Information by segment as defined by USBLS

2020 Total Pet Spending was $83.74B – Where did it come from…?

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Total Pet Spending in the U.S. was $83.74B in 2020, a $5.31B (6.8%) increase from 2019. These figures and others in this report are calculated from data in the annual Consumer Expenditure Survey conducted by the US BLS. 2020 was a strong year for the industry, on the surface. However, when you look at each segment the pandemic caused considerable turmoil. Pet Food spending spiked as specific groups binge bought early in the year. The high prices of Supplies and the fact that many categories are discretionary, rather than necessary caused their $ to continue falling. Services was hurt the most as many outlets were subject to pandemic related restrictions and closures. Veterinary Services was deemed the other necessary pet expenditure by consumers so their $ surged. 2020 Pet Spending certainly deserves a closer look.

The first question is, “Who is spending most of the $83+ billion dollars?” There are of course multiple answers. We will look at Total Pet Spending in terms of 10 demographic categories. In each category we will identify the group that is responsible for most of the overall spending. Our goal was to find demographic segments in each category that account for 60% or more of the total. To get the finalists, we started with the biggest spending segment then bundled related groups until we reached at or near 60%.

Knowing the specific group within each demographic category that was responsible for generating the bulk of Total Pet $ is the first step in our analysis. Next, we will drill even deeper to show the best and worst performing demographic segments/groups and finally, the segments that generated the biggest dollar gains or losses in 2020.

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

The only group change from 2019 is that Rural was added to Suburban as the bigger Suburbs lost ground in 2020. There were changes in the numbers and rankings and only 5 made the 120%+ club, down from 6 in 2019. Higher Education and 35>64 yr olds dropped out while Everyone Works moved in. Married Couples made the biggest gain in share and performance while All Wage & Salary Earners had the biggest drops. In fact, their share fell below 60% and their performance was less than 100%. Higher Income remains the single most important factor in Total Pet Spending.

  1. Race/Ethnic – White, not Hispanic (87.3%) down from 87.6%. This is the 2nd largest group and has the largest share of Pet Spending. Their performance was essentially stable at 127.6% but they fell from #2 to #3 in terms of importance in Pet Spending demographic characteristics. Although this demographic, along with age, are 2 areas in which the consumers have no control, spending disparities within the group are enhanced by differences in other areas like Income, CU Composition and homeownership. There are also apparently cultural differences which impact Pet Spending. Asian Americans are first in income, education and spending but last in Pet Spending as a percentage of total spending – 0.37% vs a national average of 1.04%.
  2. Housing – Homeowners (83.3%) Controlling your “own space” has long been a key to larger pet families and more pet spending. 2020 was a bad year for renters (-$0.62B) but an even worse year for Homeowners w/Mtges (-$2.1B). Homeowners spent $5.92B more but the group’s performance fell from 127.7% to 126.6% because of more home owning CUs. They dropped from 3rd to 4th place in importance for increased pet spending. The homeownership rate is growing in the younger CUs but most of the pet spending lift in the group is coming from older people who are still working but have paid off their homes.
  3. # in CU – 2+ people (80.3%) up from 78.2%. Singles are now the only group with under 100% performance. In 2020 all CUs with 3 or less people spent less. The 2.1% gain in share and performance increase of 2+ CUs from 112.2% to 114.4% was entirely driven by +$7.7B from 4 person CUs and +$2.7B from the 5+ Person group.
  4. Area – Suburban & Rural (71.6%) Homeownership is high and they have the “space” for pets. The larger suburbs had a bad year so Rural was added to get to 60+% share of pet spending. This pushed performance up to 113.6% from 95.1%. Center City had an increase of $0.68B but their performance is by far the worst at 76.8%
  5. # Earners – “Everyone Works” (70.7%) up from 68.4%. These are CUs of any size where all adults are employed. This group’s share ranking stayed in 5th place. However, their performance increased from 117.0% to 123.0%. They joined the 120%+ club and are now the 5th most important category. CUs with 2 or more earners had a $5.0B increase. This further reinforces the tie between income and increased pet spending.
  6. CU Composition – Married Couples (64.7%) With or without children, two people, committed to each other, is an ideal situation for Pet Parenting. In 2020, they moved up from 10th to 6th in share of spending due entirely to CUs with an oldest child over 6. Those with a child over 18 had an especially good year, +$8.57B. The overall group’s performance skyrocketed from 124.3% to 133.4%, moving them up to 2nd place in importance.
  7. Income – Over $70K (64.3%) They maintained their share but their performance rating fell to 147.9% from 155.0%. However, CU income is still by far the single most important factor in increased Pet Spending. Spending was on a true roller coaster – Under $50K: +$2.98B; $50>100K: -$4.57B; $100>150K: +$8.45B; $150K>:-$1.55B. The key dividing line was $100K. The over $100K group now has 28.5% of CUs but accounts for 51.6% of Total Pet $.
  8. Age – 35>64 (63.2%) There was a clear divide within this group. The 35>54 yr olds spent $3.18B less while the 55>64 yr olds spent $6.36B more. They maintained share but their performance fell from 121.0% to 118.4%. They are now out of the 120+% club and they dropped from 6th to 8th in overall importance.
  9. Education – Associates Degree or Higher (61.3%) down from 68.4%. Higher Education level is usually tied to higher income and Pet spending. It can also be a key factor in recognizing the value in product improvements. 2020 largely threw this history out the window as those with less than a college degree led the way in spending in the necessary segments – Food and Veterinary. However, they did have a minor drop in Services $ and the biggest drop in Supplies $. Overall spending for the Assoc & Higher group fell -$2.33B and their performance fell precipitously from 123.1% to 107.0%, removing them from the 120%+ club. In 2020, Higher Education fell to next to last in importance in Pet Spending.
  10. Occupation – All Wage & Salary Earners (59.2%) – Their share fell sharply from 65.0% to 59.2%. Their drop in performance from 106.5% to 96.3% was even more significant as they are the only big group with performance below 100%. Service workers had a small, $0.3B increase but the overall increase was driven by Self-Employed, +$8.84B and Managers/Professionals, +$3.41B. Every other occupation and Retirees spent less. Low level, white collar workers had the worst year, with a spending decrease of -$3.56B. In 2020, “The Bosses” ruled in Pet Spending!

Total Pet Spending is a sum of the spending in all four industry segments. The “big demographic spenders” listed above are determined by the total pet numbers. The share of spending and performance of these groups varies between segments and in a few cases falls below 60%. We also altered the groups in some segments to better reflect where most of the business is coming from. There is no doubt that the pandemic caused some turmoil in Pet Spending,

The group performance is a very important measure. Any group that exceeds 120% indicates an increased concentration of the business which makes it easier for marketing to target the big spenders. Income over $70K is again the clear winner, but there are other strong performers. High performance also indicates the presence of segments within these categories that are seriously underperforming. These can be identified and targeted for improvement. The low performance by the Wage/Salary earners came as a result of the strong performance of Self-Employed.

Now, let’s drill deeper and look at 2020’s best and worst performing segments in each demographic category

Most of the best and worst performers are just who we would expect and there are only 6 that are different from 2018. Changes from 2019 are “boxed”. We should note:

  • Income is important in Pet Spending, which is shown by the 194.3% performance by the $100>149K> group. There was also a clear dividing line. Over $100K: 181.2%; Under $100K: 67.7%.
  • Occupation – “I’m the Boss” (Self-Employed & Mgrs/Professionals) The only occupations with 100+% performance.
  • Age – The 54>64 yr olds are Boomers that have the highest income and biggest families in their generation.
  • Region – With a strong year from Rural areas, the Midwest replaced the Northeast at the top.
  • CU Composition/Number – The importance of children was maintained, especially older ones and the performance of Married, Couple Only fell again. The “magic” CU number also moved up from 3 to 4.
  • Boomers moved back on top with their emotional binge food buying and Gen Z fell to the bottom – no surprise.

Most expected winners are still doing well. The “new” winners reflect the spending surge from the Boomers. In the next section we’ll look at the segments who literally made the biggest difference in spending in 2020.

We’ll “Show you the money”! This chart details the biggest $ changes in spending from 2019.

Lots of turmoil. There are 24 Winners and Losers. 6 segments held their spot from 2019 while 6 switched from winner to loser or vice versa. Overall, 75% were different from 2019.

