Archive for category: Pet Market Segments

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.

Let’s see which groups were most responsible for the bulk of Pet Supplies spending in 2021 and the $8.65B increase. 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 so its skewed younger than Food. The categories are presented in the order that reflects their share of Total Pet Spending. This highlights the differences in importance. All 10 of the groups have over a 60% market share. The big difference is in performance. There are 6 groups with performance over 120%. That’s one more than Total Pet and Pet Food. However, 9 of 10 groups have performance of 117.8% or higher. That’s the most of any segment and indicates that Supplies spending became less balanced in 2021.

1. Race/Ethnic – White, not Hispanic (83.2%) down from 83.3%. This large group accounts for the vast majority of spending in every segment. Their share remained essentially stable and their performance grew from 121.8% to 123.9% but they fell from #4 t0 #6 in importance in Supplies Spending. Minority groups account for 32.8% of all CUs but spend only 16.8% of Supplies $. This is actually their biggest share of any segment. All groups spent more. Most of the increase came from Whites but Asians and Hispanics had the biggest % increases.
2. # in CU – 2+ people (83.3%) up from 79.5%. Their performance increased to 119.8%, from 113.3%. All CU sizes, including singles had double digit percentage increases. 2 Person CU’s had the biggest $ increase, +$2.91B but 5+ and 4 person CUs had the highest percentage increase and led in performance.
3. Housing – Homeowners (76.9%) down from 77.7%. Homeownership is a big factor in pet ownership and spending in all segments. Their share of Supplies $ fell but their performance grew slightly to 118.9%, from 118.0% due to a 1% drop in homeowner’s share of CUs. They also fell from 6^th to 8^th place in terms of importance for increased Supplies spending. Homeowners with and without a mortgage and renters all spent at least 46% more on Supplies in 2021.
4. Area – Suburban & Rural (76.0%) up from 67.1%. This was a spectacular gain in share and their performance grew to 117.8%, from 106.4% in 2020. The big Suburbs, over 2500 population led the way with a $5.99B, +90.8% increase but all areas, including Center City had double digit percentage increases.
5. Income Over $70K (68.4%) up from (61.1%) Another big gain in share and their Performance also grew from 140.5%, to 152.7%. Income remains the most important factor in increased Pet Supplies Spending and got even stronger in 2021. After a 24% increase in 2020, the $40>49K group was the only Income segment to spend less on Supplies in 2021. The highest income group, $200K> led the way with a $4B, +165.9% increase. However, all segments but $40>49K spent at least 32% more on Supplies in 2021. Of Note: All incomes over $100K perform above 100%.
6. # Earners – “Everyone Works” (73.4%) up from 72.8%. Their performance grew from 127.0% to 129.5% but they fell from #2 to #4 in importance. In this group, all adults in the CU are employed. The # Earners is more important than in Food but it is income that truly matters. All earner/no earner CUs spent more but 2 Earners led the way, +$5.2B. Only CUs with 2 or more earners perform above 100%.
7. Education – College Grads (68.3%) up from 56.7%. Higher Education lost market share in 2020 but they got it back in 2021. Their performance level also radically increased from 121.4% to 144.3% and they took over the #2 spot in importance. The only decrease came from those without a High School Diploma. However, College Grads led the way with a $7.7B lift, 89% of the increase for the entire segment. A College Degree generally leads to a higher income and as we have seen, higher income matters a lot in Supplies spending.
8. Occupation – All Wage & Salary Earners (60.9%) down from 68.0%. The performance of this group was 102.6%, down from 110.7%. All occupations and Retirees spent more. The big drop in share and performance happened because 50% of the total $ increase came from CUs without a regular wage/salaried worker.
9. CU Composition – Married Couples (62.0%) up from 60.0%. Their performance also increased from 123.7% to 130.8% and they stayed 3rd in importance. All types of CU Composition spent more on Supplies. Married Couples with the oldest child 6>17 led the way with a $3.53B increase but the $8.65 spending lift was pretty equally divided between CUs with children, +$4.4B and those with no children, +$4.25B.
10. Age – 35>64 (66.3%) up from 60.7%. A big lift from the 55>64 yr-olds caused spending to skew slightly older in 2021 so 35>64 replaced 25>54. The new group’s performance level increased to 126.6% from 113.9% but the age category dropped from #4 to #5 in importance. The <25 Gen Zers spent -$0.03B less but all other age groups had at least a 25% increase. The 35>44 group led the way with a $4B lift that more than doubled their Supplies spending,

Pet Supplies spending skews younger than Food. Spending decreased in the pandemic as consumers focused on needs rather than the more discretionary Supplies. That ended in 2021 as Pet Parents caught up with the many Pet Supplies purchases that had been “put off” for a year or more. However, the increase from 5 to 6 groups with 120+% performance, with 9 over 117.8% indicates increased spending disparity between segments.

Now, we’ll look at 2021’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. In Pet Supplies spending, there are only 4 that are different from 2020. That is 1 less than Veterinary, 6 less than Total Pet & Services and 11 less than Pet Food. Supplies has the lowest number of total changes and by far the fewest new winners. As we move deeper into the data, we will see even more differences between the Industry Segments. Changes from 2020 are “boxed”. We should note:

• Income matters in Supplies spending.
  • The $200K> was group the top performer in all industry segments but Food, where $150>199K won. However, in Supplies their performance was double that of 2^nd place ($150>199K), the biggest gap for any segment.
• # Earners – 2 Earners replaced 3 Earners at the top but again, only these 2 groups performed above 100%.
• Age – Last year 45>54 edged out 35>54 for the win. This year they traded places but the 35>44 yr-olds won by over 70%. Both are mostly Gen Xers which is further proof that Gen Xers “rule” in Supplies spending.
• Region – The West won again but 2 regions performed over 100%. The South returned to its usual spot at the bottom. However, the performance disparity from 1^st to last grew from under 20% in 2020 to over 100% in 2021.
• CU Composition – Singles replaced Single Parents at the Bottom. The 2020 winner held their spot. However, in 2021 they were the only Married w/children segment to perform over 100%. Last year they all did.

