled back their upgrade. However, it turns out that they were leading the way in another element of the trend to Super Premium – value shopping. The Boomers once again followed their lead and spending fell -$2.99B in 2016. For consumers, the Super Premium upgrade movement consisted of 3 stages:

1. Trial – The consumer considers the benefits vs the high price and decides to try it out. Usually from a retail outlet.
2. Commitment – After a period of time, the consumer is satisfied and is committed to the food.
3. Value Shop – After commitment, the “driver” is to find a cheaper price! – The Internet, Mass Market, Private label

This brought us to 2017. Time for a new “must have” trend. That didn’t happen but the competitive pricing situation brought about another change. Recent food trends have been driven by the higher income and higher education demographics. However, the “value” of Super Premium was established and now more “available”. Blue Collar workers led a new wave of spending, +$4.6B, as Super Premium more deeply penetrated the market. After the big lift in 2017, 2018 started off slowly, +$0.25B. Then came the FDA warning on grain free dog food. Many of the recent Super Premium converts immediately rolled back their upgrade and spending fell -$2.51B. This 2018 decrease broke a 20 year spending pattern. In the 1^st half of 2019, Pet Food spending remained stable at the new lower level. In the second half of 2019 we started to see a recovery from the overreaction to the FDA warning and spending increased by $2.3B. Then came 2020. The recovery was continuing but a new outside influence was added which had a massive impact on U.S. consumers – the COVID-19 pandemic. In March nonessential businesses were closed. This also produced a wave of panic buying in some truly essential product categories. In the Pet Industry there is only 1 truly essential category – Pet Food. Coupled with the FDA “recovery” and the ongoing movement to Super Premium, this produced an incredible $6.76B lift in Pet Food Spending in the 1^st half of 2020. Spending fell in the 2^nd half of 2020 and plummeted in the 1^st half of 2021. Pet Parents didn’t binge again, and some began using up the stockpile that they panic bought in the early days of COVID. In the 2^nd half of 2021, the up/down impact of COVID was essentially over. Pet Parents were still committed to their children’s health which included Super Premium Foods and Medical Supplements, often in treat form. The internet also made this quality choice accessible to more households so Pet Food spending increased both in the 2^nd half of 21 and the 1^st half of 22. 59% of the lift occurred in the 2^nd half of 2021 when inflation was still low. Was that a factor?

Let’s look at Pet Food spending by the 2 most popular demographic measures – income & age group. They both show the current and previous 12 months $ as well as 2021 yearend. This will allow you to track the spending changes between halves. The first graph is Income, which has been shown to be the single most important factor in increased Pet Spending and its influence continues to grow.

Here’s how you get the change for each half of the 21>22 mid-yr numbers using the over $100K group as an example:

$100K> Mid-yr Total Spending Change: $16.36B – $13.77B = Up $2.59B (green outline = increase; red outline = decrease)

• • 2^nd half of 2021: Subtract Mid-21 ($13.77) from Total 2021 ($15.51B) = Spending was up $1.74B in 2^nd half of 2021.
  • 1^st half of 2022: Subtract Total 2021 ($15.51B) from Mid-22 ($16.36B) = Spending was up $0.85B in 1^st half of 2022.

• All increased spending for the year but there were 3 different patterns in the individual groups. #1. $150K> & $50>69K spent more in both halves. #2. <$30K & $70>99K spent less in the 1^st half of 2022. #3. $30>49K & $100>149K spent less in the 2^nd half of 2021. All but #2 have a high/low income mix. #2 has the lowest income and the middle income groups. Both are very price sensitive. Note: Their spending dropped during the highest inflation.
• Perhaps the most obvious fact is the continued spending disparity due to income. Back in 2014, prior to the big lift due to Super Premium, $70K was the “halfway point” in Pet Food spending. The under $70K group accounted for 66.7% of CUs and 51.1% of Pet Food spending. They lost the lead in 2015 as $70K> spent 50.8% of Pet Food $. In 2020, the binge buying of Pet Food by $100>150K pushed the $100K> group to the top at 55.1%. Then the big drop in 2021 flipped $70K> back into the lead at 60.8%. They currently have a share of 62.0%. The halfway point in Pet Food spending is below $100K but still high at $91K, the 2^nd highest in history.
• < $70K > The Pet Food spending patterns for both big groups are similar with increases in both halves. However, in a bit of a surprise, the Fall 2021 lift is larger for $70K> while the early 2022 lift is larger for <$70K. Higher Inflation appears to not have grossly affected these big groups.
• < $100K > The spending patterns of these 2 groups closely mirrors the Under/Over $70K pattern. The Fall 2021 spending lift for the $100K> group was 100% driven by $150> CUs. The Spring 2022 lift for <$100K was totally driven by CUs with an income of $30>69K. Again, not the result that you would expect based upon higher inflation.
• <$30K – With a lift in the Fall and a drop in the Spring, spending for this lowest income group essentially remained stable vs last year. They may have been impacted by rising prices in 2022.
• $30>49K – This low-income group also includes many Retirees. They are growing in number and are committed to their pets. However, their spending behavior timing often lags behind other groups which may explain the Spring lift.
• $50>69K – This low income group was hit hard by the pandemic. With steady growth in both halves, they have finally surpassed their Pet Food spending in pre-pandemic 2019.
• $70>99K –This middle-income group was the most negatively affected by the pandemic. However, they fully recovered in 2021. Then spending flattened in early 2022. They are very value conscious. We’ll see if the skyrocketing inflation in the 2^nd half of 2022 affects their Pet Food spending.
• $100K>149K – High income is increasingly becoming “where it’s at” in Pet Spending. This group led the way in Pet Food binge buying and the subsequent drop. Sales grew slightly in early 2022 so they remain above 2019 $.
• $150K > Their Pet Food spending also fell in 2020, likely due to value shopping on the internet. They came back strong in 2021, 10% above 2019. $ are up slightly in 2022. Strong inflation and the resulting higher prices will likely cause them to spend more.

Now let’s look at Pet Food spending by Age Group.