  • Area Type – The big suburbs still have the biggest share of Pet $ (38.9%) but they flipped from 1st to last in 2020.
    • Winner – Rural – Pet Spending: $16.09B; Up $9.31B (+137.1%)                          2019: Suburbs 2500>
    • Loser – Suburbs 2500> – Pet Spending: $32.61B; Down -$3.54B (-9.8%)        2019: Center City
    • Comment – Spending in The Rural segment literally exploded. Center City also spent $0.68B more – a big change from their recent pattern. The downside came from the usually reliable Suburbs.
  • Occupation – Tech, Sales, Clerical flipped from 1st to last.
    • Winner –– Self-Employed – Pet Spending: $15.87B; Up $8.84B (+125.9%)                        2019: Tech, Sales, Clerical
    • Loser – Technical, Sales, Clerical – Pet Spending: $9.59B; Down -$3.56B (-27.1%)        2019: Mgrs & Professionals
    • Comment – In 2020 the “Bosses” ruled as Self-Employed & Mgrs/Professionals together spent $12.25B more.
  • Region – The 2019 winner and loser flipped places.
    • Winner – Midwest – Pet Spending: $25.27B; Up $8.65B (+52.0%)                                2019: Northeast
    • Loser – Northeast – Pet Spending: $12.61B; Down -$2.38B (-15.9%)                            2019: Midwest
    • Comment – In 2019 the Northeast had the only increase in Total Pet $. In 2020 they fell to the bottom. The Midwest made a huge comeback, but the West also spent more. They were the only regions to spend more.
  • CU Composition – Having children became more important as Married, Couple Only had another big $ decrease.
    • Winner –– Married, Oldest Child 18> – Pet Spending: $16.858; Up $8.57B (+103.3%)         2019: Singles
    • Loser – Married, Couple Only – Pet Spending: $21.20B; Down -$1.71B (-7.5%)                         2019: Married, Couple Only
    • Comment – Kids matter! Couples with an oldest child over 6 spent more but surprisingly, so did Single Parents.
  • Income – No repeats or flips here but the negative impact of the pandemic on the middle-income group is apparent.
    • Winner – $100 to $149K – Pet Spending: $23.37B; Up $8.45B (+56.6%)                                   2019: $150 to $199K
    • Loser – $70 to $99K – Pet Spending: $10.64B; Down -$3.52B (-24.9%)                                       2019: Under $30K
    • Comment – The $100-149K group had the biggest increase but spending flipped up or down by $50K income groups. <$50K Up; $50>100K Down; $100>150K Up; $150>200K Down; $200K> Up.
  • Housing – Homeowners w/o Mtge kept their spot at the top.
    • Winner – Homeowner w/o Mtge – Pet Spending: $28.81B; Up $8.02B (+38.6%)                   2019: Homeowner w/o Mtge
    • Loser – Homeowner w/Mtge – Pet Spending: $40.96B; Down -$2.10B (-4.9%)                       2019: Renter
    • Comment – Homeowners w/Mtge, the biggest spenders, had the biggest drop, but Renters again spent less.
  • # in CU – 2 People CUs continued their decline and stayed at the bottom.
    • Winner – 4 People – Pet Spending: $17.88B; Up $7.74B (+76.3%)                          2019: 1 Person
    • Loser – 2 People – Pet Spending: $28.43B; Down -$2.57B (-8.3%)                         2019: 2 People
    • Comment: Although 2 people CUs still spend the most, 34.0% of all Pet $, in 2020 the movement was to bigger CUs. 4 People led the way but 5+ Person CUs had the only other increase. 4+ People was the new magic number.
  • Age – A new winner and loser, with the Boomer surge coming to the forefront.
    • Winner – 55>64 yrs – Pet Spending: $24.15B; Up $6.36B (+35.8%)                             2019: 75+ yrs
    • Loser – 35>44 yrs – Pet Spending: $13.29B; Down $1.56B (-10.5%)                             2019: 45>54 yrs
    • Comment: There was another spending rollercoaster in 2020: <25: -$1.06B; 25>34: +$2.56B; 35>54: -$3.1B; 55>74: +$7.38B; 75+: -$0.48B.
  • Generation – The Generations flipped at the top and bottom of the Total Pet spending change ladder.
    • Winner – Baby Boomers – Pet Spending: $34.85B; Up $6.11B (+21.3%)                               2019: Gen X
    • Loser – Gen X – Pet Spending: $23.96B; Down -$1.79B (-7.0%)                                               2019: Baby Boomers
    • Comment – Boomer $ spiked in Food & Veterinary while the Gen X growth ended largely due to a drop in Food $.
  • Education – BA/BS stayed at the bottom while those without a College degree took over the top spot.
    • Winner – Less than College Grads – Pet Spending: $39.68B; Up $6.02B (+17.9%)         2019: Adv. College Degree
    • Loser – BA/BS Degree – Pet Spending: $22.56B; Down -$1.26B (-5.3%)                              2019: BA/BS Degree
    • Comment – Largely due to changes in Food spending patterns, Education’s importance declined sharply in 2020.
  • Race/Ethnic – White, Not Hispanics (87.3% of all Pet $) won again.
    • Winner – White, Not Hispanic – Pet Spending: $73.09B; Up $4.36B (+6.3%)               2019: White, Not Hispanic
    • Loser – Asian American – Pet Spending: $1.59B; Up +$0.06B (+3.8%)                            2019: African American
    • Comment – While we had a usual winner, it’s important to note that all groups spent more on their pets in 2020.
  • # Earners – 2 Earners have the biggest share of Pet $ (45.1%) and kept their spot at the top.
    • Winner – 2 Earners – Pet Spending: $37.75B; Up $3.80B (+11.2%)                                  2019: 2 Earners
    • Loser – No Earner, Single – Pet Spending: $4.82B; Down -$1.10B (-18.5%)                  2019: 1 Earner, 2+ CU
    • Comment – While 2+ Earner CUs had the biggest increases, only No Earner, Singles spent less in 2020.

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

HONORABLE MENTION

5 of the 6 are new to the list. Let’s start with Single Parents. They are the group with the most financial pressure. Their spending increase of $0.74B (+48.1%) is quite an accomplishment. Next in line is 5+ Person CU’s. 2020 was a year for bigger CUs. They finished 2nd to 4 Person CUs. 2020 was largely focused on the importance of higher incomes but there were some exceptions. The low income $30>39K group also had a significant increase in spending, +$1.29B (+25.5%). We have already noted that all Racial/Ethnic groups increased spending but African Americans had the only double digit percentage increase at +21.9%. Millennials are the only repeat on the list as their spending increase was 2nd only to the big surge by Boomers. While Self-Employed clearly won the occupational battle, Managers & Professionals finished a strong second and inspired the creation of the “I’m the Boss” grouping.

Summary

To properly review 2020, we must put it into context with recent history. Total Pet Spending reached $78.60B in 2018, a $14.28B, 22.2% increase from 2014. However, it was not a steady rise, Total spending actually fell in 2016 and each segment had at least one down year. There were a number of factors driving both the growth and tumult within the industry. Two big positives were the movement to super premium pet foods and the rapid expansion of the number of outlets offering pet services. On the downside were value shopping, trading $ between segments and outside influences like the FDA dog food warning and tariffs. Pricing, inflation/deflation was also a negative/positive factor in some cases.

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

That brings us to 2020 and the Pandemic. This caused a lot of turmoil. The effect was positive for Food and Veterinary, especially Food. Out of fear of possible shortages, many Pet Parents binge bought Pet Food. Spending also increased considerably in Veterinary, as consumers focused on their Pets’ needs. The more discretionary segments suffered. With continued high prices, Supplies continued their widespread decline. Services had by far the biggest negative impact from the pandemic as many outlets were subject to closures and restrictions.

In the best/worst performing segments, Boomers took back the top spot, but spending moved towards larger 4 Person CU’s and a more rural environment in the Midwest. It was another “booming” year for Boomers.

The biggest $ changes saw more turmoil than in 2019. 6 segments held their position, compared to 9 in 2019, while 6 switched from 1st to last or vice versa, compared to 4 in 2019. Many winners were the “usual suspects” but there were some surprise winners with huge increases: < College Grads, Self-Employed, Rural, 4 Person CUs, Married, w/Child 18>. The 55>64 yr-old Boomers are not a surprise winner. However, a closer examination shows that many surprises have close ties to this group. To better understand this, let’s look closer at the Rural Segment – avg age 56 – 45% H/O w/o Mtge. Farms are in Rural areas and up to 25% of all Self-Employed businesses are non-corp. farms. Farmers avg age is 57. The median income for commercial family farms is $164K. Rural residents are also 50% less likely to be a college grad. Areas with low population have bigger CUs and more pets, but also have less access to retail stores, so they are more likely to fear product shortages. This example illustrates how the surprises can be connected to each other and to more normal winners like the 55>64 yr old Boomers. We will continue our analysis of 2020 Pet $ by drilling down into the individual segments.

But before we go…The Ultimate Total Pet Spending CU in 2020 consists of 4 people – a married couple with a child over 18. They are in the 55 to 64 age range. They are White, but not Hispanic. At least one graduated from college. They both work in their own business and earn $100>149K. They paid off the mortgage on their house located in the rural Midwest

“Petflation” 2022 – February Update – Inflation Surges in All Segments

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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. Just recently it was announced that Food at Home (groceries) prices were up 8.6% over 2021, the biggest increase since 10.7% in 1981. This month’s huge increase is only in 4th place with 2nd place going to 1979, +13.9% and the top spot going to 1974, +22.3%. By the way, the average interest rate for a 30 year fixed rate mortgage in 1981 was 16.6%. As bad as things look right now, they can get much worse. As we have seen in recent years, even minor price fluctuations can affect consumer pet spending, especially in the more discretionary segments. With that in mind, we will initiate monthly reports to track petflation as it evolves in the marketplace.

Total Pet Products & Services prices were 4.1% higher in December 2021 than in December 2020. That’s high, but still much better than the overall CPI increase of 7.0%. We’ll start tracking 2022 in greater detail. Each report 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 February 2020 to February 2022. We will use the 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.