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 turned their attention to the multitude of Supplies needed by their “children” and spent a record $8.65B more. In the chart, there are 5 repeats from 2020 – 4 winners and 1 loser. Also, 5 segments switched from last to first and 1 flipped from 1^st to last. This is more turmoil than in 2020 when there were 7 repeats but only 2 “flips”. However, the 2021 turmoil was very positive. In 2020 all segments in the Region category spent less. In 2021, all segments in 9 of 12 categories spent more. The record lift in 2021 more than made up for 2 straight years of decreases. Here are the specifics:

• Race/Ethnic – White, Not Hispanic flipped from last to 1^st but all racial/ethnic groups spent more.
  • Winner – White, Not Hispanic – Supplies: $19.81B; Up +$7.19B (+56.9%)                             2020: Asian Americans
  • Loser – African Americans – Supplies: $0.75B; Up $0.02B (+3.4%)                                          2020: White, Not Hispanic
  • Comment – Although their share of Pet Supplies $ has fallen from 86.3% in 2018 to 83.2% in 2021, 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 clear in the Racial/Ethnic category. Whites had the most to lose and they did in 2020. They also had the most to gain in 2021 and they did that too, +$7.2B.
• Area Type– After 2 years at the bottom, the Big Suburbs flipped from last to 1^st, but all areas spent more.
  • Winner – Suburbs 2500> – Pet Supplies Spending: $12.58B; Up +$5.99B (+90.8%)                2020: Areas <2500
  • Loser – Center City – Pet Supplies Spending: $5.72B; Up $0.73B (+14.6%)                                2020: Suburbs 2500>
  • Comment– In Supplies spending, more space meant more $ as areas under 2500 pop finished 2^nd, +$1.9B (+54%).
• Region – The West flipped from last to first.
  • Winner – West – Pet Supplies Spending: $9.38B; Up $5.49B (+140.8%)                                     2020: Midwest
  • Loser – Northeast – Pet Supplies Spending: $3.60B; Up $0.96B (+36.2%)                                 2020: West
  • Comment – In 2018, all regions spent more on Supplies. In 2019 and again in 2020 all Regions spent less. Supplies was the only industry segment that was all negative in both years. 2021 brought a big turnaround, as like 2018, all Regions spent more. The West led the way but with “rounding”, the other regions all had $1+B increases.
• # Earners – 2 Earners won with another last to 1^st flip, but all segments spent more.
  • Winner – 2 Earners – Pet Supplies Spending: $11.77B; Up +$5.18B (+78.7%)                          2020: 1 Earner, Single
  • Loser – No Earner, Single – Pet Supplies Spending: $1.17B; Up $0.44B (+60.1%)                    2020: 2 Earners
  • Comment – Income is a big factor and the # of Earners is important in Supplies Spending. 2 Earner CUs had by far the biggest increase and Everyone Works CUs generated 75% of the spending lift. However, the increase was widespread as CUs with No Earners increased their Supplies spending by 68.3%.
• Housing – The winner and loser held their position from 2020 as all segments spent more in 2021.
  • Winner – Homeowner w/Mtge – Supplies: $13.32B; Up +$4.97B (+59.6%)                             2020: Homeowner w/Mtge
  • Loser – Homeowner w/o Mtge – Supplies: $4.99B; Up $1.57B (+45.7%)                                 2020: Homeowner w/o Mtge
  • Comment – You’re in a good position when the “loser” had an increase of 45.7%. Homeowners w/Mtge supplied most of the $ but Renters actually had the biggest percentage increase, +62.2%.
• Education – Advanced College Degrees held their expected spot at the top.
  • Winner – Advanced College Degree – Supp. Spending: $8.84B; Up +$4.76B (+116.7%)          2020: Adv College Degree
  • Loser – <HS Grad – Supplies Spending: $0.46B; Down $0.29B (-38.3%)                                       2020: BA/BS Degree
  • Comment – The spending flowed just as expected with those without a High School Diploma having the only decrease and those with a College Degree providing $7.7B (88.7%) of the total increase.
• Income – The low income $40>49K flipped from 1^st to last
  • Winner – $200K> – Pet Supplies Spending: $6.41B; Up +$4.00B (+165.9%)                              2020: $40>49K
  • Loser – $40>49K – Pet Supplies Spending: $1.01B; Down -$0.26B (-20.6%)                             2020: $70>99K
  • Comment – Last year’s winner, $40>49K had the only decrease in spending and the $200K> group moved to the top where they belong. Income does matter a lot in Supplies Spending. The $200K group led with a $4B increase. However, CUs $100K> (30%) provided 71% of the lift and were the only segments that performed at 100+%.
• Age – The winner and loser were both new.
  • Winner – 35>44 yrs – Pet Supplies Spending: $7.17B; Up $4.00B (+126.3%)                            2020: 25>34 yrs
  • Loser – <25 yrs – Pet Supplies Spending: $0.53B; Down -$0.03B (-5.1%)                                  2020: 55>64 yrs
  • Comment: Only <25 spent less. The 55>64 yr-olds finished a surprising 2^nd with a $1.7B, +63% increase.
• Generation – No flips/repeats. After 3 consecutive years of winning, Millennials were replaced at the top by Gen X.
  • Winner – Gen X – Supplies: $9.40B; Up +$3.91B (+71.2%)                                                          2020: Millennials
  • Loser – Gen Z – Supplies: $0.50B; Up $0.10B (+25.4%)                                                                2020: Baby Boomers
  • Comment – All generations spent more. Baby Boomers, +$2.31B and Millennials, +$2.30B essentially finished in a tie for 2^nd The Silent Generation (Born <1946) then came in a distant 4^th, +$0.13B.
• CU Composition – Married, Oldest Child 6>17 held on to the top spot.
  • Winner – Married, Oldest Child 6>17 – Supplies: $5.89B; Up $3.53B (+149.4%)                       2020: Married, Oldest Child 6>17
  • Loser – Married, + Other Adults – Supplies: $0.93B; Up $0.14B (+17.7%)                                   2020: Married, Couple Only
  • Comment – All CU types – with or without children spent more. CUs with children (27.1%) accounted for $4.4B, 50.9% of the increase while CUs without children (62.9%) accounted for $4.2B, 49.1%.
• # in CU – 2 People flipped from last to 1^st but all sizes spent more than in 2020.
  • Winner – 2 People – Pet Supplies Spending: $8.34B; Up $2.91B (+53.6%)                                  2020: 5+ People
  • Loser – 3 People – Pet Supplies Spending: $3.27B; Up $0.87B (+36.3%)                                      2020: 2 People
  • Comment: 5+ CUs finished 2^nd +$2.37B, +117%. They more than doubled Supplies spending and are the only segment with increases in 2020 & 2021. 3 People finished last in $ but Singles had the lowest % increase, +28%.
• Occupation – Managers & Professionals held their spot at the top.
  • Winner – Managers & Professionals – Supplies Spending: $7.79B; Up +$2.13B (+37.7%)           2020: Mgrs/Profess.
  • Loser – Operators & Laborers – Supplies Spending: $0.64B; Up $0.15B (+30.7%)                         2020: Retired
  • Comment – Only Managers & Professionals and Self-Employed spent more in both 2020 & 2021. In 2021 all Occupations, including Retirees, spent more on Supplies.