• 25>34 yr olds had a steady decline. All other groups spent more but 75> had a spending dip in early 2022.
• <25 – Their spending had a huge increase and they are back above $1B. It’s likely that more moved out of their parents’ home and many added pets to their household.
• 25>34 – A -$1.35B drop after last year’s $1.77B increase. This group, especially those with families, are under a lot of financial pressure. Overall inflation likely caused many CUs to cut back on spending and even rescind Food upgrades.
• 35 > 44 – Spending fell in 2020 likely because they turned to the internet. They are 2^nd in income and their spending has smaller fluctuations. Their biggest lift occurred in the 1^st half of 2022 and they exceeded $6B for the 1st time.
• 45 > 54 and – They have the highest income, so their annual up/down spending pattern is not expected. Their Pet Food $ dropped throughout 2020 but it has increased in every half since then. However, it is still below the $7.09B peak in 2019. Value Shopping & downgrades/upgrades are all likely to be factors in a complicated pattern.
• 55>64 – This group is still mostly Boomers, the most emotional Pet Parents. In 2020 they led the way in Pet Food binge buying. They also had the biggest 2021 drop. With growth in both halves, including a $0.77B lift in 2022 they have now returned to their pre-pandemic 2019 spending level.
• 65 > 74 – This group is all Boomers but with lower income. Spending grew in both halves. They are committed to their pets. Even though the members change, they are the only age group with steady annual growth since 2016.
• 75> – COVID had little impact on spending. In 2021 they upgraded, +$1.76B. Spending fell slightly in the 1^st half of 22.

That gives us the “big picture” for our 2022 Mid-year update of Pet Food spending. Now we’ll take a closer look at the start of 2022. We’ll compare it to the 1^st half of 2021 and document the biggest changes since then.

• The biggest increases are much larger than the biggest decreases in 10 categories. They are almost equal in Age, but the drop is larger in CU Composition. In Housing and CU Size, all segments spent more in 2022 than in 2021.
• There are a number of usual winners, Managers, White, Not Hisp., Boomers, 55>64, Big Suburbs, Homeowners w/Mtges and 3+ Earners. There are also some surprises like $30>49K, 2+ Unmarried Adults and HS Grads.
• When we look at the losers, we also see some familiar names, <$30K, Born <1946, 1 Earner Single and Center City. However, there are 2 big surprises – Adv. College Deg. and 25>34 yr olds.
• Pet Food spending in the 1^st half of 2022 was $1.94B ahead of the 1^st half of 2021 but $3.44B ahead of 2019. In fact, 68 of 82 demographic segments (83%) spent more in 2022 than in 2021. The pandemic turmoil appears to be over.

The spending lift was relatively large in the 1^st half, but not unexpected, after the huge drop in Pet Food $ in the 1st half of 2021 following the buying binge in 2020. It appears that the steep pandemic roller coaster may have ended in 2021 and we might be back on a more normal path of consistent growth. Pet Food spending in mid-yr 2022 was $36.35B. This is $1.57B below the binge peak of $37.96B in mid-2020 but $7.49B more than the $28.90 in pre-pandemic mid-yr 2019. If we ignore the pandemic turmoil, then Pet Food spending has grown 25.9% in 3 years. That’s an annual growth rate of +7.9%, which is 41% higher than the +5.6% rate from 1984 to 2019. That’s real proof that the Pet Food segment is back and doing even better than usual. Unfortunately, we may be facing a new challenge – runaway inflation. It started slowly at the end of 2021, then continued to grow in 2022, hitting 10+% in June and has stayed in double digits. Past periods of Pet Food inflation just caused Pet Parents to spend more. Pets must have food. However, this price increase is at record levels. We should note that the pandemic is also a factor in inflation because supply chain issues related to COVID had a big impact on prices. Overall inflation has lessened but there has been little improvement in Pet Food. All pet spending has been moving towards higher incomes. Households with a lot of financial pressure could cut back on more discretionary pet spending, reduce purchase frequency, and even downgrade their pet food. We have seen little evidence of a negative impact on Pet Food in early 2022. We’ll see what happens in the 2^nd half of 2022 when inflation took off. We’ll get that data in September.

Inflation continues to be big news. The YOY increases in the monthly Consumer Price Index (CPI) are larger than we have seen in decades but are definitely slowing. April prices grew 0.5% from March and the CPI was still up +4.9% vs 2022, but down slightly from +5.0% last month. The grocery pricing surge has also slowed. After 12 straight months of double-digit YOY monthly percentage increases, grocery inflation is down to +7.1%, with 2 consecutive months below 10%. As we have seen in recent years, even minor price changes can affect consumer pet spending, especially in the discretionary pet segments, so we will continue to publish monthly reports to track petflation as it evolves in the market.

Total 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 since July, but Petflation has generally increased. It passed the National CPI in July and is now +10.4% in April, more than double the national rate of 4.9%. 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 April 2021 to April 2023. We will use December 2019 as a base number so we can track the progress from pre-pandemic times through an eventual recovery. Inflation is a complex issue. This chart is designed to give you a visual image of the flow of pricing. You can see the similarities and differences in patterns between segments and compare them to the overall U.S. CPI. The current numbers plus yearend and those from 12 and 24 months earlier are included. This will give you some key waypoints. In April prices are up from March for all segments and all but Supplies are at their cumulative inflation peak.

In March 2021, the national CPI was only +3.9% and Pet prices were +1.9%. Veterinary and Services prices generally inflated after mid-2020, similar to the overall CPI while Food and Supplies prices generally deflated until late 2021. After that time, Petflation took off. Pet Food prices consistently increased but the other segments had mixed patterns until July 2022, when all increased. In Aug>Oct Petflation accelerated, except for a small October dip in Veterinary. In Nov>Dec, Services & Food prices continued to grow while Veterinary & Supplies prices stabilized. In Jan>Apr, prices in all but Supplies grew every month. Cumulative Total Petflation from Dec 2019 has been above the U.S. CPI since November.

