Archive for category: Pet Market Segments

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. In June the CPI was up 9.1% vs 2021, beating the previous high of 8.6% in May. Food at Home (groceries) prices continue to surge, up 12.2% over 2021. That’s 4 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 fluctuations can affect consumer pet spending, especially in the more discretionary pet segments. With that in mind, we will continue to publish monthly reports to track petflation as it evolves in the marketplace.

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 in March & April as Petflation accelerated to 97.6% of the national rate. In May, Petflation stabilized and the gap widened a bit to 94%. However, inflation in the Products segments surged in June and the gap decreased to 96.7%, again virtually equal to the national rate. Let’s look a little deeper. 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 June 2020 to June 2022. We will use December 2019 as a base number in this and future reports 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 yr-end numbers for 2020 & 2021.This will give you some key waypoints for comparisons. (Note: the April Peak for Veterinary is also highlighted.)

The pandemic hit home in early 2020. The national CPI was only +0.3% and Pet prices deflated until August. 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, inflation took off, but the patterns became mixed. Services paused in March and fell in June. Veterinary dropped in May. Supplies prices plateaued then surged in June while inflation in Food is accelerating. Here are some things to note:

• U.S. CPI – The inflation rate was below 2% through 2020. It turned up in January 2021 and continued to grow through June 2022. 44% of the overall 15.3% increase since 2019 occurred in the last 6 months.
• 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 81% of the 9.8% increase has happened since January.
• Pet Supplies – Remember that Supplies prices were high in December 2019 due to the added tariffs. They 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 to May, but turned up in June, reaching a new record high.
• 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 got stronger in 2022, slowed a little in March, turned up in April but then prices fell in June.
• Veterinary – Inflation has been generally consistent in Veterinary. Prices began rising in March 2020 and increased through 2021. Then a pricing surge began in December which pushed them past the overall CPI. Prices peaked at +15.5% in April. In May prices fell and stabilized in June which pushed them below the National CPI.
• Total Pet – The blending of the different segment patterns made the Pet Industry appear calm. That ended in December 2021 as prices surged in all segments. In June inflation is slowing in Services but growing in Products.

Next, we’ll turn our attention to the Year over Year inflation rate change for the month of June 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 vs 2021 were up 9.1% vs 2021 with the Grocery increase now hitting 12.2%. There are some small positives. Only 3 of 9 categories had increases over 1% from last month, the same as April & May but down from 5 in March…. And Non-Veterinary Services prices actually fell 0.7% from May. There is a little hope.

• U.S. CPI – Prices are up 1.4% from last month. In May the increase was 1.1%. June Inflation was +9.1%. The targeted rate is <2%. We remain 4+ times higher than the “target”. Inflation is getting worse, and it accelerated again in June.
• Pet Food – Prices are up 1.3% vs May and 10.3% vs June 2021. The YOY increase is being measured against a deflationary year, but that increase is almost 4 times the pre-pandemic 2.8% increase from 2018 to 2019.
• Food at Home – Prices are up 1.0% from May. The increase from 2021 is 12.2%, which is the largest increase in any month since 12.3% in April 1979 and the largest June monthly increase since 15.1% in 1974. Inflation for this category since 2019 is the highest of any category on the chart and is 25% more than the national CPI.
• Pets & Supplies – Prices grew 0.9% from May and set a new record high. They now have the 2^nd highest monthly increase over 2021 of any industry segment, but still have the lowest increase since 2019.
• Veterinary Services – June prices grew 0.2% from May. They are up 7.5% from 2021 but now trail Food & Supplies in the Pet Industry. They also remain 2^nd in the increase since 2019 with 16.9% compared to Food at home at 19.7%.
• Medical Services – Prices sharply increased at the start of the pandemic in 2020 but then inflation slowed and returned to a more normal rate in 2021. In 2022 prices are turning sharply up, +71% vs the pre-pandemic 2018>19 rate.
• Pet Services – Inflation slowed in 2020 but began to grow in 2021/22. Prices are -0.7% from May and +6.3% vs 2021. Prices are now below April and appear to be stabilizing, at least for a short period.
• Haircuts & Other Personal Services – Prices are +0.3% from May and +6.3% from 2021. They are +15.8% since 2019.
• Total Pet – Inflation is strong and is 3+ times the rate of last year. Service segments prices are becoming stable while the Product segments prices are growing. This is driving Petflation up. In the past, inflation has caused a reduction in the frequency of purchase in Supplies, Services and Veterinary. Super Premium Food has been generally immune as consumers are used to paying big bucks 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 over 3% for all but Pet Food & Pet Supplies. This is due to deflation in 2021.

• U.S. CPI – The current increase is double the average increase from 2019>2022, but over 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 2021.
• Food at Home – The 2022 YTD inflation beat the U.S. CPI by 22.9%. 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 deflationary 2021, it is significant and tied for 1^st with Veterinary in the Pet Industry segments.
• Veterinary Services – Has the most 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 36% higher than pre-pandemic 2018>19.
• Pet Services – February & May set records for the biggest year over year monthly increases in history. Prices seem to be becoming more stable, but the current June 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 now equal to 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 June. The Services segments have had decreases but are becoming more stable. The net was a June YTD CPI increase vs 2021 for Total Petflation of 7.1%, 85.5% of the extraordinarily high 8.3% overall rate. It was only 72.5% in March.

Inflation is strong in the Pet Market. Will it impact spending? Let’s put it into perspective. The 7.1% June YTD increase in Total Pet is far below the 8.9% record set in 2009 but 4+ times larger than the 1.5% avg since then. Although pet spending continues to move to higher income groups, 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 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.

Changes in the price manufacturers charge for a product obviously impact the retail price for consumers. However, it is not always a direct correlation and often there is a significant delay in the response. The retailers who sell high demand products like Pet Food are under intense competitive pressure.

In this brief report we will look at how changes in the Producer Price Index (PPI) for Pet Food match up to the changes in the retail CPI from December 2019 to 2022. Pre-pandemic December 2019 is used as the base number in all graphs to facilitate comparisons.

The first graph plots the PPI pricing path of Dog & Cat Food and Other Pet Food vs the Pet Food Retail CPI.