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 performance, there were no surprise winners and 10 of 12 were the same as 2020. All of the winners were either 1^st or 2^nd in CU income for segments 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

In 2019, all numbers from these segments were negative. In 2020, 5 were positive. Now, in the spectacular 2021, the worst performer was up over 53%. Some are unexpected and again it is an eclectic mix. Asian Americans have a high income but a low percentage of households with pets. They doubled the $ spent on Supplies. Supplies $ are usually tied to Marriage & Kids but Unmarried Adult 2+ CUs spent $1.6B more. Supplies spending has increasingly skewed younger but 2021 was a strong year for 55>64, mostly young Boomers. Homeowners “rule” Supplies spending but Renters spent over $2B more in 2021. 2020 was the year of “bosses”, but 2021 brought a widespread lift. This included a $1.3B lift from lower-level White Collar workers, Tech/Sls/Clerical. Gen X was the leader in 2021 Pet Spending, but Millennials are still a major player, especially in Supplies where they had a $2.2B, 53% increase. 2021 was arguably the best year in history for the Supplies Segment. We have selected these 6 segments for Honorable Mention but 93 of 96 demographic segments spent more on Supplies in 2021. This group probably should have a lot more members.

Summary

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

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

2018 started out as expected with a $1B increase in Supplies and a small lift in Food. Then the government got involved. In July the FDA issued a warning on grain free dog food and spending dropped over $2B. New tariffs were implemented on Supplies and spending flattened out then turned down $0.01B in the 2^nd half. The full retail impact of Tariffs hit home in 2019 when 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. Pet Parents traded $. Some good news was that Supplies spending became more balanced. The performance gap between best and worst narrowed by 10.25%.

That brought us to 2021. The overall Retail Market strongly recovered but with no replication of the 2020 buying binge Pet Food $ dropped. In the Supplies segment, 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, over twice the size of the previous best. In fact, the $8.65B lift was larger than the annual Supplies spending for all years prior to 2003. While the bulk of the $ increase came from higher income groups the lift was truly widespread as 97% of all demographic segments spent more on Supplies. Prices are still important in Supplies Spending. They remained low throughout 2021 then skyrocketed to record highs in 2022. We’ll see how or if this impacted spending.

Finally – The “Ultimate” Pet Supplies Spending CU consists of 5 people – a married couple, with an oldest child 6>17. They are 35>44 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. They’re doing well with an income over $200K. They live in a small suburb in the Western U.S. and are still paying off the mortgage on their home.

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

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

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

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

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

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

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

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

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

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

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

Honorable Mention

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

Summary

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

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

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

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

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

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

Inflation continues to make headlines. The YOY increases in the monthly Consumer Price Index (CPI) are larger than we have seen in decades but are slowing a little. November prices fell -0.1% from October. The CPI was still up +7.1% vs 2021, but down from +7.7% last month. The grocery price surge also slowed but they’re still up 12.0% over 2021. That’s 9 straight months of double-digit YOY monthly percentage increases. These are the first 10+% increases since 1981. As we have seen in recent years, even minor price changes can affect consumer pet spending, especially in the discretionary pet segments, so we will continue to publish monthly reports to track petflation as it evolves in the market.

Total Pet prices were 4.1% higher in December 2021 than in December 2020, while the overall CPI was up 7.0%. The gap narrowed as Petflation accelerated and reached 96.7% of the national rate in June. National inflation has slowed since July, but Petflation has increased, passing the National rate in July and is +12.0% in November, 69.0% higher than the national rate of 7.1%. We need to look a little 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 22 vs 21 which will include Pet Segments and relevant Human spending categories. Plus
  1. CPI change from the previous month
  2. Inflation changes for recent years (20>21, 19>20, 18>19)
  3. Total Inflation for the current month in 2022 vs 2019
  4. Average annual Year Over Year inflation rate from 2019 to 2022
• 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 2020 to November 2022. 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 those from 12 and 24 months earlier are included as are the year-end numbers for 2020 & 2021.This will give you some key waypoints for comparisons.

The pandemic hit home in 2020. In November, the national CPI was only +1.3% and Pet prices were +0.1%. As you can see, Veterinary and Services prices generally inflated after mid-2020, similar to the overall CPI while Food and Supplies prices generally deflated until late 2021. After that time, Petflation took off. Pet Food prices consistently increased but the other segments had mixed patterns until July 2022, when all increased. In August>October Petflation accelerated, except for a miniscule dip in Veterinary in October. In November, Services and Food prices surged, Veterinary stabilized, but Supplies fell. However, Total Petflation since December 2019 passed the National CPI lift for the 1^st time.