• U.S. CPI – The inflation rate was below 2% through 2020. It turned up in January 2021 and continued to grow until flattening out in Jul>Dec 2022. Prices turned up again in Jan>Apr but 38% of the overall 18.1% increase in the 40 months since December 2019 happened in the 6 months from January>June 2022.
• Pet Food – Prices stayed generally below Dec 2019 levels from Apr 2020 > Sept 2021, when they turned up. There was a sharp lift in Dec 2021, and it has continued. 93% of the 22.3% increase occurred since 2022.
• Pet Supplies – Supplies prices were high in December 2019 due to the added tariffs. They then had a “deflated” roller coaster ride until mid-2021 when they returned to December 2019 prices and essentially stayed there until 2022. They turned up in January and hit an all-time high, beating the 2009 record. They plateaued from Feb> May, turned up in June, flattened in July, then turned up in Aug>Oct setting a new record. Prices stabilized in Nov>Dec but turned up in Jan>Feb, setting a new record. In March, they fell -0.3%. but are up +0.3% in April.
• 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>Mar but the increase slowed to +0.1% in April. Services remains in 3^rd place among Pet Industry Segments.
• Veterinary – Inflation has been pretty consistent in Veterinary. Prices turned up in March 2020 and grew through 2021. A pricing surge began in December 2021 which put them above the overall CPI. In May 2022 prices fell and stabilized in June causing them to briefly fall below the National CPI. However, prices turned up again and despite Oct & Dec dips they have stayed above the National CPI since July and set new records in January>April.
• Total Pet – The blending of patterns made Total Pet appear calm. In December 2021 the pricing surge began. In Mar>June 2022 the segments had ups & downs, but Petflation grew again from Jul>Nov. It slowed in December but has turned up again Jan>Apr. Except for a dip by Supplies in March, prices in all segments increased every month in 2023. It has been ahead of the cumulative U.S. CPI on our 2019>23 chart since November 2022.

Next, we’ll turn our attention to the Year over Year inflation rate change for April and compare it to last month, last year and to previous years. We will also show total inflation from 21>23 & 19>23. Petflation increased to 10.4% in April and is now more than double 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 +0.5% vs March and were up 4.9% vs April 2022. The Grocery increase is down again, to +7.1% from +8.4%, but is still a big negative. Inflation usually continues in April so it’s not surprising that 8 of 9 categories had increased prices from last month, compared to 6 in March. 3 of the 8 increases were 1.0+%, all from the Pet Industry – Total Pet: 1.8%; Pet Food: 1.4%; Veterinary: 3.2%. The overall national YOY monthly inflation rate for April is down from March and is again much lower than the 21>22 rate. 3 categories – Pet Supplies, Medical Services and Food at home have a similar pattern. In all other categories the 22>23 inflation rate is higher than the 21>22 rate and is in fact the highest rate in any year since 2019 for all but Haircuts/Services. In our 2021>2023 measurement you also can see that over 70% of the cumulative inflation since 2019 occurred in the current surge for all categories but Veterinary Services, Pet Services, Medical Services and Haircuts/Personal Services. Of Note: These are all service expenditures, not products. The Pet Supplies Segment has a unique situation. The 21>23 inflation surge provided 110% of the overall inflation since 2019. This happened because Pet Supplies prices strongly deflated in 20>21.

• U.S. CPI– Prices are +0.5% from March. The YOY increase is down to +4.9%. It peaked at +9.1% back in June. The targeted inflation rate is <2% so we are still over 2 times higher than the target. However, a 10th straight slight decline is good news. It is also good that the current inflation rate is below 21>22 but the 21>23 rate is 13.6%, 73% of total inflation since 2019. How many households “broke even” by increasing their income by 14% in 2 years?
• Pet Food– Prices are +1.4% vs March and 14.6% vs April 2022. They are also more than double the Food at Home inflation rate – not good news! The YOY increase is being measured against a time when prices were 6.9% above the 2019 level, but that increase is still an incredible 6.6 times the pre-pandemic 2.2% increase from 2018 to 2019. The 2021>2023 inflation surge generated 95% of the total 24.0% inflation since 2019.
• Food at Home – Prices are up +0.1% from March. The monthly YOY increase is 7.1%, down from 8.4% in March and considerably lower than Jul>Sep 2022 when it exceeded 13%. The 25.0% Inflation for this category since 2019 is 34% more than the national CPI and remains 2^nd to Veterinary. 75% of the inflation since 2019 occurred from 2021>2023. The pattern now 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 – After a dip in March, prices increased +0.3% in April. They still have the lowest increase since 2019 and remain in last place in terms of the monthly increase vs last year for Pet Segments. As we noted earlier, prices deflated in 2020>2021 so the 2021>2023 inflation surge accounted for 100+% of the total price increase since 2019. They reached an all-time high in October then prices deflated. 3 straight months of increases pushed them to a new record high in February. but prices fell in March. They bounced back in April but not quite enough for a new record.
• Veterinary Services – Prices are +3.2% from March. They are +10.2% from 2022 and are again in 2nd place behind Food in the Pet Industry. However, they are still the leader in the increase since 2019 with 30.6% compared to Food at home at 25.0%. For Veterinary Services, relatively high annual inflation is the norm. The rate did increase during the current surge so 68% of the 4 years’ worth of inflation occurred in the 2 years from 2021>2023.
• Medical Services – Prices turned sharply up at the start of the pandemic but then inflation slowed and fell to a low rate in 20>21. In April prices fell -0.2% from March and were only +0.4% vs 2022, the lowest rate from 2019>23. Medical Services are not a big part of the current surge as only 33% of the 2019>23 increase happened from 21>23.
• Pet Services – Inflation slowed in 2020 but began to grow in 2021/2022. April 23 prices were only up +0.1% from March and +6.4% vs 2022, which is down from +8.0% last month. Initially their inflation was tied to the current surge, but it may be becoming the norm as only 58% of the total since 2019 occurred from 21>23.
• Haircuts/Other Personal Services – Prices are +0.3% from Mar. and +5.3% from 2022, the 2^nd highest rate since 2019. Inflation had its biggest increase in 20>21 so just 50% of the inflation from 19>23 happened from 21>23.
• Total Pet– Petflation is 28% higher than the 21>22 rate, 2.1 times the National CPI and +10.4% is the highest April rate in history. Prices increased in all segments vs March so Total Pet was up 1.8%. This was expected as a Mar>Apr increase in Petflation has happened in 24 of the last 26 years. Food is the runaway leader, but the 22>23 inflation rate for all but Supplies exceeds the 21>22 rate. Pet Food has generally been immune to inflation as Pet Parents are used to paying a lot. However, inflation can cause reduced purchase frequency in the other Segments.

Now, let’s look at the YTD numbers.

The increase from 2022 to 2023 is the biggest for 5 of 9 categories. The 22>23 rate for Food at Home is essentially tied with 21>22. The Total CPI, Pet Supplies & Medical Services are significantly down from 21>22. The average annual increase since 2019 is 4.4% or more for all but Medical Services (3.2%) and Pet Supplies (2.7%).