You immediately see a distinct difference in patterns between the 2 Services segments and the 2 Products segments. While there were some dips and differences, Veterinary and Services prices generally inflated during the whole 2-year period with an accelerated rate in 2021, a pattern similar to the overall CPI. Food and Supplies were generally deflated

below December 2019 prices until mid-year 2021. At that time, Food turned slowly up and Supplies returned to 2019 levels. In December inflation accelerated for all segments but Supplies, which turned sharply up in 2022. In the 1st two months of 2022 inflation rates continue to grow nationally and for all pet segments. 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 stronger through February 2022. 87% of the overall 10.4% increase since 2019 occurred in the last 14 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 which has grown larger through February.
  • 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, then again in February, breaking the old record which was set way back in September 2009.
  • Pet Services – A normal inflation rate is about 2+%. Despite or maybe because of closures, price increased at a lower rate in 2020. In 2021 consumer demand increased but there were fewer outlets. Prices increased strongly in 2021 with the biggest lifts coming in the 2nd and 4th In 2022, inflation has grown even stronger.
  • Veterinary – Inflation has always been something that you can count on in Veterinary Services. Prices were flat in February 2020 (amazing) but began moving up in March and grew consistently through the 2021 recovery. A pricing surge that started in December allowed them to beat the overall CPI with an inflation rate of +10.8%.
  • Total Pet – You can see that the blending of the segment patterns made the Pet Industry look very price calm compared to the overall market. That ended in December 2021 as prices surged up in all segments.

Next, we’ll turn our attention to the headlines, which largely focus on the Year over Year inflation rate change for the month. We’ll do a little “catch up” as this report will show comparisons for both January and February. We’re also going to look a little deeper to see how the recent numbers compare to the past, including:

  • Vs last month
  • 21>22
  • 20>21
  • 19>20
  • 18>19
  • Tot 19>22
  • Avg 19>22

We also included some “human” categories that can be compared to a pet segment. First, a look at January!

The inflation rate from January 2021 was large and growing significantly for all pet segments. We should also note that it is getting significantly worse as prices were up over 1% from December for 6 of 9 categories.

  • U.S. CPI – Through the pandemic and early recovery, inflation remained at or near normal levels. In 2021 and now 2022, inflation accelerated, resulting in increases not seen in decades.
  • Pet Food – Inflation is the lowest in this segment and only about 1/3 the rate of human groceries. Note the every other year up/down pattern. Because of the size of the Food segment, you see a similar pattern in Total Pet. The 2.7% lift is small vs 2021 but it is larger because it is going against deflated numbers in 2021.
  • Food at Home – You can see the low pre-pandemic inflation rate (normal) which turned sharply up in the pandemic and continues to accelerate. It is now 10 times higher than “normal”. It is largely being driven by shortages due to supply chain problems.
  • Pet Supplies – Prices surged in January to a new all-time record high. (beating Sept 2009). However, we should put this increase into perspective as it comes vs a period of strong deflation
  • Veterinary – Veterinary inflation had slowed before the pandemic, but it returned to more normal high levels. It is high and growing so much that the increase since 2019 is 27% greater than that of the national CPI.
  • Medical Services – Inflation spiked in 2020 but has returned to a more normal rate, well below Veterinary.
  • Pet Services – With closures and consumers’ DIY attitude in the pandemic, demand slowed as did inflation. That ended in 2021 as prices started up again. In January, the price increase vs 2021 was the biggest of any pet segment.
  • Haircuts & Personal Services – Inflation was consistent pre-pandemic. It has grown about 50% in 2021 and 2022.
  • Total Pet – Pre-pandemic, Total Pet inflation was above the national average. The deflation in the products segments drove the inflation rate for Total Pet down. However, all segments have now turned sharply up so the inflation rate is 4 times higher than it was just 1 year ago.

We have seen that prices increased strongly in January vs December producing year over year numbers that are now concerning in the Pet Industry as well as the overall market. Let’s look at February.

As you can see, a bad situation in January, got even worse in February. Prices vs February 2021 were up 7.9% overall with the Grocery increase being the largest since 1981. Again 6 of 9 categories had price increases over 1% from last month, and the increases were generally larger than the January over December increases.

  • U.S. CPI – Prices are up 0.9% since January. The targeted inflation rate is less than 2%. In February, prices were up 7.9%, basically 4 times higher than the “targeted” rate.
  • Pet Food – Prices are up 1.1% vs January and 3.7% vs February 2021. Granted, they are being measured against a deflationary year, but that increase is more than double the pre-pandemic increase from 2018 to 2019.
  • Food at Home – As we said earlier, the year over year increase in February is the largest since 10.7% in 1981 but only 40% of the 22.3% increase in 1974. Things are bad but could get a lot worse. The inflation for this category since 2019 has now increased 10% more than the national CPI.
  • Pets & Supplies – Prices were up 2.3% from their record in January, setting a new record. February prices are being compared to deflated prices in 2021 but the increase is still high, only trailing Food at Home and the national CPI.
  • Veterinary Services – February 2020 was still pre-pandemic. You can see that inflation then was at more normal levels, about twice the national CPI. It then increased to a new higher level and stayed there. However, in February it fell to 2nd place in the overall increase since 2019 as it now trails Haircuts and Other Personal services.
  • Medical Services – Prices sharply increased in pre-pandemic February 2020 but then inflation slowed and has returned to a more normal rate in 2020. Prices were up 0.4% from January, the smallest increase for any category.
  • Pet Services – While inflation slowed during the pandemic and early recovery, it is spiking now – Up 1.3% from January and 6.5% from 2021, the biggest increase in history and almost triple the rate of the previous 2 years.
  • Haircuts & Other Personal Services – This category is obviously important to consumers and they will pay the price.
  • Total Pet – The inflation rate is getting larger and is now 5 times the rate of last year. Only Food is keeping it down as it gets closer to the national CPI rate of increase. Inflation has caused problems in the past by reducing the frequency of purchase in Supplies, Services and Veterinary. Super Premium Food is 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 we’ll use the same chart format to look at Year to Date numbers – what does January + February add up to and how does 2022 compare to previous years…so far?

The strong current increase in inflation seen in January and February is reflected in YTD numbers. 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 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 – Thanks to February, the 2022 YTD increase in prices surpassed that of the overall CPI. You can clearly see how supply chain issues have grown more impactful on prices.
  • Pets & Pet Supplies – Prices have strongly turned up since the beginning of the year, breaking their all-time record set 13 years earlier. Although this year’s increase is being measured against a deflationary 2021, it is very significant and in 3rd place, trailing only Food at Home and the national CPI.
  • Veterinary Services – This chart clearly shows that the inflation rate has consistently grown each year throughout the pandemic and recovery. Regardless of the circumstances, just charge more.
  • Medical Services – Prices went up significantly just before the pandemic, but the rate has slowed since and is now essentially returned to pre-pandemic levels.
  • Pet Services – February 2022 was the largest year over year monthly increase in history and now has helped produce a YTD increase that is 2nd only to 6.6% in 2009. Demand has grown for Pet Services while the availability has decreased, a formula for inflation.
  • Haircuts & Personal Services – The services segments, essential and non-essential were hit hardest by the pandemic. Now as consumers move closer to their normal patterns of spending, the segment is not prepared so the increased demand is driving prices up at an astounding rate.
  • 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. Supplies had the biggest YTD increase of any segment. This change in Products, in conjunction with the strong inflation rate in both Services segments has pushed Total Petflation ever closer to the extraordinarily high rates in the overall market.

Inflation is radically increasing in the Pet Industry. Will it impact spending? Let’s put it into perspective. The 4.9% YTD increase in Total Pet is far below the 10.3% record set in 2009 but over 3 times larger than the 1.5% average since then.

Although pet spending is increasingly moving to higher income groups, the impact of inflation varies by segment. Supplies has been impacted the most. Many categories are commoditized and very price sensitive. The move to high priced Super Premium Food has become widespread because the perceived value has grown so higher prices just push people to value shop. Veterinary prices have strongly inflated for years. The result has been a reduction in visit frequency. Spending in the Services segment has taken off in recent years, but it is driven by higher incomes because of its convenience so inflation is less impactful. We’ll continue to monitor the situation but we’ll just have to wait and see the impact of the latest surge in Petflation.

 

2020 U.S. Pet Spending by Generation – Boomers’ Spending Surges

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In 2020 Americans spent $83.74B on our companion animals, 1.04% of $8.05 Trillion in total expenditures. Pet Spending was up $5.31B (+6.8%), a big change from the spending dip in 2019. There was 1 overriding factor affecting all spending, including pet in 2020 – the pandemic. Consumers focused on the necessary segments – Food and Veterinary, while the discretionary segments – Supplies and Services, suffered. Out of fear of shortages, Pet Parents binge bought Food early in the pandemic. On the negative side, closures caused Services to have a radical reduction in frequency.

In this report we will look at how the pandemic affected the Pet Spending for today’s most “in demand” demographic measurement – by Generation. In 2020, although Gen Z $ are often bundled with Millennials for comparison, we can now compare their annual spending vs the previous year. Using data from the US BLS Consumer Expenditure Survey we’ll look for answers.