• 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/Aug 2022. 43% of the overall 15.9% increase since 2019 happened from Jan>June 2022.
• Pet Food – Prices stayed generally below December 2019 levels from April 2020 to September 2021, when they turned up. There was a sharp increase in December but 90% of the 16.6% increase has happened since January.
• 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 when they turned sharply up reaching a new all-time pricing high in January, beating the 2009 record. They plateaued from February> May, turned up in June, flattened in July, turned up in Aug>Oct then fell in November.
• 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>Nov.
• Veterinary – Inflation has been pretty consistent in Veterinary. Prices turned up in March 2020 and grew through 2021. A pricing surge began in December which put them above the overall CPI. In May prices fell and stabilized in June. Prices turned up again and despite an October dip they have been above the National CPI since July.
• Total Pet – The blending of patterns made Total Pet appear calm. In December 2021 prices surged. The segments had mixed up & downs Mar>Jun but Petflation has accelerated since July and passed the U.S. CPI in November.

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’ve added some human categories to put the pet numbers into perspective.

Overall, Prices were -0.1% vs October but were up 7.1% vs November 2021. The Grocery increase is down to 12.0% which is still a big negative but there is another area of concern. 6 of 9 categories had increases from October. 4 were over 0.5%, 3 were Pet. The U.S. CPI rate is slowing but Petflation, especially in Food & now Services, is getting worse.

• U.S. CPI– Prices are -0.1% from October. The YOY increase is +7.1%, down from the 9.1% peak in June. The targeted inflation rate is <2% so we are still about 4 times higher than the target. However, a 5th slight decline is good news.
• Pet Food– Prices are +0.8% vs October and 15.7% vs Nov 21. They are now 31% higher than the Food at Home inflation rate – not good news! The YOY increase is being measured against a time when prices were essentially at 2019 levels, but that increase is still over 4 times the pre-pandemic 3.7% increase from 2018 to 2019.
• Food at Home – Prices are down -0.04% from October. The increase from 2021 is 12.0%, down slightly from 12.4% last month. Inflation for this category since 2019 is the highest on the chart and is 49% more than the national CPI.
• Pets & Supplies – Prices fell -0.4% from October, the 2^nd biggest decrease overall and the only one in Pet. They still have the lowest increase since 2019 but are still the 3^rd highest in monthly increase vs 2021 for Pet Segments.
• Veterinary Services – November prices rose +0.1% from October. They are +11.0% from 2021 and trail only Food in the Pet Industry. They also remain 2^nd in the increase since 2019 with 19.2% compared to Food at home at 23.4%.
• Medical Services – Prices turned sharply up at the start of the pandemic but then inflation slowed and fell to a low rate in 2021. In November prices fell again and 2022 prices are now 14% below the pre-pandemic 2018>19 rate.
• Pet Services – Inflation slowed in 2020 but began to grow in 2021/22. November prices spiked, +1.1% from October and +7.4% vs 2021, reaching yet another new record high.
• Haircuts & Other Personal Services – Prices are +1.4% from Oct. and +6.8% from 2021. They are +16.9% since 2019.
• Total Pet– Petflation is strong, 3.4 times the rate of last year and is 69.0% ahead of the National CPI. All but Supplies increased prices in November, but inflation is still primarily being driven by Food & Veterinary. Inflation can cause reduced purchase frequency in Supplies, Services and Veterinary. Super Premium Food has been generally immune as consumers are used to paying a lot and it is needed every day. We’ll see if consumers are willing to pay the new high prices for food and buy the more discretionary products/services at the same frequency as they did in the past.

Now here’s a look at Year-to-Date numbers. How does 2022 compare to previous years…so far?

The increase from 2021 to 2022 is the biggest for 8 of 9 categories. The average annual increase since 2019 is 3.4% or more for all but Pet Food & Pet Supplies. This is largely due to deflation in the 1^st half of 2021.

• U.S. CPI – The current increase is still almost double the average increase from 2019>2022, but nearly 4 times the average annual increase from 2018>2021. Inflation is a big problem that started recently.
• Pet Food – Inflation is growing stronger, especially after deflation in the 1^st half of 2021 kept YTD prices low.
• Food at Home – The 2022 YTD inflation beat the U.S. CPI by 41%. You can see the impact of supply chain issues.
• Pets & Pet Supplies – Prices have been at record levels since January. Although the 2021>22 increase is being measured against a “flat” 2021, it is significant and just behind Food & Veterinary in the Pet Industry.
• Veterinary Services – Trails only Food at Home in inflation since 2019 and is the only segment on the chart with a 3+% inflation rate each year 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 2022 prices surged but have now slowed. However, the inflation rate is still 26% higher than pre-pandemic 2018>19.
• Pet Services – May 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>Nov. The November YTD increase of 6.2% is the largest in history. Demand has grown for Pet Services while the availability has decreased, 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, prices turned up again. The YTD rate just passed 2020>21 and is 96% more than 2018>19. Consumers are paying over 15% 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 generally 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, then fell in November. The Services segments have had ups & downs but are generally inflating. The net is a November YTD Petflation increase vs 2021 of 8.8%, ahead of the high 8.1% National rate. In March, it was only 72.5% of the CPI.

Petflation is growing stronger. Will it impact spending? Let’s put it into perspective. The 8.8% current YTD increase in Total Pet is still below the 8.9% record set in 2009 but about 6 times more than the 1.5% avg since then. Pet spending continues to move to higher income groups, but the impact of inflation varies by segment. Supplies is the most affected as many categories are price sensitive. Super Premium Food has become widespread because the perceived value has grown. Higher prices generally just push people to value shop. Veterinary prices have strongly inflated for years, resulting in a reduction in visit frequency. Spending in the Services segment is driven by higher incomes, so inflation is less impactful. We’ll just have to wait and see the overall impact on Pet Spending of the continued strong Petflation.