• U.S. CPI – The current increase is down 30% from 21>22 but is still 27% more than the average increase from 2019>2023, and almost 3 times the average annual increase from 2018>2021. 75% of the 18.8% 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 1^st half of 2021 kept YTD prices low then prices surged in 2022. 91.9% of the inflation since 2019 occurred from 2021>23.
• Food at Home – The 2023 YTD inflation rate has slowed slightly but still beat the U.S. CPI by 64%. You can see the impact of supply chain issues on the Grocery category as 78% of the inflation since 2019 occurred from 2021>23.
• Pets & Pet Supplies – While the inflation rate is down slightly at about 5.4%, prices are again near February’s record high. Prices deflated significantly in 2021 which helped to create a very unique situation. Prices are up 11.3% from 2019 but 113% of this increase happened from 2021>23. Prices are up 12.8% from their 2021 “bottom”.
• Veterinary Services – They held onto the top spot in inflation since 2019 but they are only the 4^th highest since 2021. At +6.2%, they have the highest average annual inflation rate since 2019 but Veterinary is unique. They are the only category in which the inflation rate grew steadily every year from 2019>2023. Throughout the pandemic and recovery, no matter what, just charge more.
• Medical Services – Prices went up significantly at the beginning of the pandemic, but inflation slowed in 2021. In 2023 prices have deflated monthly to reach a rate actually 33.3% below the pre-pandemic 2018>19 rate.
• 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. The January increase of 8.4% was the largest in history. YTD April has slipped a little to 7.6%. Growing demand with decreased availability is a formula for inflation.
• 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. The YTD rate is 10% below the 2020>21 peak but is 68% more than 2018>19. Consumers are paying 20% more than in 2019. This usually reduces the purchase frequency.
• Total Pet – We have seen two different inflation patterns. After 2019, Prices in the Services segments continued to increase, and the rate accelerated as we moved into 2021. The product segments – Food and Supplies, were on 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 have continued to climb. Supplies prices stabilized Apr>May, grew Jun>Oct, fell in Nov, rose in Dec>Feb, fell in Mar then rose again in Apr. The Services segments have had ups & downs but are generally inflating. The net is a YTD Petflation rate vs 2022 of 10.3%, 83.9% more than the National rate. In April 22 it was 20.8% less than the CPI.

Petflation is getting stronger. Let’s put the numbers into perspective. Petflation grew from 9.4% in March to 10.4% in April. This is below the record 12.0% set in November, but it is a record for the month. More bad news is that 8 of the last 9 months have been over 10%. We are back in double digits. The current rate is 6.5 times more than the 1.6% average rate from 2010>2021. 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 driven by higher incomes, so inflation is less impactful. This recognized 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 10.4% from 2022 but they are up 19.3% from 2021 and 23.8% 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 is definitely possible in products. It’s happened before. Let’s hope for a repeat.

Inflation continues to be big news. The YOY increases in the monthly Consumer Price Index (CPI) are larger than we have seen in decades but are definitely slowing. March prices grew 0.3% from February and the CPI was still up +5.0% vs 2022, but down from +6.0% last month. The grocery pricing surge has also slowed. After 12 straight months of double-digit YOY monthly percentage increases, grocery inflation is down to +8.4%.  As we have seen in recent years, even minor price changes can affect consumer pet spending, especially in the discretionary pet segments, so we will continue to publish monthly reports to track petflation as it evolves in the market.

Total 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 since July, but Petflation has generally increased. It passed the National CPI in July and is still +9.4% in March, 88% higher than the national rate of 5.0%. 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 March 2021 to March 2023. We will use December 2019 as a base number so we can track the progress from pre-pandemic times through an eventual recovery. Inflation is a complex issue. This chart is designed to give you a visual image of the flow of pricing. You can see the similarities and differences in patterns between segments and compare them to the overall U.S. CPI. The current numbers plus yearend and those from 12 and 24 months earlier are included. This will give you some key waypoints. In March Supplies prices fell slightly but all other segments are at their cumulative inflation peak.

In March 2021, the national CPI was only +3.1% and Pet prices were +1.5%. Veterinary and Services prices generally inflated after mid-2020, similar to the overall CPI while Food and Supplies prices generally deflated until late 2021. After that time, Petflation took off. Pet Food prices consistently increased but the other segments had mixed patterns until July 2022, when all increased. In Aug>Oct Petflation accelerated, except for a small October dip in Veterinary. In Nov>Dec, Services & Food prices continued to grow while Veterinary & Supplies prices stabilized. In Jan>Mar, prices in all but Supplies grew every month. Total Petflation since Dec 2019 has been above the U.S. CPI since November.

• U.S. CPI – The inflation rate was below 2% through 2020. It turned up in January 2021 and continued to grow until flattening out in Jul>Dec 2022. Prices turned up again in Jan>Mar but 39% of the overall 17.5% increase since 2019 happened from January>June 2022.
• Pet Food – Prices stayed generally below Dec 2019 levels from Apr 2020 > Sept 2021, when they turned up. There was a sharp lift in Dec 2021, and it has continued. 92% of the 20.6% increase occurred since 2022.
• Pet Supplies – Supplies prices were high in December 2019 due to the added tariffs. They then had a “deflated” roller coaster ride until mid-2021 when they returned to December 2019 prices and essentially stayed there until 2022. They turned up in January and hit an all-time high, beating the 2009 record. They plateaued from Feb> May, turned up in June, flattened in July, then turned up in Aug>Oct to a new record high. Prices stabilized in Nov>Dec but turned up again in Jan>Feb, reaching a new record high. In March, they fell -0.3%.
• Pet Services – Normally inflation is 2+%. Perhaps due to closures, prices increased at a lower rate in 2020. In 2021 consumer demand increased but there were fewer outlets. Inflation grew in 2021 with the biggest lift in Jan>Apr. Inflation was stronger in 2022 but it got on a rollercoaster in Mar>June. It has turned up again July>Mar but Services remains in 3^rd place among Pet Industry Segments.
• Veterinary – Inflation has been pretty consistent in Veterinary. Prices turned up in March 2020 and grew through 2021. A pricing surge began in December 2021 which put them above the overall CPI. In May 2022 prices fell and stabilized in June causing them to briefly fall below the National CPI. However, prices turned up again and despite Oct & Dec dips they have stayed above the National CPI since July and set new records in January>March.
• Total Pet – The blending of patterns made Total Pet appear calm. In December 2021 the pricing surge began. In Mar>June 2022 the segments had ups & downs, but Petflation grew again from Jul>Nov. It slowed in December then turned up again in January and February as all segments increased prices. Prices grew again in March as all, but Supplies had increases. It has been ahead of the cumulative U.S. CPI on our 2019>23 chart since November.