• Pricing remained essentially stable for all groups through most of 2020. The first change was that the PPI for Non-Dog/Cat Pet Food began moving up in November. This lift has continued but this small category has little impact on overall Pet Food Retail Prices.
• The Dog & Cat Food PPI moved up sharply in July 2021 then essentially stabilized until the end of the year. This turned Retail Prices up slightly, only +1.6% vs 2019 by December 2021.
• In 2022, the Dog & Cat PPI turned up in Jan/Feb, stabilized in Mar/Apr, then rose sharply in May. Pet Food Retail prices began growing in February. This increase accelerated in March and continues through May. The Retail inflation rate for Pet Food is now 66% of the PPI increase for Dog & Cat Food. In February it was 31.6% and only 25.4% back in December 2021. This gap is definitely narrowing as the Retail price increases are more closely matching the increase in manufacturing costs. By the way, the increase for Other Pet Foods is a meteoric +31.6% vs 2019. This is huge and by far the biggest increase in any Pet Food category, but it is only 29% of the 109% increase in the Gasoline PPI over the same period.

Obviously, it takes a while for a rise in the PPI to impact retail prices. Also, as we saw in most of 2020 and in the 2^nd half of 2021, stability in the PPI usually generates stability in Retail prices.

Dogs & Cats “rule” the pet food segment just like they “rule” the overall Pet Industry. However, the lift in prices for manufacturing Food for Other Pets has now gotten so large that it is having an impact in pushing Pet Food Retail Prices up.

We will now drill a little deeper into the “ruling” Dog & Cat Food categories. We will look at the individual PPI history for Dog Food and Cat Food and the 2 largest sub-categories in each – Dry/Semi-moist and Canned. Our chart will track and compare the Pet Food CPI and the PPI history for all groups from December 2019 to March 2022. The detailed data release for these specific groups is 2 months behind the overall PPI release.

• The PPI for all categories was essentially unchanged from December 2019 until October 2020. At that time manufacturers’ prices in the Canned Dog Food category moved up 1.1%.
• In October 2020 Pet Food retail reached bottom in their deflationary movement. The price increase in Canned Dog Food slowed overall Pet Food deflation and essentially stabilized prices.
• Both the individual PPIs and the overall Pet Food CPI plateaued from November 2020 through May 2021.
• All prices moved up slightly in June 2021 but the PPIs took off in July. The Pet Food CPI also was above December 2019 for the 1^st time since February 2020.
• Canned Dog Food led the skyrocketing PPI prices in July 2021 but all categories had a significant increase. The increase continued in August, but the CPI unexpectedly dipped slightly below December 2019.
• The PPIs for all groups essentially stabilized from September through December 2021 while the Pet Food CPI began to increase, especially from Nov>Dec.
• In January 2022, the PPIs for all but Canned Dog Food turned up again. Their increase continued in February, with Canned Cat Food skyrocketing up to +12.7%, almost equal to the overall increase by Canned Dog Food. The Pet Food CPI moved up slightly in January and then inflation took off in February.
• The PPIs stabilized again in March, but we should note that prices for Canned Dog Food have been stable since August, after the spectacular Jun>August lift. While manufacturing prices have stabilized, inflation in Pet Food Retail is accelerating. From our 1^st chart we know that this trend continued through May.
• Once again, we see that there is obviously a timing delay from the PPI to the CPI. It takes time for the impact to work its way from manufacturer to retailer to consumer.
• We also see that the Canned Food categories have significantly more pricing volatility than Dry Food for both Dogs and Cats. While Canned Dog Food led the way in the PPI lift and ended up with the biggest increase, +13.3%, Canned Cat Food finished a close second at +12.7%.
• However, when you look at how these individual PPIs compare to the overall PPI for Dog or Cat, it is readily apparent that Canned Cat Food has a much larger share of total Cat Food than Canned Dog Food has of Total Dog Food.

In terms of what will happen in the future, we turn again to our first chart. The PPI for Dog/Cat Food was stable through April but turned sharply up again in May. When Mfg prices go up, Distributors & Retailers must take a closer look at their product mix. For those items with increasing prices, they can raise their prices, accept lower margins or some combination of both. The Retail CPI is spiking. It’s likely that rising manufacturing prices will cause Retail Pet Food inflation to continue to grow. We need the PPIs to flatten for the CPI to stop increasing. Ultimately, we hope that any supply chain issues will be fixed, returning Pet Food Retail and Manufacturing to a more price competitive market.

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.

Things changed in 2017 as low inflation spurred a 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%). However, the inflation rate 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 consumers concentrated on needs. For Pet Parents, that meant that they became focused on Pet Food & Veterinary Services. As a result, Veterinary spending grew $3.05B, (+14.0%).

We’ll start our analysis with the groups who were responsible for the bulk of Veterinary spending in 2020 and the $3.05B 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 & 2019. This is more than Supplies & Services with 5 but much less than Food (8). 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 the “needed” segments. Income remains the biggest factor in Veterinary Spending, but Education is also important as College Grads is a different group from Total Pet. The categories are in the order that reflects their share of Total Pet $.