In 2021 Total Pet Spending in the U.S. was $99.98B, a $16.23B (19.4%) increase from 2020. Pet Food spending fell because there was no binge buying in 2021. However, spending in the other segments skyrocketed producing the industry’s biggest increase in history. Pet Parents began to use Pet Services again, got all of the Vet services that their “children” needed and bought all the supplies that they had been putting off during the pandemic.

• A $2.44B (-6.6%) decrease in Food
• A $8.65B (+57.0%) increase in Supplies
• A $7.82B (+31.5%) increase in Veterinary
• A $2.21B (+32.0%) increase in Services

Let’s see how these numbers blend together at the household (CU) level. Weekly, 24.4 million CU’s (1/5) spent $ on their Pets – food, supplies, services, veterinary or any combination – up from 22.5M in 2020 but down from 27.1M in 2019.

In 2021, the average U.S. CU (pet & non-pet) spent a total of $748.93 on their Pets. This was a +17.4% increase from the $637.78 spent in 2020. However, this doesn’t “add up” to a 19.4% increase in Total Pet Spending. With additional data provided from the US BLS, here is what happened.

• 1.8% more CU’s
• Spent 9.5% more $
• 7.1% more often

If 68% of U.S. CU’s are pet parents, then their annual CU Total Pet Spending was $1101.37. Now, let’s look at the recent history of Total Pet Spending. The rolling chart below provides a good overview. (Note: All numbers in this report come from or are calculated by using data from the US BLS Consumer Expenditure Surveys – The 2016>2021 Totals include Veterinary Numbers from the Interview survey, rather than the Diary survey due to high variation)

• We should note a 3-year pattern since 2010. 2 years of increases followed by a small decrease.
• In 2014-15, the Super Premium Food upgrade began, with the biggest lift coming in 2015.
• In 2016, they were intensely value shopping for super premium foods. They started spending some of this saved money on Supplies and Veterinary Services, but not quite enough as spending fell slightly for the year.
• In 2017, spending took off in all but Services, especially in the 2nd half. Consumers found more $ for their Pets.
• In 2018 a spectacular lift in Services overcame the FDA issue in Food, tariffs on Supplies and inflation in Veterinary.
• In 2019 a bounce back in Food and small lift in Veterinary couldn’t overcome the drop in Supplies from “tarifflation”.
• In 2020 consumers focused on necessities, Food & Veterinary (+$8.7B) while Services & Supplies suffered (-$3.4B).
• In 2021 there was no Food binge but in all other segments consumers made up for all the lost ground…and more!

Now we’ll look at some Demographics. First, 2021 Total Pet Spending by Income Group

Only the $100>149K income group spent less, but $150K> accounted for 87% of the record $16.23B increase.

Nationally: · Total Pet: ↑$16.23B   · Food: ↓$2.44B  · Supplies: ↑$8.65B  · Services: ↑$2.21B  · Veterinary: ↑$7.82B

• < $70K – (55.2% of U.S. CUs); CU Pet Spending: $430.09, +6.3%; Total $: $31.77B, ↑$1.86B (+6.2%) ..
  • Food ↓$0.09B
  • Supplies ↑$1.63B
  • Services ↑$0.17B
  • Veterinary ↑$0.15B
  • Money matters a lot to this group. In the pandemic they focused on Pet needs, especially Veterinary. In 2021 they spent less on food but more in all other segments, especially Supplies and they beat their previous $ high in 2017.
• >$70K – (44.8% of U.S. CUs); CU Pet Spending: $1143.31, +22.0%; Total $: $68.21B, ↑$14.37B (+26.7%) from…
  • Food ↓$2.35B
  • Supplies ↑$7.02B
  • Services ↑$2.04B
  • Veterinary ↑$7.67B
  • This group continues to grow, up 4.9% in 2021. They accounted for 88.5% of the spending increase. However, it is more complicated. The $70>99K & $150K> groups had big increases, including lifts in all segments. The $100>149K had a big drop in Food because they binge bought in 2020 which turned their Total Spending down.
• < $30K – (25.5% of U.S. CUs); CU Pet Spending: $335.90, +7.0%; Total $: $11.26B, ↑$1.07B (+10.5%) from…
  • Food ↑$0.05B
  • Supplies ↑$0.69B
  • Services ↑$0.11B
  • Veterinary ↑$0.21B
  • This lowest income group has had relatively stable spending in recent years but they remain committed to their pets. They spent more in all segments, especially Supplies & Veterinary, and beat their previous $ record in 2017.
• $30>$70K – (29.7% of CUs); CU Pet Spending: $509.14, +6.7%; Total $: $20.51B, ↑$0.79B (+4.0%) from…
  • Food ↓$0.14B
  • Supplies ↑$0.94B
  • Services ↑$0.06B
  • Veterinary ↓$0.07B
  • Due to a big lift in Supplies they managed to eke out a small  increase. The small drop in Veterinary spending comes after a 23% increase in 2020. By the way, they too set a $ record, barely – $20.51B over $20.46B.
• $70>$99K – (14.8% of CUs); CU Pet Spending: $794.91, +43.8%; Tot $: $15.74B, ↑$5.10B (+48.0%) from…
  • Food ↑$2.45B
  • Supplies ↑$0.86B
  • Services ↑$0.22B
  • Veterinary ↑$1.57B
  • 2020 had double digit % drops in every segment. In 2021, all were up 26+%. A big turnaround for middle income.
• $100K>$149K– (14.2% of CUs); CU Pet Spend: $977.96, -21.1%; Tot $: $18.50B, ↓$4.87B (-20.8%) from…
  • Food ↓$8.92B
  • Supplies ↑$1.59B
  • Services ↑$0.67B
  • Veterinary ↑$1.80B
  • They were the group leader in 2015 & 2017. In 2016, they were the worst performers. In 2018/2019 their Total $ were stable. In 2020 they drove most of the Food binge buying. In 2021 they had strong lifts in Supplies, Services & Veterinary but a huge drop in Food turned Total $ down. They are reactive and have the money to take action.
• $150K> – (15.8% of CUs); CU Pet Spending: $1621.19, +56.0%; Total $: $33.98B, ↑$14.14B (+71.3%) from…
  • Food ↑$4.12B
  • Supplies ↑$4.57B
  • Services ↑$1.15B
  • Veterinary ↑$4.30
  • In 2020, the $150>199K group drove the overall spending in the highest income group down for the 1^st time in my records going back to 2013. In 2021 they were spectacular. Both the $150>200K & $200K> groups had double digit increases in all segments and they generated 87% of the Total Industry Increase. This demonstrates the growing importance of higher income CUs to the Pet Industry. FYI – The $200K> group has 8.6% of CUs but generates 20.6% of all Pet $ and their 2021 increase was $9.0B, 55.5% of the $16.23B record lift.
• < $100K – (70.0% of CUs); CU Pet Spending: $507.21, +16.5%; Total $: $47.50B, ↑$6.96B (+17.2%)…
  • Food ↑$2.36B
  • Supplies ↑$2.49B
  • Services ↑$0.39
  • Veterinary ↑$1.72
  • A spending sandwich, heavily loaded on the top.  <30K: +$1.07B; $30>49K: -$1.90B; $50>99K: +$7.79B
• >$100K – (30.0% of CUs); CU Pet Spending: $1316.02, +16.7%; Total $: $52.48, ↑$9.27B (+21.5%) from…
  • Food ↓$4.80B
  • Supplies ↑$6.16B
  • Services ↑$1.82B
  • Veterinary ↑$6.10B
  • We added the over/under $100K measurement last year because $100K> exceeded 50% of the $ for the 1^st time. Their lead is growing. However, you see that the big Food $ drop by $100>149K still had a major impact.