Next, we’ll turn our attention to the Year over Year inflation rate change for March and compare it to last month, last year and to previous years. We will also show total inflation from 21>23 & 19>23. Although Petflation slowed in March, it is now 88% higher than 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 +0.3% vs February and were up 5.0% vs March 2022. The Grocery increase is below double digits at 8.4% but is still a big negative. Inflation usually continues in March so it’s not surprising that 6 of 9 categories had increased prices from last month, compared to 8 in February. 4 of the 6 increases were 0.7+%, all from the Pet Industry – Total Pet: 0.7%; Pet Food: 1.6%; Veterinary: 0.9%; Pet Services: 0.8%. The overall national YOY monthly inflation rate for March is down from February, but it is also much lower than the 21>22 rate. 4 categories – Pet Supplies, Veterinary, Medical Services and Food at home have a similar pattern. In all other categories the 22>23 inflation rate is higher than the 21>22 rate and is in fact the highest rate in any year since 2019 for all but Haircuts/Services. In our 2021>2023 measurement you also can see that over 70% of the cumulative inflation since 2019 occurred in the current surge for all categories but Veterinary Services, Pet Services, Medical Services and Haircuts/Personal Services. Of Note: They are all service expenditures, not products. The Pet Supplies Segment has a unique situation. The 21>23 inflation surge provided 114% of the overall inflation since 2019. This happened because Pet Supplies prices strongly deflated in 20>21.

• U.S. CPI– Prices are +0.3% from February. The YOY increase is down to +5.0%. It peaked at +9.1% back in June. The targeted inflation rate is <2% so we are still over 2.5 times higher than the target. However, a 9th straight slight decline is good news. It is also good that the current inflation rate is below 21>22 but the 21>23 rate is 14.0%, 75% of total inflation since 2019. How many households “broke even” by increasing their income by over 14% in 2 years?
• Pet Food– Prices are +1.6% vs February and 14.4% vs March 2022. They are also 71% higher than the Food at Home inflation rate – not good news! The YOY increase is being measured against a time when prices were only 5.4% above the 2019 level, but that increase is still an incredible 6.9 times the pre-pandemic 2.1% increase from 2018 to 2019. The 2021>2023 inflation surge generated 93% of the total 21.3% inflation since 2019.
• Food at Home – Prices are down -0.2% from February. The monthly YOY increase is 8.4%, down from 10.2% in February and considerably lower than Jul>Sep 2022 when it exceeded 13%. The 24.5% Inflation for this category since 2019 is 31% more than the national CPI and remains 2^nd to Veterinary. 78% of the inflation since 2019 occurred from 2021>2023. The pattern now 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 are down -0.3% from February. That’s the 1^st decrease since November. They still have the lowest increase since 2019 and remain in last place in terms of the monthly increase vs last year for Pet Segments. As we noted earlier, prices deflated in 2020>2021 so the 2021>2023 inflation surge accounted for 100+% of the total price increase since 2019. They reached an all-time high in October then prices deflated. 3 straight months of increases pushed them to a new record high in February. but prices fell slightly in March.
• Veterinary Services – Prices are +0.9% from February. They are +7.7% from 2022 and are now in 3rd place behind Food & Services in the Pet Industry. However, they are the leader in the increase since 2019 with 26.9% compared to Food at home at 24.5%. For Veterinary Services, relatively high annual inflation is the norm. The rate did increase during the current surge so 65% of the 4 years’ worth of inflation occurred in the 2 years from 2021>2023.
• Medical Services – Prices turned sharply up at the start of the pandemic but then inflation slowed and fell to a low rate in 20>21. In March prices fell -0.5% from February and were +1.0% vs 2022, the lowest rate from 2019>23. Medical Services are not a big part of the current surge as only 34% of the 2019>23 increase happened from 21>23.
• Pet Services – Inflation slowed in 2020 but began to grow in 2021/2022. March 23 prices were up +0.8% from last month and +8.0% vs 2022, the 2^nd highest rate next to January’s +8.4%. Initially their inflation was tied to the current surge, but it may be becoming the norm as only 61% of the total since 2019 occurred from 21>23, down from 73%.
• Haircuts/Other Personal Services – Prices are +0.2% from Feb. and +5.4% from 2022, the 2^nd highest rate since 2019. Inflation had its biggest increase in 20>21 so just 50% of the inflation from 19>23 happened from 21>23.
• Total Pet– Petflation is 25% higher than the 21>22 rate, 88% ahead of the National CPI and the +9.4% is the highest March rate in history. Prices increased in all segments but Supplies vs February so Total Pet was up 0.7%. This was expected as a Feb>Mar increase in Petflation has happened in 23 of the last 26 years. Food is the runaway leader, but the 22>23 inflation rate for all but Supplies exceeds the 21>22 rate. Pet Food has generally been immune as Pet Parents are used to paying a lot. However, inflation can cause reduced purchase frequency in the other Segments.

Now, let’s look at the YTD numbers.

The increase from 2022 to 2023 is the biggest for 5 of 9 categories. The 22>23 rate for Haircuts/Services is essentially tied with 21>22. The Total CPI, Pet Supplies & Medical Services are significantly down from 21>22. The average annual increase since 2019 is 4.4% or more for all but Medical Services (3.2%) and Pet Supplies (2.7%).