1. Race/Ethnic – White, not Hispanic (87.2%) down from 90.9%. This group accounts for the vast majority of spending in every segment, but they lost significant share in 2020. Their 127.5% performance is also down from 132.6% and they fell from 2nd to 3rd in importance in Veterinary Spending but still reflects the spending disparity. Minorities did narrow the gap in 2020. Hispanics & African Americans spent 50% more while the spending by Asians almost tripled.
2. Housing – Homeowners (83.1%) down from 83.2% Homeownership is a major factor in pet ownership and spending in all industry segments. In terms of importance to Veterinary spending, their 126.3% performance rating is down from 130.5%, but they held on to 4th place. The slight decrease in share and performance came from a bigger % increase from Renters as they fell in numbers while homeownership grew. We should note that Homeownership is not as important to Veterinary Spending as it once was. In 2015 their share was 88.4% with performance of 141.8%.
3. # in CU– 2+ people (77.9%) up from 75.0% This group, which is 70% of U.S. CUs, gained share and their performance grew from 107.4% to 111.0%. Their rank in terms of importance in Veterinary Spending moved up from last to 8th. Spending by Singles and 4 person CUs was flat while 2, 3 & 5 person CUs had big gains.
4. Area – Suburban & Rural (67.1%) down from 68.7% Suburban CU’s are the biggest spenders in every segment. Rural had a great year and was added to hit the 60% goal. Performance still fell to 106.4%, from 107.9%. The decreases in share and performance came because Suburbs 2500> were up only 3.2% while Center City was +19.8%.
5. # Earners – “Everyone Works” (69.7%) down from 70.4% In this group, all adults in the CU are employed. Their Performance fell from 121.5% to 120.3% and they fell in rank from #5 to #6. Only No Earner, Singles spent less. The small drop in share and performance were due to a huge lift by 2+ People CUs with 1 or no earner.
6. CU Composition – Married Couples (58.6%) up from 57.0% Their performance also grew to 120.8% from 116.7% and they returned to the 120+% club at #6. Until 2019, Married Couples had a 60+% market share and 120+% performance in all segments. Only Married Couples with an oldest child <6 spent less. The gains came because the spending by singles was essentially flat, only +0.6%.
7. Income – Over $70K (63.4%) down from 66.3% The performance of the $70K> group fell significantly from 159.8% to 145.8%. However, higher income is still the most important factor in increased Vet spending. Only the $50>99K group spent less. The spending by the <$50K group grew by 37.0%. Those making $100K> also spent 16.4% more. The key factor in the big changes in share and performance was a 9.8% drop by the $70>99K group.
8. Age – 35>64 (60.1%) down from 63.2% Their performance also fell from 120.7% to 112.7% and they dropped out of the 120% club. Only <25 & 35>44 yr olds spent less. All other groups had double digit % increases. The drop by 35>44 yr-olds in conjunction with a 52.1% lift by 25>34 caused the big loss in share and performance.
9. Education – College Grads (61.3%) down from 63.9% Income generally increases with education. It is also important in understanding the need for regular Veterinary care. Performance also fell from 144.1% to 131.2%. Education lost share and performance but moved up to 2nd from 3rd in importance. Only those without a HS diploma spent less. The big drop in share and performance came from a 48.2% lift by HS Grads without a BA/BS. Veterinary Services are very important. The pandemic caused this need to become recognized by more education levels.
10. Occupation – All Wage & Salaried (68.1%) up from (67.3%) but their performance only increased from 110.3% to 110.7%. Tech/Sls/Clerical and Retirees spent less while most of the lift was driven by Managers & Professionals. However, the largest percentage increase was from the Self-Employed. This combination slowed the gains. It also reinforces that “the bosses” ruled in 2020.

Spending did become a little more balanced but Higher income remains the biggest single factor in Veterinary spending. We see the impact of this in many groups as it often contributes to the big spending disparity between segments. The most notable change was that the 35>64 age group fell out of the 120+% club due to a big lift by the 25>34 yr olds.

Now, we’ll look at 2020’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. However, there are 7 that are different from 2019. This is the same as Services but much more than the 3 in Supplies and much less than the 10 in Food. This suggests some spending turmoil. The changes from 2019 are “boxed”. We should note:

• Income – The winner & losers are the expected groups but they are 30% closer together.
• Earners – New, but not unexpected, winner and loser. They have the highest and lowest incomes.
• Occupation – Once again, it’s all about income
• Age – The highest income group, 45>54 yr-olds returned to the top. Despite a strong showing by the 25>34 group, only those from 35>74 perform above 100%.
• Race/Ethnic; Education; Housing – The usual winners and losers but the performance gap narrowed a bit.
• Area – A fundamental change in the loser based upon population. Last year it was Rural. This year it’s Center City.
• Region – After winning for 5 straight years, the Northeast was replaced by the West at the top. The West is also the only region performing above 100%. The South has now finished last for 5 years in a row.
• CU Composition – No change here but again the performance gap narrowed a little, 10%.
• # in CU – Only 2 & 3 person Cu’s perform above 100%. We have seen spending movement to larger CUs. This is very apparent in Veterinary as the 5+ group spent 67% more and moved up a little after 2 years at the bottom.
• Generation – The loser flipped from the oldest to the youngest and the performance gap widened by 30%.

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

We saw some turmoil in performance. There was even more here. There were 4 repeats and 10 segments flipped from 1^st to last or vice versa. Last year they had 8 repeats and 4 flips. There were some surprise winners – 25>34 yr-olds & Center City but no surprise losers. In fact, in 4 categories all segments spent more. You should also note the increases were significantly larger than the decreases and 85% of 96 demographic segments spent more. Here are the specifics:

• Occupation – The winner and loser flipped with the “Bosses” returning to the top.
  • Winner – Mgrs & Professionals– Veterinary Spending: $9.87B; Up $2.11B (+27.1%)                      2019: Tech/Sales/Clerical
  • Loser – Tech/Sales/Clerical – Veterinary Spending: $3.42B; Down $0.27B (-7.4%)                          2019: Mgrs & Profess.
  • Comment – The highest income groups – Self-Employed and Mgrs & Professionals accounted for 90% of the increase. Blue Collar workers did spend $0.41B more but Retirees spent a little less, -0.04B (-1.0%).
• Region – The Northeast flipped from 1^st to last. They have now flipped for 3 consecutive years.
  • Winner – West – Veterinary Spending: $7.01B; Up $2.08B (+42.1%)                                                    2019: Northeast
  • Loser – Northeast – Veterinary Spending: $4.10B; Down $0.98B (-19.3%)                                         2019: Midwest
  • Comment – The South finished 2^nd for the 4^th consecutive year. All but the Northeast had double digit % gains.
• Race/Ethnic – Both groups held their spots as White, non-Hispanics maintained their dominance in this segment.
  • Winner – White, Not Hispanic – Veterinary: $21.67B; Up $1.85B (+9.3%)                                       2019: White, Not Hispanic
  • Loser – African American – Veterinary: $0.87B; Up $0.30B (+51.8%)                                               2019: African Americans
  • Comment– In 2019 only African Americans spent less. In 2020 everyone spent more. This shows that Pet Parents’ commitment to the health & wellbeing of their Pet Children is widespread across all racial/ethnic groups.
• Housing – Homeowners w/Mtges held their position at the top.
  • Winner – Homeowner w/Mtge – Veterinary: $14.06B; Up $1.62B (+13.0%)                                    2019: Homeowner w/Mtge
  • Loser – Renter – Veterinary: $4.19B; Up $0.53B (+14.5%)                                                                      2019: Homeowner w/o Mtge
  • Comment – Every segment spent more and in fact, Homeowners w/Mtges had the lowest percentage increase. They won because they account for 56.6% of all Veterinary spending.
• # in CU – Both the winner and loser flipped.
  • Winner – 2 People – Veterinary Spending: $9.73B; Up $1.50B (+18.3%)                                              2019: 1 Person
  • Loser – 1 Person – Veterinary Spending: $5.48B; Up $0.03B (+0.6%)                                                   2019: 2 People
  • Comment: Again, all groups spent more. 4 Person CUs and singles had increases under 2% while everyone else was in double digits, led by 5+ CUs who were up 67%.
• Generation – Baby Boomers flipped from last to first as they focused on their Pets’ needs – Food & Veterinary.
  • Winner – Baby Boomers – Veterinary: $8.93B; Up $1.45B (+19.4%)                                                  2019: Millennials
  • Loser – Gen Z – Veterinary: $0.20B; Down $0.06B (-22.5%)                                                                  2019: Baby Boomers
  • Comments – After 2 years at the bottom Boomers returned to the top. Millennials also had a good year, +$1.1B. Gen Z was the only generation to spend less.
• Area Type – Center City is a bit of a surprise and the big suburbs flipped from 1^st to last.
  • Winner – Center City – Veterinary Spending: $8.17B; Up $1.35B (+19.8%)                                       2019: Suburbs 2500>
  • Loser – Suburbs 2500> – Veterinary Spending: $11.57B; Up $0.36B (+3.2%)                                   2019: Suburbs <2500
  • Comment – All groups also spent more. The question became “How much more?” With 33% of the $ and a 20% increase, Center City won. Suburbs 2500> have 47% of $ but were only +3%. By the way, Rural was +80%.
• CU Composition – Married Couple Only flipped from last to 1^st.
  • Winner – Married, Couple Only – Veterinary: $7.04B; Up $1.31B (+22.9%)                                2019: Singles
  • Loser – Married, Oldest Child <6 – Veterinary: $0.95B; Down $0.21B (-18.2%)                          2019: Married, Couple Only
  • Comment – After a $0.72B increase in 2019, the loser was the only segment to spend less. Single Parents spent 68% more but 63% of the total $ increase came from Married Couples Only and those with a child over 18.
• # Earners – Both the winner and loser are new, but not surprising.
  • Winner – 3+ Earners – Veterinary Spending: $3.26B; Up $1.15B (+54.2%)                                     2019: 2 Earners
  • Loser – No Earner, Single – Veterinary Spending: $1.45B; Down $0.51B (-26.1%)                        2019: 1 Earner, 2+ CU
  • Comment – The winner and loser have the highest and lowest incomes and No Earner, Singles were the only group to spend less. Income is of primary importance to increased Veterinary Spending & # of earners is important. However, not every adult has to work. 1 Earner, 2+ Person CUs was only beaten by $0.03B.
• Income – $100>149K flipped from last to first.
  • Winner – $100>149K – Veterinary Spending: $5.04B; Up $1.14B (+29.1%)                                    2019: <$30K
  • Loser – $70>99K – Veterinary Spending: $3.74B; Down $0.41B (-9.8%)                                          2019: $100>149K
  • Comment – Two groups spent less, $50>69K & $70>99K. Last year we had a definite spending rollercoaster. It’s still here in 2020, but with bigger groups. <$50K: +$1.82B; $50>99K: -$0.48B; $100K>: +$1.69B.
• Age – In a bit of a surprise, the 25>34 yr-olds won while 35>44 flipped from 1^st to last.
  • Winner – 25>34 yrs – Veterinary Spending: $3.74B; Up $1.11B (+42.2%)                                       2019: 35>44 yrs
  • Loser – 35>44 yrs – Veterinary Spending: $4.47B; Down $0.59B (-11.6%)                                       2019: 45>54 yrs
  • Comment: Two groups spent less, the 35>44 yr-olds and the <25 group. Everyone else had double digit percentage increases. The 25>34 group is only 4^th in income and 5^th in Veterinary spending performance so their win is unexpected. Apparently, they were motivated by the pandemic. Their Services $ were flat but they spent a lot more in all other segments.
• Education – Those with an Advanced College Degree held their spot at the top.
  • Winner – Adv. College Degree – Veterinary Spending: $7.41B; Up $0.88B (+13.4%)                 2019: Adv. College Degree
  • Loser – <High School Grads – Veterinary Spending: $0.34B; Down $0.14B (-29.4%)                2019: Associates Degree
  • Comment – Only those without a HS Diploma spent less. College grads were up $1.29B (+9.3%). However, those with a HS Diploma but not a BA/BS spent $1.89B (+25.6%) more so the lift was widespread.

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. However, there was some turmoil as only 4 segments held their spot from 2019 while 10 flipped from first to last or vice versa, but with almost no surprising winners. The surprise was in how widespread the spending lift was. In 4 categories, no segments spent less and overall, 85% of all demographic segments spent more. This means that there were “hidden” segments that didn’t win but made a significant contribution to the $3B increase. These groups don’t win an award, but they certainly deserve….

HONORABLE MENTION

Center City won but Rural came in second – the opposite ends of the population spectrum. Income matters as Self-Employed finished 2^nd to Managers & Professionals. However, spending became a little more balanced in both Income & Education which is reflected by the performance of the $30>39K, 1 Earner, 2+CU and HS Grads w/some College groups. It also wasn’t all about Baby Boomers and Gen X. The younger Millennials certainly stood up with a $1B increase in spending. There are many more groups that could be included as 82 of 96 segments (85%) spent more on Veterinary Services. That is significantly better than 57% in 2019 and 63% in 2018. 2020 was a good year!