Income Recap –  The top 2 drivers in consumer spending behavior are value (quality + price) and convenience. That makes income , especially disposable income very important in Pet Spending. We also often see motivation brought by new product development. In 2020 we saw the results from perhaps the biggest human motivator – fear. This was the driver in the pandemic binge buying of pet food. The key results were the big drop from $70>99K and the huge lift from $100>149K. This helped drive the 50/50 $ divide up to $103K, a huge change from $94K in 2019. 2021 brought a record lift and record spending in all segments but Food. This increase was driven by the highest income groups, over $150K. The 50/50 spending divide moved up to $107K as CU income continues to grow in importance in Total Pet Spending.

Next let’s look at 2021 Total Pet Spending by Age Group

Only the 55>64 year-olds spent less. Everyone else spent more.

Nationally: · Total Pet: ↑$16.23B   · Food: ↓$2.44B  · Supplies: ↑$8.65B  · Services: ↑$2.21B  · Veterinary: ↑$7.82B

• <25 – (4.9% of U.S. CUs); CU Pet Spending: $269.75, -4.7%; Total $: $1.79B, ↑$0.35B (+24.2%) from…
  • Food ↑$0.27B
  • Supplies ↓$0.03B
  • Services ↑$0.02B
  • Veterinary ↑$0.09B
  • The increase came from a 31% gain in CUs as a huge number moved out of their parents’ home.
• 25-34 – (15.7% of U.S. CUs); CU Pet Spending: $701.04, +19.5%; Total $: $14.90B, ↑$2.48B (+20.0%) from…
  • Food ↑$0.12B
  • Supplies ↑$0.93B
  • Services ↑$0.17B
  • Veterinary ↑$1.26B
  • These Millennials have often led the way in new food trends. In 2020 they stepped up in the pandemic and the lift continued into 2021, with spending increases in all segments & 20% overall.
• 35-44 – (17.2% of CUs); CU Pet Spending: $937.83, +57.7%; Total $: $21.39B, ↑$8.10B (+60.9%) from…
  • Food ↑$1.24B
  • Supplies ↑$4.00B
  • Services ↑$0.78B
  • Veterinary ↑$2.08B
  • They have the largest families and are building their careers, so they are very sensitive to and cautionary in times of change. In 2020, they had double digit % decreases in all but Supplies. In the 2021 recovery they spent more in all segments, had the biggest increase of any age group and moved to the top in Total Pet CU $pending.
• 45-54 – (16.7% of U.S. CUs); CU Pet Spending: $828.19, +19.9%; Total $: $18.51B, ↑$3.03B (+19.6%) from…
  • Food ↑$1.12B
  • Supplies ↑$0.85B
  • Services ↓$0.02B
  • Veterinary ↑$1.08B
  • This group has the highest income and occupied the top spot in Pet Spending in 2018. In 2019 & 2020 their spending and rank fell. In 2021, except for a minor decrease in Services $ due to fewer CUs, they spent substantially more on their pets. They fell to 3^rd place in Total Pet spending but at a record level.
• 55-64 – (18.5% of U.S. CUs); CU Pet Spending: $849.56, -11.7%; Total $: $20.95B, ↓$3.20B (-13.3%) from…
  • Food ↓$7.89B
  • Supplies ↑$1.73B
  • Services ↑$0.75B
  • Veterinary ↑$2.20B
  • 90% are still younger Baby Boomers and they are especially reactive. They were the primary drivers behind the 2020 binge spending on Pet Food. In 2021 they turned their attention to the other segments with a $4.7B increase in spending. However, it didn’t make up for the $7.9B drop in Food $.
• 65-74 – (16.1% of U.S. CUs); CU Pet Spending: $711.22, +20.1%; Total $: $15.14B, ↑$2.91B (+23.8%) from…
  • Food ↑$0.93B
  • Supplies ↑$0.83B
  • Services ↑$0.39B
  • Veterinary ↑$0.75B
  • This group is growing, +5.1% and are all Baby Boomers. They are careful with their money, but their commitment to their pets is very apparent. They spent more in all segments in 2021 and are the only other age group besides the 25>34 yr-olds to spend more in both 2020 and 2021.
• 75> – (10.9% of U.S. CUs); CU Pet Spending: $504.45, +54.7%; Total $: $7.30B, ↑$2.57B (+54.4%) from…
  • Food ↑$1.76B
  • Supplies ↑$0.34B
  • Services ↑$0.12B
  • Veterinar ↑$0.34B
  • Pet Parenting is more difficult, and money is tight for these oldest Pet Parents, but their commitment is still there. They had a 10% decrease in 2020 due to drops in Supplies & Services. In 2021 they came back strong with increases in all segments and the 2^nd highest % increase of any age group.