• U.S. CPI – The current increase is down 27.5% from 21>22 but is still 32% more than the average increase from 2019>2023, and more than 3 times the average annual increase from 2018>2021. 75% of the 18.9% 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 1^st half of 2021 kept YTD prices low then prices surged in 2022. 90.7% of the inflation since 2019 occurred from 2021>23.
• Food at Home – The 2023 YTD inflation rate has slowed slightly but still beat the U.S. CPI by 71%. You can see the impact of supply chain issues on the Grocery category as 79% of the inflation since 2019 occurred from 2021>23.
• Pets & Pet Supplies – While the inflation rate is down slightly at about 5.6%, prices remain near February’s record high. Prices deflated significantly in 2021 which helped to create a very unique situation. Prices are up 11.3% from 2019 but 114% of this increase happened from 2021>23. Prices are up 12.9% from their 2021 “bottom”.
• Veterinary Services – They held onto the top spot in inflation since 2019 but they are only the 4^th highest since 2021. At +5.9%, they have the highest average annual inflation rate since 2019 but Veterinary is unique. They are the only category in which the inflation rate grew steadily every year from 2019>2023. Throughout the pandemic and recovery, no matter what, just charge more.
• Medical Services – Prices went up significantly at the beginning of the pandemic, but inflation slowed in 2021. In 2023 prices have deflated monthly to reach a rate actually 12.5% below the pre-pandemic 2018>19 rate.
• 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>Mar. The January increase of 8.4% was the largest in history. YTD March remained stable at 8.0%. Growing demand with decreased availability is a formula for inflation.
• 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. The YTD rate is 11% below the 2020>21 peak but is 59% more than 2018>19. Consumers are paying 20% more than in 2019. This usually reduces the purchase frequency.
• Total Pet – We have seen basically two different inflation patterns. After 2019, Prices in the Services segments continued to increase, and the rate accelerated as we moved into 2021. The product segments – Food and Supplies, were on 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 have continued to climb. Supplies prices stabilized Apr>May, grew Jun>Oct, fell in Nov, rose in Dec>Feb, then fell in Mar. The Services segments have had ups & downs but are generally inflating. The net is a YTD Petflation rate vs 2022 of 10.3%, 77.6% more than the National rate. In March 22 it was 27.5% less than the CPI.

Petflation is still very strong. Let’s put the numbers into perspective. Petflation fell from 10.9% in February to 9.4% in March. This is below the record 12.0% set in November, but it is a record for the month. Some good news is that after 7 straight months over 10%, we are finally out of the double digits. However, the current rate is 6 times more than the 1.6% average rate from 2010>2021. 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 driven by higher incomes, so inflation is less impactful. This recognized 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 9.4% from 2022 but they are up 17.6% from 2021 and 22.0% 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 is definitely possible in products. It’s happened before. Let’s hope for a repeat.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

This chart shows the number of new winners/losers.

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

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

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

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

Now the Age and Racial/Ethnic Categories

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

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

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

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

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

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

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

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

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

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

And Finally, What you have all been waiting for…

THE ULTIMATE 2021 PET SPENDING CUs – Side by Side

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

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

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

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

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

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

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

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

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

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

Now we will turn our attention to the final Industry Segment – Veterinary Services. For years, Veterinary Services prices have had high inflation. This has resulted in CU income becoming the most dominant factor in spending behavior and a reduction in visit frequency. Consumers paid more, just used Veterinary Services less often.

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.

We’ll start our analysis with the groups who were responsible for the bulk of Veterinary spending in 2021 and the $7.82B increase. The first chart details the biggest pet 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 – 6 of 10 groups perform above 120%, the same as 2018>2020. This is equal to Supplies and more than Food (5) but less than Services (7). This means that these big spenders are performing well but it also signals that there is still a large disparity between the best and worst performing demographics in this “needed” segment. The groups are the same as those for Total Pet and categories are listed in the order that reflects their share of Total Pet $pending. As with all Industry Segments, High Income is the most important factor in Spending.

1. Race/Ethnic – White, not Hispanic (84.7%) down from 87.2%. This group accounts for the vast majority of spending in every segment, but they lost significant share in 2021. Their 126.0% performance is also down from 127.5% and they fell from 3rd to 4th in importance in Veterinary Spending but it still reflects the disparity in spending. Minorities did narrow the gap in 2021 primarily due to a $1.5B, 91% lift by Hispanics. However, all groups spent more.
2. # in CU – 2+ people (79.7%) up from 77.9% This group, which is 69.5% of U.S. CUs, gained share and their performance grew from 111.0% to 114.7%. Their rank in terms of importance in Veterinary Spending stayed at #8. All sizes spent more. The biggest $ lift, +$3.43B, came from 2 person CUs. 4 people had the biggest % gain, +75.8%.
3. Housing – Homeowners (81.0%) down from 83.1% Homeownership is a major factor in pet ownership and spending in all industry segments. In terms of importance to Veterinary spending, their 125.2% performance rating is down from 126.3%, and they fell from to 4th to 5th place. All segments increased spending by over $2B. This is impressive. However, the percentage increase for Renters was +47.7%, while Homeowners’ spending grew only 28.2%. This difference is what drove the drop in share and performance. We should note that Homeownership is not nearly as important to Veterinary Spending as it once was. In 2015 their share was 88.4% with performance of 141.8%.
4. Area – Suburban & Rural (73.0%) up from 67.1% Suburban CU’s are the biggest spenders in every segment. All areas spent more but those <2500 had a great year, +53.9%. This drove the big increase in share and their performance grew substantially to 113.2%, from 106.4%.
5. Income – Over $70K (71.7%) up from 63.4% Their performance also grew significantly from 145.8% to 160.0%. Higher income became even more important in increased Veterinary spending. Only the $30>49K group spent less. The <$30K group had a slight lift, +$0.2B (+7.2%) but the other groups, over $50K all had 40+% increases. $150K> led the way with a $4.3B (+61.8%) spending increase.
6. # Earners – “Everyone Works” (68.6%) down from 69.7% However, their Performance grew from 120.3% to 121.0% and they stayed at #6. In this group, all adults in the CU are employed. All segments spent more. Their share fell but performance increased because of a big $ lift from No Earners combined with a drop in the number of Earner CUs.
7. Education – College Grads (65.4%) up from 61.3%. Income generally increases with education. It is also important in understanding the need for regular Veterinary care. Performance also grew from 131.2% to 138.1% and they stayed 2nd in importance. Once again, all segments in the category spent more. However, College Grads spent $6.13B more. That means that 47.4% of all CUs generated 78.4% of the increase. The BA/BS group led the way with +$3.8B. BTW, Associate Degrees also spent $0.8B more, emphasizing the importance of formal, after HS education.
8. Occupation – All Wage & Salaried (66.4%) down from 68.1% but their performance increased from 110.7% to 111.9% due to 1.4M fewer CUs. All segments spent more. They lost share but gained in performance because of fewer CUs and a strong year by Retirees and non wage/salaried workers. The top 3 lifts were certainly a mixed bag: Mgrs/Professionals, +$2.27B; Retirees, +$1.59B; Service Workers, +$1.55B.
9. CU Composition – Married Couples (60.9%) up from 58.6% Their performance also grew to 128.4% from 120.8% and they moved up to #3 from #6 in importance. After 2 years, Married Couples market share returned to 60+% while their # of CUs fell by 1%. Only Single Parents spent less, -$0.1B. Married Couples with Children were +$2.57B but all Married Couple CUs with no children were +$2.75B. Singles & All Adult, Unmarried CUs were +$2.59B.
10. Age – 35>64 (62.1%) up from 60.1% Their performance also grew from 112.7% to 118.7% but they stayed in 7^th place. For the 8^th time all groups spent more and all had double digit % increases. The 55>64 yr olds led the way, +$2.20B but 35>44 was a close second, +$2.08B. Both of these segments had increases of 40+%.