We’ll start by defining the generations and looking at their share of U.S. Consumer Units (CUs are basically Households)

GENERATIONS DEFINED

Gen Z: Born after 1996

In 2020, Age under 24

Millennials: Born 1981 to 1996

In 2020, Age 24 to 39

Gen X: Born 1965 to 1980

In 2020, Age 40 to 55

Baby Boomers: Born 1946 to 1964

In 2020 Age 56 to 74

Silent/Greatest: Born before 1946

In 2020, Age 75+

  • Baby Boomers still have the largest number of CU’s at 43.3M and 33.0% of the total. They had a slight increase in 2020 but generally they have been losing ground. In fact, they have 1.8M fewer CU’s than in 2016.
  • The Oldest Generations will continue to lose CUs primarily due to death or movement to permanent care facilities.
  • Gen X has the second most CUs and gained ground in 2020.
  • Millennials have the largest number of individuals, but they rank only third in the number of CU’s.
  • Gen Z lost CUs as did Millennials. The pandemic caused many younger folks to move back home or group together.

Now let’s look at some key CU Characteristics

One significant change was the increase in homeownership. This was primarily driven by the Gen Xers and Millennials. Gen Xers still have the biggest CUs but now Millennials have the most children <18 per CU.

  • CU Size – CUs with 2+ people account for 70.2% of all U.S. CUs (up from 69.8% in 2019) and 80.3% of pet $ (up from 78.2% primarily due to a huge spending lift by 4+ person CUs). Millennials are actively building their H/Hs. However, CU size, with all the related responsibilities, still peaks with the Gen Xers and then starts dropping. The Boomers are the last group with 2+ CUs but that will end soon. Gen Z joined the 2+ group for the 1st time in 2020.
  • # Children < 18 – 27.7% of U.S. CU’s have children and they generate 38.4% of Pet Spending. CUs with children were the driving force in the increase in Pet spending. Married Couples with children spent $8.77B more and even single parents increased pet spending by $0.77B. All other groups spent less. The biggest decrease came from Married Couples with no children – down -$2.22B. “Unmarried Adults only” CUs, of 2 or more people were next to last with a decrease of -$1.43B. Singles had the biggest increase in 2019. In 2020, they spent -$0.55B less on their pets. Overall, there was no change in the # of children per CU in 2019 but there were changes within groups. Millennials took over the top spot while the number of children per CU for both Gen X and Boomers decreased. We should note that CU’s with the oldest child over 18 had the biggest Pet $ increase, +$8.77B. This group is often Baby Boomers.
  • # Earners – Pet spending is usually tied to the number of earners in a CU. In 2020, 2 person, 2+ earner CUs still spent the most on their pets and had the biggest increase, +$5B (+11.8%). Generally, these are the younger generations, but the 55 to 64 year old Baby Boomers are also an important part of this group.
  • Homeownership – Owning and controlling your own space has always been a major factor in increased Pet Ownership and spending. Driven by the younger groups, homeownership increased to 65.81% from 63.74%. However, the pet spending pattern was even more defined. Homeowners with no Mtges spent +$8.0B more on their pets. Homeowners with mortgages spent -$2.1B less on their pets while the Pet $ for Renters fell -$0.6B. We should note that the number of Baby Boomer Homeowners w/no Mtge grew from 38% to 41%. The homeowners share of Total Pet Spending grew from 81.4% to 83.3% due to those without a mortgage and was likely driven by Boomers.
    • As expected, Gen Z are the most common renters in society. Homeownership by Millennials has moved up to 47% but it is still only 71% of the national average.
    • Gen Xers have been above the national avg since 2018 and Homeownership continues to increase with age.

Next, we’ll compare the Generations to the National Avg.:

In Income, Total CU Spending, Total Pet Spending and the Pet Share of Total CU Spending

CU National Avg: Income – $84,352; Total CU Spending – $61,282; Total Pet Spending – $637.78; Pet Share – 1.04%

  • Income – The Gen Xers are still at the top and their lead grew. The Boomers income plunged from 112% to 93% and they fell to 3rd place. Millennials’ income moved up to beat the national average and they are now #2. Income drops radically in the oldest group as they retire, and Gen Z is just getting started.
  • Total Spending – The Gen Xers make the most and spend the most but it’s not out of line with their income. Millennials increased their spending so that it now equal to the national average. Like their income, Boomers’ spending fell below the national average. Thanks to a big lift in income in relation to spending, the oldest group and Gen Z are no longer deficit spending in relation to their after tax income. With strong increases in both Income and spending, the retail importance of Millennials is growing.
  • Pet Spending – Again only 2 groups exceed the national average, but Boomers replaced Gen X in the top spot. Millennials are still 3rd but are 15% below Gen X and 30% below Boomers. The oldest and youngest groups trail.
  • Pet Spending Share of Total Spending – The national number grew from 0.94% to 1.04%. The growth was driven by a 0.09% increase from Millennials and a huge 0.31% lift from Boomers. All other groups fell and Boomers are still the only group to spend more than 1% of their total expenditures on their pets. In 2018 every group spent at least 0.92% of their total CU spending on their pets. In 2019 this fell to 0.82% and in 2020 it was down to 0.70%.

Now, let’s look at Total Pet Spending by Generation in terms of market share as well as the actual annual $ spent for 2015 through 2020. The 2020 numbers are boxed in red (decrease) or green (increase) to note the change from 2019.

  • Boomers are still the biggest force in Pet Spending and their share is again over 40% after falling to 36.6% in 2019.
  • There are definite age-related long term patterns which are readily apparent in the bar graph. Spending in the oldest group is low and slowly falling. In contrast, the youngest group (combined Millennials & Gen Z) is the only one showing consistent year after year growth. Gen X had also been growing every year… until 2020. The Boomers have the biggest share but are on a rollercoaster ride because they are the most likely group to have a strong reaction to trends, especially in this era of super premium foods. With their tremendous buying power, this can cause major spending swings impacting the whole industry. In 2020 this was very apparent as they were the primary group that panic bought Pet Food out of fear of possible shortages due to the pandemic.
  • In 2020, every other generation was up or down. Silent/Greatest: -$1.12B. Boomers: +$6.88B. Gen X: -$1.79B. Millennials: +$2.24B. Gen Z: -$0.14B.
  • Boomers – Ave CU spent $800.78 (+$131.53); 2020 Total Pet spending = $34.85B, Up $6.11B (+21.3%)
    • 2015>2020: Up $2.70B; They got back on the roller coaster as spending turned up and is now +8.4% from 2015.
  • Gen X – Ave CU spent $665.22 (-$61.83); 2020 Total Pet Spending = $23.96B, Down $1.79B (-7.0%)
    • 2015>2020: Up $5.70B; Their annual Pet spending growth since 2015 had been strong and consistent until 2020. They fell to #2 in Ave CU Pet spending and their $ increase since 2015 fell from $7.49B in 2019 to $5.70 in 2020.
  • Millennials + Gen Z – Ave CU spent $533.80 (+$62.38); 2020 Total Pet Spending = $19.60B, Up $2.10B (+12.0%)
    • 2015>2020: Up $9.87B; As the income and overall spending of Millennials grows, their pet spending has also grown every year since 2015. The “youngsters” have the biggest increase in $ of any group, $9.87B, +101%.
    • Millennials Only – Ave CU spent $565.07 (+$71.46); 2020 Total Pet Spending= $18.67B, Up $2.24B (+13.7%)
    • Gen Z Only – Ave CU spent $254.68 (-$25.41); 2020 Total Pet Spending= $0.93B, Down $0.14 (-13.4%)
  • Silent + Greatest – Ave CU spent $354.20 (-$34.65); 2020 Total Pet Spending = $5.34B, Down $1.12B (-17.3%)
    • 2015>2020: Down $2.27B; They still spend a relatively high amount on their pets, but age is becoming a factor.

Boomers returned to the top spot in Ave CU Total Pet Spending. Driven by Millennials, the youngest pet parents are still consistently increasing their annual spending which bodes well for the future.

Let’s look at the individual segments. First, Pet Food…

  • The trendy nature of Pet Food is more pronounced for the Boomers. In the older generations, pet ownership is fading. The younger groups have generally had more consistent growth but Gen X spending fell sharply in 2020.
  • Since 2014, Millennials’ have led the way in food trends, and they are the only group with an annual increase every year since 2015. The panic food buying in 2020 was more of an emotional reaction than a trend.
  • Boomers – Ave CU spent $442.06 (+$147.55); 2020 Pet Food spending = $19.31, Up $6.75B (+53.7%)
    • 2015>2020: Up $3.74B– Big reactions to every trend, from super premium to FDA warnings to fear of shortages.
  • Gen X –Ave CU spent$230.36 (-$53.82); 2020 Pet Food spending =$8.29B,Down $1.73B (-17.3%)
    • 2015>2020: Up $1.03B They reacted to the FDA warning by further upgrading their food. No pandemic panic buying for them. They value shopped.
  • Millennials + Gen Z – Ave CU spent $191.02 (+$29.17); 2020 Pet Food Spending = $7.07B, Up $0.94B (+15.4%)
    • 2015>2020: Up $3.43B They are the only group with increased spending every year since 2015. Their income is growing as is a commitment to their pets. They pioneer food upgrades and they too bought more just to be safe.
    • Millennials Only – Ave CU spent $206.94 (+$35.39); 2020 Pet Food spending = $6.86B, Up $1.07B (+18.6%)
    • Gen Z Only – Ave CU spent $52.97 (-$29.04); 2019 Pet Food spending = $0.20B, Down $0.13B (-39.7%)
  • Silent/Greatest – Ave CU spent $147.57 (-$5.12); 2020 Pet Food spending = $2.17B, Down $0.31B (-12.5%)
    • 2015>2020: Down $0.98B; They are committed to their pets, but COVID hit them hard and their CU #s are fading.