Age Group Recap: In 2020 the age spending pattern in Total Pet matched Pet Food. It was generational, Boomers and Millennials spent more. Everyone else spent less. In 2021 it was radically different. Except for the 55>64 group’s big drop in Food and 2 other decreases of $0.03B or less, every age group spent more in every segment. Almost a universal lift.

Next, we’ll take a look at some other key demographic “movers” in 2021 Total Pet Spending. The segments that are outlined in black “flipped” from 1^st to last or vice versa from 2020. The red outline stayed the same.

In 2021, 80 of 96 Demographic Segments (83%) spent more on their Pets. In 2020 only 46 segments (48%) spent more. That’s a huge improvement. However, it came with a lot of turmoil. 16 of the 24 segments (2/3) flipped from 1^st to last or vice versa from 2020. Last year only 6 flipped. 10 of the 16 flipped to the bottom. Invariably, they binge bought pet food in 2020 and “paid for it” in 2021. Only 1 segment held its position. White, Not Hispanic stayed on top. This is not unexpected. They are perennial winners. You also see huge increases. 7 are over $10B. Despite the big drops in Pet Food $ by the losers, 9 of the drops are far smaller than the increases. There are 2 exceptions – Married, Oldest child over 18 and Self-Employed. Both binge bought Pet Food in 2020 but their 2021 increases in the discretionary segments were small. We should also note that in the # of Earners category, all segments spent more. In 2020, all Racial/Ethnic groups spent more.  Let’s look at some specifics.

9 of the winners are the usual “suspects” with the only surprises being Retirees and No Earner, 2+ CUs. 35>44 is not usual, but they do have the 2^nd highest income in the Age Category. In fact, 8 winners rank 1^st or 2^nd in income in their category, which is more evidence of the growing importance of income in Total Pet Spending.

10 of the 12 “losers” in 2021 had at least a $7B increase in Pet Food spending in 2020 and flipped from 1^st to last in 2021. African Americans also spent 48% more on Pet Food in 2020 and gave it all back in 2021 but their Pet Spending is so small that it is often overlooked. In the # of Earners category, the only 2020 Food Binge Buying came from 2 Earner CUs. All segments obviously did well in 2021 with at least a $1.1B increase. By the way African Americans and 1 Earner Singles both have CU incomes at least 30% below the National Average.

Recap: After a slight downturn in 2019, Pet Spending turned up in 2020. There is no doubt that the onset of the COVID-19 pandemic was the major factor in the turnaround. It produced mixed results among the industry segments. Services took a big negative hit due to restrictions and closures in nonessential outlets. Consumers, including Pet Parents, focused their attention and spending on the most needed Products and Services. In the Pet Industry this resulted in a 10% drop in Supplies $ but strong lifts in spending for Veterinary Services and especially Pet Food. The Pet Food $ were even stronger because Pet Parents feared possible shortages like what happened to many other essential products. This caused some very select demographics to binge buy an extra $6.77B in the 1^st half of 2020. That brought us to 2021 which became the strongest year in history. 2020 Food Binge buying didn’t increase the usage rate and obviously wasn’t repeated in 2021. However, Pet Parents spent a lot of time with their Pet “Children” during the pandemic. This caused them to have an even better understanding of what was needed to better improve the lives of their pets and strengthen the human animal bond between them. In 2021 virtually all Pet Parents decided to fill those wants and needs. The result was a record increase in Total Pet and in all segments but food which also produced annual spending records. Although 83% of all segments spent more, the higher their income, the more they spent.

Inflation continues to make headlines. There have been year over year increases in the monthly Consumer Price Index (CPI) larger than we have seen in decades. October prices rose 0.4% from September, and the CPI was still up +7.7% vs 2021, but down from +8.2% last month. The grocery price surge slowed a little but they’re still up 12.4% over 2021. That’s 8 straight months of double-digit YOY monthly percentage increases. These are the first 10+% increases since 1981. As we have seen in recent years, even minor price changes can affect consumer pet spending, especially in the discretionary pet segments, so we will continue to publish monthly reports to track petflation as it evolves in the market.

Total Pet prices were 4.1% higher in December 2021 than in December 2020, while the overall CPI was up 7.0%. The gap narrowed as Petflation accelerated and reached 96.7% of the national rate in June. National inflation has slowed since July, but Petflation has increased, passing the National rate in July and is +11.6% in October, 50.6% higher than the national rate of 7.7%. We need to look a little 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 22 vs 21 which will include Pet Segments and relevant Human spending categories. Plus
  1. CPI change from the previous month
  2. Inflation changes for recent years (20>21, 19>20, 18>19)
  3. Total Inflation for the current month in 2022 vs 2019
  4. Average annual Year Over Year inflation rate from 2019 to 2022
• 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 October 2020 to October 2022. 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 those from 12 and 24 months earlier are included as are the year-end numbers for 2020 & 2021.This will give you some key waypoints for comparisons. (Note: Some key peaks and valleys are also highlighted.)

The pandemic hit home in 2020. In October, the national CPI was only +1.3% and Pet prices were down -0.4%. There are 2 different patterns between the Services and the Products segments. Veterinary and Services prices generally inflated after mid-2020, similar to the overall CPI. 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, when all increased. In August>October Petflation accelerated, except for a miniscule dip in Veterinary last month.