Spending disparity grew in 8 categories and higher income became even more important in Veterinary spending. The most notable change was that Married Couples again reached a 60% share and moved from 6^th to 3^rd in importance. There was also a strong showing by 35>44 (Mostly young Gen Xers) and 55>64 (Mostly young Boomers).

Now, we’ll look at 2021’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 5 that are different from 2020. This is 1 more than Supplies but far fewer than the 10 in Services and the 15 in Food. This suggests considerably less spending turmoil. The changes from 2020 are “boxed”. We should note:

• Income– The winner is up from $150>199K. Winner & Loser are not surprises but the gap is 40% more than 2020.
• Earners – An expected repeat winner and loser. They have the highest and lowest incomes.
• Occupation – Retirees replaced Blue Collar at the bottom but once again, it’s all about income
• Age – The 55>64 yr-olds edged out 35>44 and replaced the highest income group, 45>54 yr-olds at the top. These 3 groups have the highest income and are the only segments performing above 100% in Veterinary Spending.
• Race/Ethnic; Education; Housing– The expected winners & losers but the performance gap grew for all but Renters.
• Area – Another set of repeats but the difference in performance (disparity) increased by over 35% from 2020.
• Region –Northeast replaced West at the top and has now won for 6 of the past 7 years. The South has finished last for 6 years in a row. The win/lose gap increased by 20%, but 2 regions performed at 100+% – the 1^st time since 2019.
• CU Composition – No change here but again the performance gap widened, by 20%.
• # in CU – 4 Person CUs edged out 2 People for the win but now 2, 3 and 4 person CU’s all perform above 100%.
• Generation – No change again and the performance gap only widened by 4%.

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 also true here. There were 8 repeats and 3 segments flipped from 1^st to last or vice versa. Last year they had 4 repeats and 10 flips. There were no surprise losers and 1 surprise winner – Millennials. In fact, in 9 categories all segments spent more, up from 4 in 2020. You should note that like 2020, the increases were significantly larger than the decreases. Plus, 94% of 96 demographic segments spent more. Here are the specifics:

• Race/Ethnic – Both groups held their spots as White, non-Hispanics maintained their dominance in this segment.
  • Winner – White, Not Hispanic – Veterinary: $27.65B; Up $5.98B (+27.6%)                      2020: White, Not Hispanic
  • Loser – African American – Veterinary: $1.00B; Up $0.13B (+14.9%)                                  2020: African Americans
  • Comment– In 2019 only African Americans spent less. In 2020 & 2021 all spent more. This shows that Pet Parents commitment to the health & wellbeing of their Pet Children is widespread across all racial/ethnic groups.
• Area Type – Center City, last year’s surprise winner flipped from 1^st to last and big Suburbs returned to the top.
  • Winner – Suburbs 2500> – Veterinary Spending: $15.97B; Up $4.40B (+38.1%)               2020: Center City
  • Loser – Center City – Veterinary Spending: $8.83B; Up $0.66B (+8.1%)                               2020: Suburbs 2500>
  • Comment – All groups also spent more. The Suburbs 2500> went from a 3% increase in 2020 to a 38%, $4.4B increase in 2021. However, the Areas <2500 had the biggest % increase, +56.1%, up $2.2B.
• Education – BA/BS Degree replaced Advanced College Degree at the top while <HS Grads stayed on the bottom.
  • Winner – BA/BS Degree – Veterinary Spending: $11.62B; Up $3.79B (+48.4%)                2020: Adv. College Degree
  • Loser – <High School Grads – Veterinary Spending: $0.37B; Up $0.03B (+8.3%)            2020: <HS Grads
  • Comment – All Education levels spent more but the lift was very much skewed towards higher Education. College grads generated 78.4% of the lift but those with at least an Associate’s Degree were responsible for 88.9%.
• Housing – Homeowners w/Mtges held their usual position at the top.
  • Winner – Homeowner w/Mtge – Veterinary: $17.56B; Up $3.49B (+24.8%)                2020: Homeowner w/Mtge
  • Loser – Renter – Veterinary: $6.19B; Up $2.00B (+47.7%)                                                   2020: Renter
  • Comment – Every segment spent more and had an increase of at least $2B. You know that it was a great year when the “loser” spent 47.7% more.
• # in CU – 2 Person CUs held on to the top spot.
  • Winner – 2 People – Veterinary Spending: $13.16B; Up $3.43B (+35.2%)                       2020: 2 People
  • Loser – 3 People – Veterinary Spending: $5.02B; Up $0.22B (+4.7%)                               2020: 1 Person
  • Comment: For the second consecutive year all groups spent more. 4 Person CUs went from a $0.04B (+1.5%) increase in 2020 to up $2.22 (+75.8%) in 2021.
• Region – The Northeast flipped from last to 1st. This is 4 consecutive years of flips for this Region.
  • Winner – Northeast – Veterinary Spending: $7.52B; Up $3.42B (+83.5%)                      2020: West
  • Loser – Midwest – Veterinary Spending: $6.45B; Up $1.19B (+22.5%)                              2020: Northeast
  • Comment – All Regions had double digit percentage increases of at least $1.19B. The Midwest replaced the Northeast at the bottom and the South fell to 3^rd place after 4 consecutive years at #2.
• Generation – No flips and the winner and loser were both new.
  • Winner – Millennials – Veterinary: $9.23B; Up $3.18B (+52.5%)                                    2020: Baby Boomers
  • Loser – Born <1946 – Veterinary: $1.83B; Down $0.19B (-9.2%)                                     2020: Gen Z
  • Comments – In a bit of a surprise, Millennials replaced Boomers at the top. The oldest Generation had the only decrease as the Silent/Greatest replaced Gen Z at the bottom. In 2021, Millennials, younger Gen Xers and younger Boomers all had a strong year in Veterinary spending.
• # Earners – Both the winner and loser are new, but not surprising.
  • Winner – 2 Earners – Veterinary Spending: $13.19B; Up $3.17B (+31.6%)                     2020: 3+ Earners
  • Loser – 1 Earner, Single – Veterinary Spending: $4.22B; Up $0.19B (+4.7%)                2020: No Earner, Single
  • Comment – The winner and loser reflect their income levels. Income is of primary importance to increased Veterinary Spending & # of earners is tied to income. In 2021 all CUs, with or without earners, spent more. 1 Earner, Singles had the only single digit % increase.
• Income – Both the winner and loser are new.
  • Winner – $200K> – Veterinary Spending: $6.32B; Up $2.58B (+69.0%)                        2020: $100>149K
  • Loser – $30>39K – Veterinary Spending: $1.24B; Down $0.61B (-33.1%)                        2020: $70>99K
  • Comment – Only the $30>39K group spent less. We got off last year’s spending rollercoaster as the size of the increase in Veterinary spending generally grew with income, peaking at $200K> in both $ and percentage.
• CU Composition – Married Couple Only held their spot at the top.
  • Winner – Married, Couple Only – Veterinary: $9.31B; Up $2.28B (+32.4%)                          2020: Married, Couple Only
  • Loser – Single Parents – Veterinary: $0.61B; Down $0.09B (-12.6%)                                         2020: Married, Oldest Child <6
  • Comment – After a 68% increase in 2020, Single Parents were the only group to spend less in 2021. Overall, Marriage became more important as 47.4% of CUs generated 60.9% of Veterinary $ and 68% of the increase.
• Occupation – The winner held on while the loser changed from White Collar to Blue Collar.
  • Winner – Mgrs & Professionals – Veterinary Spending: $12.14B; Up $2.27B (+23.0%)        2020: Mgrs & Profess.
  • Loser – Construction Workers – Veterinary Spending: $0.65B; Up $0.06B (+9.9%)              2020: Tech/Sales/Clerical
  • Comment – Retirees finished in 2^nd place, +$1.59B and not all Blue Collar workers had small increases. Service Workers were +$1.55B (+64.5%), the highest % increase of any segment.
• Age – A new winner and loser.
  • Winner – 55>64 yrs – Veterinary Spending: $7.65B; Up $2.20B (+40.4%)                      2020: 25>34 yrs
  • Loser – <25 yrs – Veterinary Spending: $0.42B; Up $0.09B (+28.2%)                                2020: 35>44 yrs
  • Comment: Last year 2 groups spent less. In 2021 all segments increased Veterinary spending. 55>64 replaced 25>34 at the top while <25 replaced 35>44 on the bottom. This seemed to indicate that the $ were skewing a little older. In fact, the 25>55 age group generated 56% of the spending increase while 55 and over accounted for 42%. The younger groups are still strongly growing.