Summary

2016 and 2017 produced a combined increase of $3.6B in Veterinary Spending as inflation moved to record low levels. In 2018 we had the Baby Boomer Spending “Bust” which especially impacted Food and Veterinary. The Boomers spending continued to fall in 2019. Fortunately, Gen X and Millennials stepped up to produce a small. 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.

There was some turmoil in the segment, but the net result is that spending became a little more balanced in most demographic categories. In general, the size of the increases far exceeded the size of the decreases. In fact, in 4 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 it’s highest level, nearly 200% at $150K>. The “halfway” point (50%) occurred at $70>99K in 2020. This is the 1^st time that the halfway point has fallen below $100K. Spending may be more balanced, but you can see that there is still a huge disparity.

Higher Education: Performance increases with Education but doesn’t reach 100% until you have a BA/BS degree. The performance of HS Grads with an Associate Degree or at least some college is now over 90%. Those with a College Degree perform at 131%. The disparity is not 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 identified six demographic categories with high performing large groups. (There were 5 for Supplies and Services but 8 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 were some changes of note. Marriage returned to prominence while a strong year by the 25>34 yr-olds drove the performance of the 35>64 age group significantly down.

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. Also, although Boomers and Millennials drove the lift, increases were widespread across demographics making Veterinary spending more balanced. In 2021, the overall U.S. economy has largely recovered. We’ll see if Pet Parents continue to spend heavily on Veterinary Services.

Finally – The “Ultimate” Veterinary Services Spending Consumer Unit consists of 3 people – a married couple and their 18 yr old child. They are 45 to 54 years old. They are White, but not of Hispanic origin. At least one of them has an Adv. College Degree. Both are Mgrs/Professionals and their child also works. Their total income is $150>$200K. They live in a small suburb, adjacent to a big city in the Western U.S. and are still paying off the mortgage on their home.

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. In April the CPI was up 8.3% vs 2021, only down slightly from 8.5% in March. Food at Home (groceries) prices continue to surge, up 10.8% over 2021. March was +10%. These are the only double-digit YOY monthly percentage increases in this category since 1981. As we have seen in recent years, even minor price fluctuations can affect consumer pet spending, especially in the more discretionary pet segments. With that in mind, we will continue to publish monthly reports to track petflation as it evolves in the marketplace.

Total Pet prices were 4.1% higher in December 2021 than in December 2020, while the overall CPI was up 7.0%. In March 2022, Total Petflation was up +7.5% vs 2021 and the overall CPI was +8.5%. The gap significantly narrowed. In April, Petflation was 8.1%, 97.6% of the national rate of 8.3%. Now, the gap is virtually nonexistent. Let’s look a little deeper. 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 April 2020 to April 2022. We will use December 2019 as a base number in this and future reports 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 yr-end numbers for 2020 & 2021.This will give you some key waypoints for comparisons.

The pandemic began in March but hit home in April. Even the national CPI deflated, but not the Services segments. There are 2 different patterns between the Services and the Products segments. Veterinary and Services prices generally inflated after mid-2020, a pattern similar to the overall CPI. Food and Supplies prices generally deflated until late 2021. After that time, inflation took off. In March the rate of increase over the prior month slowed for Services and Supplies but accelerated for Food and Veterinary. In April, Supplies deflated but the others grew. Here are some things to note:

• U.S. CPI – The inflation rate was below 2% through 2020. It turned up in January 2021 and continued to grow through April 2022. 89% of the overall 12.5% increase since 2019 occurred in the last 16 months.
• 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. 88% of the 6.7% total has happened since November.
• Pet Supplies – Remember that Supplies prices were high in December 2019 due to the added tariffs. They 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 continued to set new price records in February and March, but prices turned down -0.1% 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 coming in Jan>Apr. Inflation got even stronger in 2022, slowed a little in March, then turned up again in April
• Veterinary – Inflation has always been something that you can count on in Veterinary Services. Prices began moving up in March 2020 and grew consistently through the 2021 recovery. Then a pricing surge began in December which pushed them past the overall CPI with total inflation since 2019 reaching +15.5% in April.
• Total Pet – The blending of the segment patterns made the Pet Industry appear calm compared to the overall market. That ended in December 2021 as prices surged for all segments. In April inflation grew in all but Supplies.

Next, we’ll turn our attention to the Year over Year inflation rate change for the month of April 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 vs 2021 were up 8.3% vs 2021 with the Grocery increase now hitting 10.8%. There are some small positives. Only 3 of 9 categories had increases over 1% from last month, down from 5 in March…. And Pet Supplies prices actually fell 0.1% from March. There is a little hope.

• U.S. CPI – Prices are up 0.6% from last month. In March the increase was 1.3%. Inflation was 8.3%. The targeted rate is <2%. We remain 4 times higher than the “target”. Inflation is getting worse, but the increase rate has slowed.
• Pet Food – Prices are up 1.2% vs March and 7.0% vs April 2021. They are being measured against a deflationary year, but that increase is more than triple the pre-pandemic 2.2% increase from 2018 to 2019.
• Food at Home – Prices are up 1.3% from March. The increase from 2021 is 10.8%, which is the largest increase in any month since 11.1% in November 1980 and the largest April increase since 12.3% in 1979. Inflation for this category since 2019 is 27% more than the national CPI.
• Pets & Supplies – Prices fell 0.1% from a record high in March. Current prices go against deflated prices in 2021 but their increase only trails Food at Home, Veterinary and the Total CPI. Note: They have the lowest increase since 2019
• Veterinary Services – April prices grew 0.8% from March. This pushed them up 9.8% from 2021, trailing only Food at Home, but more than twice their increase in past years. They stayed on top in the increase since 2019, +18.6%.
• Medical Services – Prices sharply increased at the start of the pandemic in 2020 but then inflation slowed and returned to a more normal rate in 2021. It appears to be turning up again in 2022.
• Pet Services – Inflation slowed in 2020 but began to grow in 2021 & 2022. Prices are up 1.7% from March and 5.9% from 2021, down slightly from a record 6.5% increase in February, but still about double the rate of 2019 & 2020.
• Haircuts & Other Personal Services – Prices are +.4% from March and 5.1% from 2021. They are +15.0% since 2019.
• Total Pet – Inflation is growing and is 3+ times the rate of last year. Veterinary is a big driver but all segments contributed to the +8.1%, which is almost equal to the 8.3% U.S. CPI. Inflation has caused problems in the past by reducing the frequency of purchase in Supplies, Services and Veterinary. Super Premium Food has been generally immune as consumers are used to paying big bucks and it is needed every day. We’ll see if consumers are still willing to pay the higher prices for more discretionary products and 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 over 3% for all but Pet Food & Pet Supplies. This is due to deflation in 2021.