• 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/Aug 2022. 43% of the overall 16.0% increase since 2019 happened from Jan>June 2022.
• Pet Food – Prices stayed generally below December 2019 levels from April 2020 to September 2021, when they turned up. There was a sharp increase in December but 90% of the 15.6% increase has happened since January.
• 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 when they turned sharply up reaching a new all-time pricing high in January, beating the 2009 record. Prices plateaued from February> May but turned up in June. The CPI flattened in July but turned up in Aug>Oct.
• 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>Oct.
• Veterinary – Inflation has been pretty consistent in Veterinary. Prices turned up in March 2020 and grew through 2021. A pricing surge began in December which put them above the overall CPI. In May prices fell and stabilized in June. Prices turned up again and despite an October dip they have been above the National CPI since July.
• Total Pet – The blending of the different segment patterns made Total Pet appear calm. In December 2021 prices surged in all. The segments had mixed up & downs Mar>Jun but Total Petflation has accelerated since July.

Next, we’ll turn our attention to the Year over Year inflation rate change for October and compare it to last month, last year and to previous years. We’ve added some human categories to put the pet numbers into perspective.

Overall, Prices were up 0.4% vs September but were up 7.7% vs October 2021. The Grocery increase is down to 12.4% which is still a big negative but there is another area of concern. Only 2 of 9 categories had increases over 1% from last month, but both are “Pet”. The National CPI rate is slowing but Petflation, especially in Food & Supplies, is getting worse.

• U.S. CPI– Prices are up 0.4% from August. The YOY increase is +7.7%, down from the 9.1% peak in June. The targeted inflation rate is <2% so we are still 4 times higher than the “target”. However, a 4th slight decline is good news.
• Pet Food– Prices are +1.0% vs September and 15.0% vs Oct 21. They are now 21% higher than the Food at Home inflation rate – not good news! The YOY increase is being measured against a time when prices were essentially at 2019 levels, but that increase is still over 4 times the pre-pandemic 3.7% increase from 2018 to 2019.
• Food at Home – Prices are up 0.5% from September. The increase from 2021 is 12.4%, down slightly from 13.0% last month. Inflation for this category since 2019 is the highest on the chart and is 46% more than the national CPI.
• Pets & Supplies – Prices grew 1.4% from September, the biggest increase of any segment. However, they stayed in 3rd place in terms of monthly increase over 2021 for pet segments and still have the lowest increase since 2019.
• Veterinary Services – October prices fell -0.03% from September. They are +11.1% from 2021 and trail only Food in the Pet Industry. They also remain 2^nd in the increase since 2019 with 19.5% compared to Food at home at 23.1%.
• Medical Services – Prices sharply increased at the start of the pandemic in 2020 but then inflation slowed and fell to a low rate in 2021. In October prices dipped but 2022 prices are still 6% above the pre-pandemic 2018>19 rate.
• Pet Services – Inflation slowed in 2020 but began to grow in 2021/22. October prices are +0.7% from September and +6.3% vs 2021, reaching another new record high.
• Haircuts & Other Personal Services – Prices are +0.2% from Sep. and +5.6% from 2021. They are +15.8% since 2019.
• Total Pet– Petflation is strong, 3 times the rate of last year and is 50.6% ahead of the National CPI. All but Veterinary increased prices in October, but inflation is still primarily being driven by Food & Veterinary. Inflation can cause reduced purchase frequency in Supplies, Services and Veterinary. Super Premium Food has been generally immune as consumers are used to paying a lot and it is needed every day. We’ll see if consumers are willing to pay the new high prices for food and buy the more discretionary products/services at the same frequency as they did in the past.

Now here’s a look at Year-to-Date numbers. How does 2022 compare to previous years…so far?

The increase from 2021 to 2022 is the biggest for 7 of 9 categories. The average annual increase since 2019 is 3.8% or more for all but Pet Food & Pet Supplies. This is largely due to deflation in the 1^st half of 2021.

• U.S. CPI – The current increase is still almost double the average increase from 2019>2022, but about 4 times the average annual increase from 2018>2021. Inflation is a big problem that started recently.
• Pet Food – Inflation is growing stronger, especially after deflation in the 1^st half of 2021 kept YTD prices low.
• Food at Home – The 2022 YTD inflation beat the U.S. CPI by 36%. You can see the impact of supply chain issues.
• Pets & Pet Supplies – Prices have been at record levels since January. Although the 2021>22 increase is being measured against a “flat” 2021, it is significant and just slightly behind Food & veterinary in the Pet Industry.
• Veterinary Services – Trails only Food at Home in inflation since 2019 and is the only segment on the chart with a 3+% inflation rate each year 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 2022 there is another pricing surge as the inflation rate is 34% higher than pre-pandemic 2018>19.
• Pet Services – February & May set records for the biggest year over year monthly increases in history. Prices began to grow again in July, reaching record highs in September & October. The October YTD increase of 6.1% is the largest in history. Demand has grown for Pet Services while the availability has decreased, 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, prices turned up again. The YTD rate is even with 2020>21 but still 93% more than 2018>19. Consumers are paying 15% 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 generally 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 we neared yearend. In 2022, everything changed as Food and Supplies prices turned sharply up. Food prices continued to climb. Supplies pricing stabilized then grew in Jun>Oct. The Services segments have had ups & downs, but both are generally inflating. The net was an October YTD Petflation increase vs 2021 of 8.4%, surpassing the high 8.3% National rate. In March, it was only 72.5% of the CPI.

Petflation is growing stronger. Will it impact spending? Let’s put it into perspective. The 8.4% current YTD increase in Total Pet is still below the 8.9% record set in 2009 but 5+ times more than the 1.5% avg since then. Pet spending continues to move to higher income groups, but the impact of inflation varies by segment. Supplies is the most affected as many categories are price sensitive. Super Premium Food has become widespread because the perceived value has grown. Higher prices generally just push people to value shop. Veterinary prices have strongly inflated for years, resulting in a reduction in visit frequency. Spending in the Services segment is driven by higher incomes, so inflation is less impactful. We’ll just have to wait and see the overall impact on Pet Spending of the continued strong Petflation.