Pet Food Spending is driven by trends – new Super Premium Foods, FDA warnings and even fear of shortages due to COVID. Millennials lead the way in thoughtful changes, but Boomers lead in emotion. Now, on to Supplies Spending.

  • Gen X took over the top spot in both CU spending and share as Boomer spending plummeted again. The younger groups dominate this segment as Gen Xers and Millennials/Gen Z together account for 66% of Supplies spending.
  • Gen X – Ave CU spent $152.47 (-$1.70); 2020 Pet Supplies spending = $5.49B, Up $0.02B (+0.4%)
    • 2015>2020: Up $0.92B; Gen Xers are again the leader in CU spending. They were affected by the new tariffs in 2019 but essentially held their ground in 2020 so that they now have the biggest share of Supplies $.
  • Baby Boomers – Ave CU spent $101.85 (-$34.96); 2020 Pet Supplies spending = $4.41B, Down $1.49B (-25.3%)
    • 2015>2020: Down $1.53B; Their 2019 spending was hit hard by tariffs. In 2020 they spent their Pet $ on Food!
  • Millennials + Gen Z – Ave CU spent $123.76 (+$5.59); 2020 Pet Supplies spending = $4.52B, Up $0.18B (+4.2%)
    • 2015>2020: Up $1.29B; Supplies are still Millennials’ best performing segment. They were the least impacted by the tariffs in 2019 and were the only group with any real growth in 2020.
    • Millennials Only – Ave CU spent $125.05 (+$6.41); 2020 Pet Supplies spending = $4.12B, Up $0.20B (+5.2%)
    • Gen Z Only – Ave CU spent $111.92 (-$2.09); 2020 Pet Supplies spending = $0.40B, Down $0.02B (-4.8%)
  • Silent + Greatest – Ave CU spent $47.75 (-$17.38); 2020 Pet Supplies spending = $0.73B, Down $0.37B (-33.3%)
    • 2015>2020: Down $0.59B; This $ conscious group was hit hard first by tariffs then by the pandemic.

In 2016 most Consumers value shopped for super premium food and spent some of their savings on Supplies. Supply prices dropped in 2017 and everyone under 72 spent more! Late 2018 saw added tariffs but only Boomers dialed back their purchases. In 2019 the sharply rising prices drove spending down in all groups. In 2020 Millennials and Gen X spent a little more while the older groups spent a lot less.

Next, we’ll turn our attention to the Service Segments. First, Non-Veterinary Pet Services

  • Only Gen Z spent more. Gen X is still #1 in both CU spending and share. Gen X/Millennial/Gen Z share = 62.1%
  • Gen X – Ave CU spent $69.98 (-$15.62); 2020 Pet Services spending = $2.52B, Down $0.52B (-17.0%)
    • 2015>2020: Up $0.40B; As the #1 group, they were strongly impacted by the COVID related drop in frequency.
  • Baby Boomers – Ave CU spent $50.60 (-$13.90); 2020 Pet Services spending = $2.19B, Down $0.59B (-21.3%)
    • 2015>2020: Down $0.28B; Boomers had the biggest drop in $ as they focused on the needed segments.
  • Millennials + Gen Z – Ave CU spent $48.09 (-$2.34); 2020 Pet Services spending = $1.76B, Down $0.09B (-5.1%)
    • 2015>2020: Up $0.74B; They had the smallest decrease of any group and the biggest $ increase since 2015. In 2020 Gen Z actually got into the Services game for the first time.
    • Millennials Only – Ave CU spent $49.52 (-$4.82); 2020 Pet Services spending = $1.63B, Down $0.16 (-9.1%)
    • Gen Z – Ave CU spent $34.92 (+$19.45); 2020 Pet Services spending = $0.13B, Up $0.07B (+118.8%)
  • Silent + Greatest – Ave CU spent $27.58 (-$28.80); 2020 Pet Services spending = $0.42B, Down $0.53B (-55.5%)
    • 2015>2020: Down $0.22B; They definitely have the need but were the group most impacted by the pandemic.

This segment had slow annual growth until 2017 which saw a small drop in spending due to an extremely competitive environment. Consumers increased frequency but paid less. In 2018, the increased number of outlets really hit home, especially for the younger groups and spending exploded. 2019 brought another small decrease as Gen Xers and Millennials looked for and found a better deal. 2020 brought pandemic restrictions and closures. Frequency and $ fell.

Now, Veterinary Services

  • Boomers are still the biggest spenders in this segment, but again they only lead Gen Xers in $ because of more CUs.
  • The younger groups have a consistently growing commitment to this Pet Parenting responsibility. The combined Veterinary spending of Millennials/Gen Z and Gen Xers has increased $7.74B (+126%) since 2015.
  • Boomers – Ave CU spent $206.27 (+$32.84); 2020 Veterinary spending= $8.93B, Up $1.45B (+19.4%)
    • 2015>2020: Up $0.76B; In 2020, Boomers focused on needed segments – Food & Veterinary. They had the biggest increase in CU spending and in Veterinary $, +$1.45B
  • Gen X – Ave CU spent $212.41 (+$9.31); 2020 Veterinary spending= $7.65B, Up $0.44B (+6.1%)
    • 2015>2020: Up $3.34B; In 2016 their Veterinary spending exceeded the national CU Average. In 2018, they took over the top spot in CU spending. They are still #1 per CU and #2 in share as the Boomers had a bigger lift.
  • Millennials + Gen Z– Ave CU spent $170.94 (+$29.96); 2020 Veterinary Spending $6.25B, Up $1.07B (+20.7%)
    • 2015>2020: Up $4.40B; Their CU spending is up 165% since 2015. Veterinary has become a much bigger priority.
    • Millennials Only – Ave CU spent $183.56 (+$34.48); 2020 Veterinary spending = $6.05B, Up $1.13B (+22.9%)
    • Gen Z Only – Ave CU spent $54.87 (-$13.73); 2020 Veterinary spending = $0.20B, Down $0.06B (-22.5%)
  • Silent + Greatest – Ave CU spent $131.30 (+$16.65); 2020 Veterinary spending $2.02B, Up $0.08B (+4.2%)
    • 2015>2020: Down $0.76B; Their pets’ health is still a priority. Their CU increase only trails Millennials & Boomers.

Gen Xers and Millennials have consistently increased their commitment to Veterinary Services. In 2015, their share of Veterinary Spending was 36%. It is now 56% – a 56% increase. This is a big, fundamental change in spending behavior.

One last chart to compare the share of spending to the share of total CU’s to see who is “earning their share”

  • Baby Boomers Performance – Total: 126.1%; Food: 158.8%; Supplies: 88.2 %; Services: 96.3%; Veterinary: 108.9%
    • Boomers led the way in building the industry and are still the “top dogs” in $. They earn their share and are still the spending leader in Total Pet and the “needed” segments – Food & Veterinary. They are also the most emotional Pet Parents, so their spending is subject to radical swings like 2020’s panic, binge buying of Pet Food. They should hold the lead in Pet $ for several more years and be a major force for many more, but the Gen Xers and then Millennials are preparing to take their turn at the top.
  • Gen X Performance – Total: 104.2%; Food: 82.0%; Supplies: 132.0%; Services: 133.2%; Veterinary: 112.2%
    • After 2 years at the top Gen Xers fell to 2nd in performance. They earned their share in Total Pet and all industry segments but Food. Until 2020 they had increased their Total Pet Spending every year since 2015. Except for this year’s big dip in Food, their spending has become more balanced and their performance has improved. Gen Xers range in age from 40 to 55 so they are just entering the peak earning years. Expect their commitment and pet spending to continue to grow.
  • Millennials Performance – Total: 88.8%; Food: 74.2%; Supplies: 108.2%; Services: 94.3%; Veterinary: 96.9%
    • Millennials are now the only group to have increased their pet spending every year since 2015. Their spending is more evenly balanced, and performance has improved but their future as the Pet Parenting spending leaders is still a long way off. Their income, home ownership and pet spending are all increasing. They are educated and well connected. Indications are that they may lead the way in adopting new trends, especially in food. Their progress is good news, but in reality, their leadership is still more than a decade away.
  • Silent/Greatest Performance – Total: 54.6%; Food: 50.4%; Supplies: 41.3%; Services: 52.5%; Veterinary: 69.3%
    • Pet Parenting is more challenging in old age, but they remain committed. 0.86% of their total spending is on pets.
  • Gen Z Performance – Total: 40.5%; Food: 20.1%; Supplies: 96.9%; Services: 66.5%; Veterinary: 29.0%
    • They are just beginning so the numbers are low and progress is slow. However, they have “figured out” Supplies.