• U.S. CPI – The current increase is double the average increase from 2019>2022, but over 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 2021.
• Food at Home – The 2022 YTD inflation beat the U.S. CPI by 15%. You can see the impact of supply chain issues.
• Pets & Pet Supplies – Despite an April dip, prices are up sharply in 2022. Although the 2021>22 increase is being measured against a deflationary 2021, it is very significant and 2^nd to Veterinary in the Pet Industry segments.
• Veterinary Services – Has the most inflation since 2019 and is the only segment on the chart in which the inflation rate has consistently grown 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 the rate has slowed since and has now essentially returned to pre-pandemic levels.
• Pet Services – February was the largest year over year monthly increase in history. The rate slowed in March but turned up again in April. The current YTD increase remains 2^nd only to 6.4% in 2009. 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 0.4% in April. The YTD rate is now down slightly from 2020>21 but still 60% more than 2018>19. Consumers are paying 14.7% more than in 2019. This usually reduces the frequency.
• Total Pet – When we first looked at the pandemic impact on Petflation. We saw basically two different patterns. 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. In April, the inflation rate grew in all segments but Supplies. This pushed the YTD CPI increase vs 2021 for Total Petflation to 6.4%, 80% of the extraordinarily high 8.0% rate in the overall market. It was only 72.5% of the National rate in March.

Inflation is surging in the Pet Market. Will it impact spending? Let’s put it into perspective. The 6.4% YTD increase in Total Pet is far below the 9.6% record set in 2009 but 4 times larger than the 1.5% avg since then. Although pet spending continues to move to higher income groups, 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 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. Hopefully, Supplies prices will continue to fall but we’ll just have to wait and see the impact of the strong Petflation.

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 over 20 years was broken by 1 statement. The grain free warning lost some 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.

First, we’ll see which groups were most responsible for the bulk of Pet Food spending and the $5.65B increase. The first chart details the biggest pet food spenders for each of 10 demographic categories. It shows their share of CU’s, share of pet Food spending and their spending performance (Share of spending/share of CU’s). 3 groups are different from Total Pet – 45>74, < College Grads & the newly created “I’m the Boss” group. The categories are presented in the order that reflects their share of Total Pet Spending. There is one big difference. In 2020 Pet Food spending, older age produced a higher share than higher income. While higher Income performed better in Food, it finished 2^nd in importance to being “a boss”. The importance of higher education also plummeted. While Pet ownership is widely spread across demographic segments, in 2020 Pet Food spending was much more targeted in virtually all categories. As you will see in our analysis, that target was older, less educated but still with a high income – younger Baby Boomers. In 2019, Pet Food accounted for 65% of Pet Products $ and 40% of Total Pet. In 2020 the Food share rose to 70.8% in Products and 44.0% of Total Pet. The pandemic caused Pet Parents to focus on “needs” and at the top of that list was Pet Food.

1. Race/Ethnic – White, not Hispanic (88.8%) – up from 87.0%. This large group accounts for the vast majority of spending in every segment. They gained in share and their performance increased to 129.9% from 126.9%, but this category fell from #4 to #6 in terms of importance in Pet Food Spending demographic characteristics. While Hispanics, African Americans and Asian Americans account for 31.6% of U.S. CU’s, they spend only 11.2% of Pet Food $. This is down from 17% in 2018. African Americans were the only minority to spend more on Pet Food in 2020, +0.5B which generated a $0.06B, lift for all minorities, about 1% of the +$5.6B increase by White, Not Hispanics.
2. Housing – Homeowners (86.7%) – up from 81.9%. Homeownership is a huge factor in pet ownership and more pet spending. In 2020, homeowners gained allmost 5% in share and their performance grew from 128.5% to 131.7%. However, homeownership fell from 3rd to 5th in terms of importance for increased pet Food spending. It was a great year for Homeowners w/o a mortgage but spending fell for renters and especially for those with a mortgage.
3. # in CU – 2+ people (82.5%) – up from 80.2%. The share of market for 2+ CU’s is over 80% for Pet Food and Total Pet. Last year they had 80+% in only Pet Food. Their performance grew from 114.9% to 117.5% but their rank fell from 6^th to 9^th. 5+ CUs were the only segment to increase in number and 4 person CUs drove the lift. Only CUs of 4 or more people performed above 100%. This is a big change from recent years. Singles performance also fell sharply, which helped drive the 2+ group’s increase. In 2020, more people meant more Pet Food spending.
4. Area – Suburban + Rural (77.8%) up from 75.5%. Their performance grew from 118.6% to 123.4%. (7th) It was a bad year for large Suburbs (2500>) and a great year for Rural. We had to add the Rural and Suburban numbers together to reach our target of 60+%. Areas under 2500 population now account for 18.9% of CUs but 47.6% of Pet Food $.
5. # Earners – “Everyone Works” (70.7%) – up from 66.4%. This was a big increase from last year and their performance also grew sharply from 113.6% to 123.3%. They only rank 8th but they now are in the 120+% club.
6. CU Composition – Married Couples (71.1%) – up from 63.0%. They gained in share and their performance grew from 129.0% to 146.6%, but they fell from 2nd to 3rd. Only Married couples with an oldest child over 6 spent more.
7. Income – Over $70K (65.3%) – up from 60.9%. Their performance rating also grew from 146.9% to 150.2% but they fell from 1st to 2nd in importance. High income is still very important in Pet Food Spending. In fact, the bar was raised in 2020. $100K+ CUs now account for 55% of Pet Food $. In 2019 their share was 42%. The $70>100K group had a bad year and other factors like occupation came to the forefront in the pandemic. Pet ownership is common across all income levels but in 2020 higher income remains critically important in Pet Food Spending.
8. Age – 45>74 (68.6%) – up from 62.6%. This older group replaced 35>64 yr-olds and their performance grew from 124.3% to 132.2% so the “Age” category ranked #4 in importance. 45>64 is in both groups and 55>64 was the big driver. The change came because the 65>74 share grew from 15.7% to 16.1% while 35>44 fell from 16.0% to 11.9%.
9. Education – Less than College Grads (57.9%) – up from 50.4%. Higher Education continues to fall in importance in Pet Food Spending as those without a degree gained share and their performance grew from 90.6% to 108.7%. Higher education, specifically a college degree, is now the least important factor in increased Pet Food Spending.
10. Occupation – I’m the Boss – Mgrs/Profess/Self-Employed (58.5%) – up from 38.7% – Spending by Blue Collar workers and lower level White Collar workers fell while the spending by the “Bosses” took off. Their performance grew from 123.2% to 175.1% and amazingly moved Occupation to the top spot in Pet Food Spending importance.