We’ve now seen the winners and losers in terms of increase/decrease in Veterinary Spending $ for 12 Demographic Categories. The 2020 pandemic brought strong  growth in Veterinary spending which grew even stronger in 2021. However, the lift came with little turmoil as most segments held their spots in performance and there were no significant surprises in $ changes. The surprise was in just how widespread the spending lift was. In 2020, 4 categories, had no segments that spent less and 85% of all demographic segments spent more. In 2021 these increased to 9 categories and 94%. This means that there were even more “hidden” segments that didn’t win but made a significant contribution to the $7.82B increase. These groups don’t win an award, but they certainly deserve….

Honorable Mention

Racial/Ethnic spending became a little more balanced thanks to a 91% increase by Hispanics. Veterinary spending is driven by income but the lowest income group, No Earner, Singles had the biggest % increase. Low income Service Workers also had a huge, 64.5% lift. Although they are the 2^nd highest income segment, they are rarely the winner. In 2020 their increase in Veterinary $ was only 1%. In 2021 they exploded with a $1.72B (53.5%) lift, but this was only good enough for 3^rd place in the income category. The 35>44 yr-olds had a great year, finishing 1^st a number of times in other industry segments. In Veterinary they had to settle for 2^nd place behind the 55>64 yr-olds. They are a perennial 2^nd place finisher. In 2021, even a $2.1B increase was not enough to move them up. It was also a strong year for all Homeowners.

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 94% of all segments spending more.

There was also less turmoil in the segment, but spending became a little less balanced in most demographic categories. The size of the increases far exceeded the size of the decreases. However, in 9 categories all segments increased spending. Income and Education remain of primary importance in terms of increased spending.

Income: Performance generally increases with income and reaches its highest level, 225+% at $200K>. The “halfway” point (50%) in $ fell below $100K for the 1^st time in 2020. It turned up sharply in 2021 to $113K. Spending is less  balanced in most categories in 2021 due to income.

Higher Education: Performance increases with Education but now reaches 100% when you have an Associates degree. Those with a BA/BS or higher perform at 138%. The performance of those with no “formal” College Degree is 57%. The disparity is not quite as bad as Income but still big. Equality in both categories is a long way off.

The performance of other big spending groups is also very important in the Veterinary segment. We again identified six demographic categories with high performing large groups. There were 6 for Supplies, 7 for Services but only 5 for Food.  Consumers have no control over Race/Ethnicity but in addition to Income and Education, Homeownership, # Earners & Marriage are also important factors in Veterinary spending. All groups but Marriage are tied to income and their high performance demonstrates that there are still big spending disparities among segments within these categories.

There was really only 1 change of note. Marriage returned to prominence moving up from 6^th to 3^rd in importance.

In 2019 Veterinary spending increased +2.7% while prices rose 4.14% – a net decrease in the amount of Services. In 2020 spending grew +14.0% while inflation was 3.7%. That’s over 10% in real growth, a very positive situation. In 2021 inflation rose to 4.9% but spending skyrocketed, +31.5%. That means 26.6% in “real” growth, 84% of the total record increase – truly spectacular. Although the lift was demographically widespread, Veterinary spending became a little less balanced. We’ll see if Pet Parents continue to spend heavily on Veterinary Services with the high inflation rates in 2022.

Finally – The “Ultimate” Veterinary Services Spending Consumer Unit consists of 4 people – a married couple with an oldest child over 18. They are 55>56 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 Northeast U.S. and are still paying off the mortgage on their home.