Baby Boomers are still the Pet $ leaders, but Gen Xers, followed by Millennials are ultimately the future of the industry. Both groups seem ready, willing and able to take their turn at the top. As these groups have risen, Pet Spending has become more balanced across the generations. This bodes well for the continued strong growth of the industry.

2020 U.S. TOTAL PET SPENDING $83.74B…Up ↑$5.31B

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In 2020 Total Pet Spending in the U.S. was $83.74B, a $5.31B (6.8%) increase from 2019. The biggest driver was the pandemic. Pet Parents focused on necessities and binge bought Pet Food in the 1st half of the year. In the 2nd half they turned their attention to the other necessary segment – Veterinary. The two more discretionary segments, Supplies and Services, suffered. Services was impacted the most with restrictions and closures but Supplies $ continued their decline due to a reduction in both $ per transaction and purchase frequency. However, there was still a net gain in Total Pet $.

  • A $5.65B (+18.1%) increase in Food
  • A $1.65B (-9.8%) decrease in Supplies
  • A $3.05B (+14.0%) increase in Veterinary
  • A $1.73B (-20.1%) decrease in Services

Let’s see how these numbers blend together at the household (CU) level. In any given week, 22.5 million U.S. CU’s (1/6) spent money on their Pets – food, supplies, services, veterinary or any combination – down from 27.1M in 2019.

In 2020, the average U.S. CU (pet & non-pet) spent a total of $637.78 on their Pets. This was a +7.5% increase from the $593.51 spent in 2019. However, this doesn’t “add up” to a 6.8% increase in Total Pet Spending. With additional data provided from the US BLS, here is what happened.

  • 0.8% fewer CU’s
  • Spent 29.0% more $
  • 16.6% less often

If 67% of U.S. CU’s are pet parents, then their annual CU Total Pet Spending was $951.91. 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>2020 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 (yr 1 the largest) followed by a small decrease.
  • In 2014-15, the Food upgrade began, but early in 2015 consumers were trading $ in other segments to pay for it.
  • 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).

Now we’ll look at some Demographics. First, 2020 Total Pet Spending by Income Group

<$70K spending was up. Middle income was down. $100>150K had a huge lift but $150K> spent less. Definitely mixed.

Nationally: · Total Pet: ↑$5.31B   · Food: ↑$5.65B  · Supplies: ↓$1.65B  · Services: ↓$1.73B  · Veterinary: ↑$3.05B

  • < $70K – (56.5% of U.S. CUs); CU Pet Spending: $404.76, +11.1%; Total $: $29.91B, ↑$1.93B (+6.9%) ..
    • Food ↑$0.59B
    • Supplies ↓$0.39B
    • Services ↓$0.03B
    • Veterinary ↑$1.76B

Money matters a lot to this group, but the pandemic caused them to focus on Pet needs, especially Veterinary. After a 2 years of declines, they spent more in 2020 and are once again ahead of 2015 $.

  • >$70K – (43.5% of U.S. CUs); CU Pet Spending: $937.46, +2.7%; Total $: $53.84B, ↑$3.38B (+6.7%) from…
    • Food ↑$5.05B
    • Supplies ↓$1.26B
    • Services ↓$1.70B
    • Veterinary ↑$1.29B

This group continues to grow, up 4.0% in 2020. On the surface, this accounted for most of their spending increase. However, it is more complicated. There were 2 big swings. The middle income $70>99K group spent significantly less in all segments while the $100>149K group spent $9.6B more in Food & Veterinary, driving much of the lift.

  • < $30K – (25.4% of U.S. CUs); CU Pet Spending: $314.01, +19.5%; Total $: $10.19B, ↑$1.06B (+11.6%) from…
    • Food ↑$0.57B
    • Supplies ↓$0.09B
    • Services ↓$0.05B
    • Veterinary ↑$0.62B

Although still behind 2015 $, this lowest income group demonstrated their committment to their pets with strong increases in Food and Veterinary spending and only minimal $ drops in the more discretionary segments.

  • $30>$70K – (31.1% of CUs); CU Pet Spending: $477.03, +6.4%; Total $: $19.72B, ↑$0.87B (+4.6%) from…
    • Food ↑$0.02B
    • Supplies ↓$0.30B
    • Services ↑$0.01B
    • Veterinary ↑$1.14B

This lower income group essentially maintained their spending level in Food and Services. They did spend 7% less on Supplies but they had a 23% increase in Veterinary, which drove their overall spending lift.

  • $70>$99K – (15.0% of CUs); CU Pet Spending: $552.88, -25.1%; Tot $: $10.64B, ↓$3.52B (-24.9%) from…
    • Food ↓$2.15B
    • Supplies ↓$0.54B
    • Services ↓$0.42B
    • Veterinary ↓$0.41B

This middle income group had the biggest negative pandemic reaction with double digit % drops in every segment

  • $100K>$149K– (14.4% of CUs); CU Pet Spend: $1239.36, +54.2%; Tot $: $23.37B, ↑$8.45B (+56.6%) from
    • Food ↑$8.46B
    • Supplies ↓$0.36B
    • Services ↓$0.79B
    • Veterinary ↑$1.14B

They were the Star of the income groups in 2015 and 2017. In 2016, they were the worst performers. In 2018 & 2019 their Total $ were stable. The 2020 pandemic obviously motivated them. They drove most of the binge buying on Food and much of the lift in Veterinary. They are very reactive and have the money to take action.

  • $150K> – (14.1% of CUs); CU Pet Spending: $1038.91, -14.8%; Total $: $19.84B, ↓$1.55B (-7.2%) from…
    • Food ↓$1.26B
    • Supplies ↓$0.36B
    • Services ↓$0.49B
    • Veterinary ↑$0.56

The results in this big group were also mixed. The $200K> group was up +0.6% due to drops in the discretionary Supplies & Services segments which were overcome by slightly greater increases in Food & Veterinary. The $150>199K group drove the overall spending in the high income group down for the 1st time in my records going back to 2013. They spent 1% (0.06B) more on Supplies, Services & Veterinary but $1.7B less on Food. Income is becoming increasingly important in Pet spending but the behavior can vary between the higher income groups.

  • < $100K – (71.5% of CUs); CU Pet Spending: $435.56, -0.7%; Total $: $40.54B, ↓$1.59B (-3.8%) ..
    • Food ↓$1.56B
    • Supplies ↓$0.93B
    • Services ↓$0.45
    • Veterinary ↑$1.35

The spending dividing line was clearly $50K. All Groups Under $50K: +$2.98B; All groups from $50>99K: -$4.57B

  • >$100K – (28.5% of CUs); CU Pet Spending: $1127.64, +12.0%; Total $: $43.20B, ↑$6.90B (+19.0%) from…
    • Food ↑$7.20B
    • Supplies ↓$0.72B
    • Services ↓$1.28B
    • Veterinary ↑$1.69B

We have detailed the variations but the net result is that their focus was on Pet Needs. We added the over/under $100K measurement because of the growing importance of income. For the 1st Time >$100K $ exceeded 50%.

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 in the opportunity 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. Although the spending was mixed, the key results were the big drop from $70>99K and the huge lift from $100>149K. This combination was instrumental in driving the 50/50 $ divide up to $103K. That’s up considerably from $94K in 2019. Even with spending increases from the lower income groups, CU income continues to grow in importance in Total Pet Spending.

Next let’s look at 2020 Total Pet Spending by Age Group

Basically, a Generational Divide. Boomers & Millennials spent more. Everyone else spent less.

Nationally: · Total Pet: ↑$5.31B   · Food: ↑$5.65B  · Supplies: ↓$1.65B  · Services: ↓$1.73B  · Veterinary: ↑$3.05B

  • <25 – (3.8% of U.S. CUs); CU Pet Spending: $283.19, -15.8%; Total $: $1.44B, ↓$1.06B (-42.3%) from…
    • Food ↓$0.37B
    • Supplies ↓$0.31B
    • Services ↓$0.03B
    • Veterinary ↓$0.35B

The biggest factor was a loss of 2M CUs (-31%) as they moved back home with their parents or grouped together.

  • 25-34 – (16.0% of U.S. CUs); CU Pet Spending: $586.67, +28.7%; Total $: $12.42B, ↑$2.56B (+26.0%) from…
    • Food ↑$0.87B
    • Supplies ↑$0.62B
    • Services ↓$0.03B
    • Veterinary ↑$1.11B

These Millennials have often led the way in new food trends. Now they have stepped up in trying times. Services spending was essentially the same as 2019 but they spent over 20% more in all other segments, even Supplies.

  • 35-44 – (17.0% of CUs); CU Pet Spending: $594.82, -11.0%; Total $: $13.29B, ↓$1.56B (-10.5%) from…
    • Food ↓$0.61B
    • Supplies ↓$0.07B
    • Services ↓$0.30B
    • Veterinary ↓$0.59B

This group has the largest families and is in the middle of building their careers. This makes them very sensitive to and cautionary in times of change. They are big in Supplies and that essentially didn’t change. However, they had double digit % decreases in all the other segments.