Only 7 of the big spenders for Pet Food are the same as those for Total Pet and they generally performed better in Food. This is a marked contrast from past years. In 2020, Pet Food Spending grew $5.65B and all 7 of the matching groups gained in both share and performance. Pet Food spending became much less balanced which is best illustrated by the need for 3 new big groups and the fact that the performance of 8 of the groups exceeds 120%.

Now, we’ll look at 2020’s best and worst performing Pet Food spending segments in each category.

Many of the best and worst performers are the ones that we would expect but 2020 produced some surprise winners – <College Grads, Homeowners w/o Mtges, Married, Oldest Child 6>, 4 People CUs, and 1 surprise loser – College Grads. There are 10 that are different from 2019. This is 3 more than last year and 4 more than for Total Pet this year. Changes from 2019 are “boxed”. We should note:

• Income is important in every segment, but the Food winner makes less than the winner in other segments. However, the Food segment’s influence is so strong that it pushed the Total Pet winner down to $100>149K.
• Occupation – Service Workers replaced Retirees at the bottom, but you still see the importance of Income in Food.
• Age – The 55>64 yr olds (high income “Boomers”) returned to the top but the <25 group stayed on the bottom.
• Education – In 2020, having a College Degree truly did not matter in Pet Food Spending.
• Housing – Owning a home is always important. In 2020, some of the extra $ available from having a paid off mortgage were used to spend more on Pet Food.
• CU Composition – Married, Couples Only had won for 5 years in a row. Now, having older kids is more important.
• CU Size – 2 Person CUs used to be the perennial winner. Last year it was 3 people and in 2020 it moved up to 4.
• Generation – Boomers remain the best performers in Pet Food, but the youngest replaced the oldest at the bottom.

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

There are just 3 repeats from 2019 so 21 of the 24 segments (88%) are new, including 5 that flipped from 1^st to last or vice versa. The winner and loser in Education and Housing are surprising but the biggest trend to note is the size of the increases in the winners. This shows the overall increase in Pet Food spending in 2020 was not widespread like 2019 but rather driven by very specific groups. Here are the specifics:

• Housing – Homeowners w/Mtges flipped from first to last.
  • Winner – Homeowners w/o Mtge – Food: $17.18B; Up $8.98B (+109.4%)               2019: Homeowners w/Mtge
  • Loser – Homeowners w/Mtge – Food: $14.75B; Down $2.60B (-15.0%)                     2019: Renters
  • Comment – Renters also spent less so the Food increase came solely from Homeowners with a paid off mortgage. However, it wasn’t driven by Retirees. 90% of the increase in Food $ came from those still working.
• Region – The 2019 winner and loser flipped positions.
  • Winner – Midwest – Pet Food Spending: $15.72B; Up $8.70B (+123.9%)                          2019: South
  • Loser – South – Pet Food Spending: $9.19B; Down $2.84B (-23.6%)                                   2019: Midwest
  • Comment – Last year all regions spent more. This was the 3^rd consecutive year in which the spending change, whether up or down, was the same for all regions. In 2020, that pattern changed as only the Midwest and West spent more.
• Income – The income winner continues to trend down. $100>149K group won. In 2019, it was the $150>199K group.
  • Winner – $100 to $149K – Pet Food Spending: $14.38B; Up $8.46B (+142.9%)                 2019: $150 to $199K
  • Loser – $70 to $100K – Pet Food Spending: $3.75B; Down $2.15B (-36.4%)                        2019: $30 to $39K
  • Comment – Truly a spending rollercoaster: <$40K: +$1.52B;$40>99K:-$3.07B;$100>149K:+$8.46K; $150>199K: -$1.68B;$200K>: +$0.43B.
• CU Composition – CU’s with Children, especially older children, came to the forefront.
  • Winner – Married, Oldest Child 18> – Food: $11.74B; Up $8.44B (+256.1%)                 2019: Married, Couple Only
  • Loser – 2+ Adults, No Kids – Food: $3.20B; Down $1.55B (-32.6%)                                  2019: Single Parents
  • Comment – In 2019, 85% of the increase came from all adult CUs – Singles & 2+ CUs, married or unmarried – just no kids. In 2020, the spending behavior essentially flipped. Singles again spent more but overall, CUs with kids, including Single Parents, spent $8.81B more while all adult CUs with no kids spent $3.16B less.
• Occupation – Self-Employed won for the 3^rd consecutive year.
  • Winner – Self-Employed– Pet Food Spending: $11.29B; Up $7.91B (+234.2%)                  2019: Self-Employed
• Loser – Tech, Sales, Clerical – Pet Food Spending: $2.99B; Down $2.52B (-45.8%)                      2019: Retired
  • Comment – Those with more control, Self-Employed, Managers & Professionals and Retirees, spent more. With the exception of Service Workers, who spent 1.8% more, all other occupations, blue and white collar, spent less.
• # in CU – After 2 straight wins, 3 People CUs was replaced at the top by 4 person CUs.
  • Winner – 4 People – Pet Food Spending: $11.56B; Up $7.61B (+192.8%)                         2019: 3 People
  • Loser – 2 People – Pet Food Spending: $10.77B; Down $2.00B (-15.7%)                          2019: 5+ People
  • Comment: Although Singles again had an increase, the movement to larger CUs continues as 4+ CUs spent $9.3B more. The previously magic “2” number continues to decline.
• Area Type – In 2020, driven by Rural, the lower population areas continued to spend more.
  • Winner – All Areas <2500 – Pet Food Spending: $17.54B; Up $7.20B (+69.7%)                    2019: Suburbs <2500
  • Loser – Suburbs 2500> – Pet Food Spending: $11.12B; Down $2.11B (-15.9%)                     2019: Center City
  • Comment – Only Cities with a population above 5 million and areas with a population under 2500 spent more. The larger Suburbs, 2500+ people, took the biggest hit, -$2.11B. Their share of Pet Food $ fell from 42% to 30%.
• Age – The highest income group, 45>54 flipped from the top to the bottom.
  • Winner – 55>64 yrs – Pet Food Spending: $14.63B; Up $7.09B (+94.0%)                                2019: 45>54 yrs
  • Loser – 45>54 yrs – Pet Food Spending: $5.45B; Down $1.63B (-23.1%)                                  2019: <25 yrs
  • Comment: Although the 55>64 yr olds drove almost all of the increase, there was another spending rollercoaster. <25: -$0.37B; 25>34: +$0.87B; 35>54: -$2.24B; 55>74: +$7.41B; 75>: -$0.02B.
• Generation – Boomers are back on top, while Gen X flipped from 1^st to last.
  • Winner – Baby Boomers – Pet Food Spending: $19.31B; Up $6.75B (+53.7%)                        2019: Gen X
  • Loser – Gen X – Pet Food Spending: $8.29B; Down $1.73B (-17.3%)                                          2019: Born <1946
  • Comment – Much of the Pet Food spending lift was an emotional reaction to the pandemic so it is not surprising that Boomers, the 1^st pet parents, led the way. Another rollercoaster – Gen Z, Gen X and those born before 1946 all spent less while Millennials and Boomers spent more.
• Education – Higher education has been becoming less important in Pet Food spending. The trend continues.
  • Winner – <College Grad – Food Spending: $21.33B; Up $5.61B (+35.7%)                             2019: HS Grads
  • Loser – BA/BS Degree – Food Spending: $7.75B; Down $0.40B (-4.9%)                                2019: <HS Grad
  • Comment – Driven by those with an advanced degree, College Grads did spend $0.04B more. However, almost all of the 2020 spending lift came from those without a degree.
• Race/Ethnic – White, Not Hispanic kept their position at the top.
  • Winner –– White, Not Hispanic – Pet Food Spending: $32.73B; Up $5.58B (+20.6%)           2019: White, Not Hispanic
  • Loser ––- Asians – Pet Food Spending: $0.43B; Down $0.27B (-38.4%)                                    2019: Hispanic
  • Comment – The U.S. is slowly becoming more racially/ethnically diverse but White, Not Hispanic is still by far the biggest spender in every Pet Industry Segment. In 2020 their share of Food spending hit 88.8%, the largest in any segment. African Americans also spent more on Pet Food in 2020, but Asians and Hispanics spent less.
• # Earners – 2 Earner CUs kept their place at the top and accounted for 94% of the Pet Food Spending lift.
  • Winner –– 2 Earners – Pet Food Spending: $18.28B; Up $5.30B (+40.8%)                               2019: 2 Earners
  • Loser – No Earner, 2+ CU – Pet Food Spending: $2.48B; Down $0.28B (-10.3%)                    2019: 1 Earner, 2+ CU
  • Comment – As we have seen, an income over $100K is important as it occupation. While everyone works CUs now perform above 120%, the real key to increased Pet Food spending is having 2 or more earners.

We’ve now seen the “winners” and “losers” in terms of increase/decrease in Pet Food Spending $ for 12 Demographic Categories. 1n 2019, the rebound lift from the FDA warning was widespread. In 2020, the big spending lift due to the pandemic occurred in very specific segments. Most of America remains firmly committed to high quality Pet Food. However, super premium Food comes with high prices, so income has grown in importance in Pet Food spending. I suspect that the internet and value shopping will become even more important in this segment. 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

5+ Person CUs came in 2^nd to 4 person CUs but this is also representative of the movement in food spending to larger CUs. Single Parents have the lowest performance in the category, but it is improving. African Americans have the lowest income and lowest percentage of pet ownership, but they are still committed to the wellbeing of their Pet Children. In recent years, Millennials have led the way in Pet Food spending trends. Their behavior was then followed by their Boomer parents. In 2020, the situation was reversed as many got on board with the move by the older group. Managers and Professionals have very high income and often lead the way in spending trends, especially in the era of super premium foods. In 2020, they finished second behind the incredible lift by the self-employed group.

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 second half of 2014. In 2015 a substantial portion of consumers began to upgrade to this new trend. The result was a $5.4B spending increase. These consumers were generally more educated, often worked as managers or were self-employed 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 began value shopping for their new food and found great deals online and in some stores. They spent some of the $3.0B “saved” Food dollars 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 year 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 and spending in the first half was up $0.25B. Then the bottom dropped out as spending fell $2.51B in the second half in reaction to the FDA warning on grain free dog food. It turned out that the big decrease in pet food spending came directly from the groups who had fueled the big 2017 increase. This turmoil was illustrated by the fact that 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 either 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. Education became less important but income and related categories mattered more. Pet Food Spending became a little less demographically balanced in 2019 and the 2020 Pandemic accelerated this trend. Fear of shortages led to binge buying and a $5.65B increase. This behavior was driven by very specific groups, including 55>64 yr old Boomers, Self-Employed & Managers, Homeowners w/o Mtges, $100>149K incomes and less populated areas. 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. The retail market strongly recovered in 2021. We’ll see if/how this impacted Pet Food $.

Finally – 2020’s “Ultimate” Pet Food Spending CU is 4 people – a married couple, with at least 1 child over 18. They are 55>64 years old and White, but not of Hispanic origin. Neither graduated from college but they both work in their own business. They earn $100>$150K but have paid off the mortgage on their house in a rural area in the Midwest.