  • 45-54 – (17.2% of U.S. CUs); CU Pet Spending: $690.80, -9.3%; Total $: $15.47B, ↓$1.54B (-9.0%) from…
    • Food ↓$1.63B
    • Supplies ↓$0.45B
    • Services ↓$0.31B
    • Veterinary ↑$0.85B

This group has the highest income and occupied the top spot in CU Pet Spending in 2019. In 2020 they fell to a distant second. They had double digit % decreases in 3 segments. The $0.85B increase in Veterinary Services was likely them making up for a $1B decrease in Veterinary procedures in 2019.

  • 55-64 – (19.1% of U.S. CUs); CU Pet Spending: $962.48, +33.0%; Total $: $24.15B, ↑$6.36B (+35.8%) from…
    • Food ↑$7.09B
    • Supplies ↓$1.26B
    • Services ↓$0.37B
    • Veterinary ↑$0.90B

These younger Baby Boomers are especially reactive. They were the primary drivers behind the binge spending on Pet Food. They cut back spending on Supplies and reduced the frequency in Services but spending in the other “necessary” segment, Veterinary, grew 20%. The result was a 35.8% increase in Total Pet $.

  • 65-74 – (15.6% of U.S. CUs); CU Pet Spending: $592.19, +3.5%; Total $: $12.44B, ↑$1.02B (+9.1%) from…
    • Food ↑$0.32B
    • Supplies ↑$0.11B
    • Services ↓$0.28B
    • Veterinary ↑$0.87B

This group is growing, +3.7% and now are all Baby Boomers. They are careful with their money, but their commitment to their pets is very apparent. They had a reduced frequency in Services but spending in all other segments grew, especially in Veterinary and Food, the “needed” segments.

  • 75> – (11.2% of U.S. CUs); CU Pet Spending: $326.03, -10.5%; Total $: $4.73B, ↓$0.48B (-9.3%) from…
    • Food ↓$0.02B
    • Supplies ↓$0.29B
    • Services ↓$0.42B
    • Veterinary ↑$0.25B

Pet Parenting is more difficult, and money is tight for these oldest Pet Parents, but their commitment is still there. No binge spending, but they held their ground in Food. They cut back on Supplies and Services but had a 17% increase in Veterinary Services $ which kept their overall decrease in Total Pet under 10%.

Age Group Recap: There was an age spending pattern in Total Pet, but it was basically divided by generation. Boomers and Millennials spent $8.35B more. Everyone else spent $3.04B less. Pet Food spending had the same pattern. Other segments had different patterns. In Supplies only the 25>34 and 65>74-year-olds spent more. In Veterinary, only the <25 and 35>44-year-olds spent less. Unfortunately, Services was more consistent as all age groups spent less.

Next, we’ll look at the biggest winner and loser in each demographic category. In some cases, a clear spending pattern is evident. In those situations, segments are bundled together to reflect their shared spending behavior.

Key Demographic “Movers” for 2020.

In 2019, 50 of 96 Demographic Segments (52%) spent more on their Pets but spending fell -$0.16B (-0.2%). In 2020 only 46 of these 96 segments (48%) spent more but Total Pet Spending increased by $5.31B (+6.8%). This is very unusual to say the least. 6 segments flipped from 1st to last or vice versa and 3 segments held their spot. These are not unusual numbers. What you do see in the chart is the huge difference between the most positive and most negative segments. This suggests that the lift was very targeted. From our earlier segment analysis, we know that the driving force behind the lift was Pet Food spending, especially the binge buying that occurred in the 1st half of 2020. Let’s look at some specifics.

There are a few usual winners like:

  • Homeowners
  • White, Not Hispanic
  • 2 Earners
  • Self Employed

We should note that all racial/ethnic segments spent more which is always a good sign for the industry. There were also some winning segments that are periodically on top, whenever they are strongly motivated by events/trends:

  • $100>149K
  • < 2500 Population
  • 55>64-year-olds
  • Baby Boomers

That means that there were still some unexpected winners, like:

  • Married, Oldest child 18>
  • 4 people
  • Less than College Grads

Now let’s look at the downside. The “usual” losers were:

  • Singles
  • Renters
  • No Earner, Singles

This low number means that there must have been quite a few surprises, like:

  • Large Suburbs
  • 2 People
  • 35>44
  • Gen X
  • College Grads

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 1st half of 2020. Although the 25>34-year-olds participated in this lift, the key drivers were the 55>64-year-old Baby Boomers. Boomers have a history of strong reactions to trends and outside factors. The 55>64-year-olds also have the highest income of any Boomer group so they had both the “will” and the “way” (money) to binge spend for the welfare of their pet children… and in 2020, they did!

 

2020 U.S. VETERINARY SERVICES SPENDING $24.85B…UP ↑$3.05B

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Veterinary Services is the 2nd largest segment in the Pet Industry. High inflation, 3.5+%, caused a reduction in Veterinary visits from 2014>2016. In 2017 inflation slowed (+2.2%) and consumers responded. In 2018 prices turned up (+2.6%) and spending plateaued. In 2019 inflation was +4.1% and Veterinary Spending grew +2.7% so “real” spending was actually down -1.4%. In 2020, COVID drove spending up significantly in “needed” categories, like Veterinary. Spending reached  $24.85B, up $3.05B (+14.0%). Inflation was 3.7% so 74% of the growth was real. In this report, we’ll take a closer look at the demographics behind the 2020 numbers. (Note: All 2020 numbers in this report come from or are calculated by using data from the US BLS Consumer Expenditure Interview Survey, rather than their Diary report. The low frequency of Veterinary Visits is still generating an exceptionally high variation on the data collected by the Diary method. Interview seems to be a more logical and accurate way to track Veterinary Service Expenditures.)

Let’s get started. Veterinary Spending per CU in 2020 was $189.35, up 14.8% from $164.88 in 2019. (Note: A 2020 Pet CU (67%) Spent $282.61) More specifically, the increase in Veterinary spending came as a result of:

  • 0.8% less CU’s
  • Spending 12.8% more $
  • …1.8% more often

We’ll take a closer look. But first, the chart below gives an overview of recent Veterinary Spending.

The big spending drop in the first half of 2015 coincided with the upgrade to Super Premium Foods – Trading $. Then consumers began value shopping for Premium Foods and the savings freed up $ for Veterinary Services. Spending began to climb until it flattened out at the beginning of 2017. In 2017, Veterinary inflation slowed markedly in the second half and spending took off. In 2018 prices turned up again and consumers essentially held their ground through 2019. The initial reaction to COVID in 2020 was a drop in spending but the “need focused” consumers then drove a huge increase.

Now, let’s look at Veterinary spending by some specific demographics. First, here is a chart by Income Group

Although not as much as Services and now Food, Veterinary Spending is driven by income. The only group to spend less than 2015 was <$30K. 2020 spending was mixed. The only drop came from the $70>100K income group and the increase was almost equally divided between <$70K & $100K>. The 50/50 break point in $ was $96K, down from $97K in 2019.

National: $189.35 per CU (+14.8%) – $24.85B – Up $3.05B (+14.0%)

  • Over $150K (14.1% of CUs) – $375.65/CU (+2.9%) $6.96B, Up $0.56B (+8.7%) This highest income group is the biggest Veterinary Spender as 14.1% of CUs generated 28% of 2020 $. Their $ grew but slower than the overall rate.
  • $100>150K (14.4% of CUs) – $267.61/CU (+24.8%) $5.04B, Up $1.14B (+29.1%) Spending by this middle/upper income group slowed in 2019 as prices turned up, but it took off in 2020 as they reacted strongly to their pet needs.
  • $70K>100K (15.0% of CUs) – $190.23/CU (-12.4%) $3.74B, Down $0.41B (-9.8%) Their spending has steadily grown since 2016. That changed in 2020 as monetary pressures from the pandemic caused them to spend less.
  • $30K>70K (31.1% of CUs) – $149.72/CU (+25.4%) $6.11B, Up $1.14B (+22.9%) This is the 2nd largest group in Veterinary $ and their spending pattern is remarkably similar to the big spending $150K+ group. Vet $ were flat in 2019 but grew strongly in 2020 as they found the money to fulfill their Veterinary needs.
  • Under $30K (25.4% of CUs) $89.67/CU (+35.0%) $2.99B, Up $0.62B (+26.2%) This group is very price sensitive. After an increase in all segments in 2017, they dialed back their pet spending on Food and Veterinary Services in 2018. They began to recover in 2019 and spending growth continued in 2020. They are now just 6% below their 2015 $.

Now, here is Veterinary Spending by Age Group

Every group but 35>44 and <25 spent more. The lift came more from increased $ spent rather than visit frequency.

National: $189.35 per CU (+14.8%) – $24.85B – Up $3.05B (+14.0%)

  • <25 (3.8% of CUs) – $65.35/CU (-29.7%) – $0.33B – Down $0.35B (-51.7%) The biggest factor in the big spending drop by this youngest group was a 2.2M, -31.2% decrease in CUs. 31.2% fewer CUs spent 32.0% less $ …3.3% more often.
  • 25>34 (16.0% of CUs) – $178.05/CU (+43.9%) – $3.74B – Up $1.11B (+42.2%) The commitment of these Millennials to their pets is growing. Their Veterinary $ ticked up in 2019 after being stable for 2 years. In 2020 the $ took off with a 43.9% increase in CU spending. 1.2% fewer CUs spent 37.5% more $ …4.6% more often.
  • 35>44 (17.0% of CUs) – $200.58/CU (-11.5%) – $4.47B – Down $0.59B (-11.6%) In 2019, these mostly Gen Xers radically increased their Veterinary spending and they moved to the top in Veterinary $. In 2020 they increased visit frequency but cut back -20% on $. They fell to 3rd 0.1% less CUs spent 20.5% less $ …11.4% more often
  • 45>54 (17.2% of CUs) – $221.60/CU (+18.7%) – $5.01B – Up $0.85B (+20.4%) This group has the highest income, but value is important. In 2017, the slowed inflation caused them to spend significantly more money and more often. In 2018, prices turned up and continued to inflate in 2019. Spending dropped precipitously. They fell from the top spot in Veterinary $ and even below their 2015 numbers. 2020 brought a strong recovery with a 20% increase in $. They spent more $ more often and moved up the ladder to #2. 1.5% more CUs spent 11.7% more $…6.2% more often
  • 55>64 (19.1% of CUs) – $217.17/CU (+17.2%) – $5.45B – Up $0.90B (+19.8%) This group is all Baby Boomers and was the leader in Veterinary Spending prior to 2015. In 2015 they upgraded to Super Premium Food and Vet Spending fell. In 2016 they began to spend more again on Veterinary Services. In 2017, as inflation significantly slowed, they regained the top spot. In 2018 Veterinary prices began to strongly inflate again. Their spending fell and continued down into 2019. In 2020 their frequency fell but they spent a lot more. They’re back on top in Veterinary Spending because 2.2% more CUs spent 25.2% more $ …6.4% less often
  • 65>74 (15.6% of CUs) – $200.22/CU (+22.6%) – $4.09B – Up $0.87B (+27.1%) This group is growing in numbers and very price sensitive. They are Boomers so they are committed to their pets. In 2020 their visit frequency was down due to the pandemic, but they spent 37% more $. 3.7% more CUs spent 37.0% more $ …10.5% less often
  • 75> (11.2% of CUs) – $118.92/CU (+17.0%) – $1.75B – Up $0.25B (+16.7%) This group of oldest Pet Parents has a strong commitment to their pets – in 2015 a $1B increase in Veterinary Spending. In 2016, they upgraded their food. In 2017 they increased spending in Food, Supplies and Services. In 2018, they turned their attention back to Veterinary and in 2019 they had increases in all but Supplies. The pandemic hit them hard, but they still took care of their pets with increased Veterinary spending. 0.2% less CUs spent 14.9% more $…1.8% more often

Now, let’s take a look at some other key demographic “movers” behind the 2020 Veterinary Spending numbers.

Veterinary spending increased by $3.05B (+14.0%) in 2020. Even with a high 3.7% inflation rate, 74% of the growth was real. 2020 had widespread positivity. 82 of 96 demographic segments (85.4%) spent more on Veterinary Services while only 14 segments spent less. In 4 categories all segments spent more. However, there was some turmoil as 8 flipped from first to last or vice versa while 4 segments maintained their position from 2019.

Half of the segments were the “usual” winners and losers. On the winning side were:

  • Mgrs/Professionals
  • Homeowners w/Mtge
  • White, Not Hispanic
  • 2 People
  • Married Couple Only
  • Adv College Degrees.

The “usual” losers were equal in number and included:

  • Singles
  • African Americans
  • Renters
  • No earner Singles
  • <HS Grads
  • Gen Z

That means that there were relatively few surprises:

  • Winners: Center City, 25>34 yrs old
  • Losers: Suburbs, 35>44 yrs old

In our earlier analysis we saw that the increase was widespread across Income and Age groups. Only 1 income group, $70>99K and 2 age groups, <25 and 35>44 spent less. There were 4 categories in which all segments spent more. The nature of these categories illustrates how truly widespread the lift in Veterinary $ was.

  • Race/Ethnic
  • Housing
  • CU sizes
  • Area Type

There had been a strong youth movement in Veterinary Spending from the <45 crowd. That changed in 2020 as the 45> groups were up $2.87B which accounted for 94% of the segment’s increase. We should also note that the 65> group is now the only group with  a spending increase for 3 consecutive years.

Generations still seems to be the most popular demographic measurement and it was almost all good news as Gen Z was the only generation with a decline in Veterinary Spending in 2020. Baby Boomers bounced back to the top spot in Veterinary $ after 2 years of big decreases. Boomers fueled the growth of the Pet Industry and remain the overall biggest pet spenders. In Veterinary $, their spending in 2017 was greater than all of the younger generations combined. In 2020, the younger groups spent 50% more than the Boomers. Because of their sheer numbers, Boomers will remain a force in the industry for years to come. but the “torch” is slowly but surely being passed.

2020 U.S. PET SERVICES SPENDING $6.89B…Down ↓$1.73B

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Except for a small decline in 2017, Non-Vet Pet Services has shown consistent growth in recent years. In 2018, that changed as spending grew a spectacular $1.95B to $8.72B. The number of outlets offering Pet Services has grown rapidly and consumers have opted for the convenience. However, prices were also strongly increasing. In the 2nd half of 2019 spending turned down and then plummeted in 2020 due to COVID. The final $ were $6.89B, down $1.73B (-20.1%). In this report we will drill down into the data to see what groups were most impacted. (Note: All numbers in this report come from or are calculated by using data from the US BLS Consumer Expenditure Surveys)

Services’ Spending per CU in 2020 was $52.53, down from $65.22 in 2019. (Note: A 2020 Pet CU (67%) Spent $97.34)

More specifically, the 20.1% decrease in Total Pet Services spending came as a result of:

  • 0.8% less households
  • Spending 3.40% less $
  • 16.62% less often

The chart below gives a visual overview of recent spending on Pet Services

You can see that after the big lift in 2018, spending essentially flattened out in 2019, similar to the pattern in 2016-17. Increased availability and convenience of Services has radically driven up the spending on Services. This happened despite a return to a more normal inflation rate, +2.4%. However, inflation grew even stronger, +2.5%. By the 2nd half of 2019, it made an impact as spending declined for the 1st time in 18 months. The 2020 pandemic brought restrictions and closures which drove spending radically down. Now, let’s look at some specific demographics of 2020 Services spending.

First, by Income Group.

In 2018, all groups spent more. In 2019, only the middle income group, $70>150K, spent more. In 2020 they had the biggest decrease, and their spending is now below the level in 2015. The only increase came from the $30>70K group, which is the only group earning under $150K which spent more than they did in 2015. The 50/50 dividing line in $ for Services was $123K. That is down from $125K in 2019 but still by far the highest of any segment.

  • <30K (25.4% of CU’s) – $19.66 per CU (-0.1%) – $0.66B, Down $0.05B (-6.7%) – This segment is getting smaller and money is tight, so Services spending is less of an option. Their Services $ fell even farther below 2015.
  • $30>70K (31.1% of CU’s) – $35.95 per CU (+3.0%) – $1.47B, Up $0.01B (+0.9%) – In 2019 they had the biggest decrease. In 2020, they had the only increase and finished second in $ to the $150K> group.
  • $70>100K (15.0% of CU’s) – $41.87 per CU (-35.6%) – $0.82B, Down $0.42B (-33.7%) – The spending of this middle income group had slowly but consistently grown since 2016. Then came the pandemic and the $ plummeted in 2020, falling even below the previous low point in 2016.
  • $100>150K (14.4% of CU’s) – $62.88per CU (-42.0%) – $1.19B, Down $0.79B (-40.0%) – They had shown the strongest, most consistent growth since 2016. Then came 2020, when they had the biggest decrease, down 40.%.
  • $150K> (14.1% of CU’s) – $149.07 per CU (-19.6%) – $2.76B, Down $0.49B (-15.0%) – They have moved steadily down since peaking in 2018. The pandemic drop in 2020 was -$0.49B, but they are still slightly above 2015 $.

Now, let’s look at spending by Age Group.

All age groups spent more on Services in 2018. In 2019, the groups under 45 spent less on Services while those 45 or older spent more. In the 2020 pandemic, everyone spent less but all stayed above 2015 $. Here are the specifics:

  • 75> (11.2% of CU’s) – $23.09 per CU (-55.0%) – $0.34B – Down $0.42B (-55.1%) This group has the greatest need for pet services, but money is always an issue. In 2019 they had the biggest increase. In 2020 they basically gave it all back, with the biggest drops in spending and frequency. 0.2% fewer CU’s spent 28.5% less $, 37.1% less often.
  • 65>74 (15.6% of CU’s) – $47.60 per CU (-25.0%) – $0.97B – Down $0.28B (-22.2%). This group is also very value conscious and growing in numbers. From 2016 to 2019 their spending was very stable. In 2020 it plunged by over 20% primarily due to a big decrease in frequency. 3.7% more CU’s spent 5.7% less $, 18.9% less often.
  • 55>64 (19.1% of CU’s) $53.15 per CU (-23.4%) – $1.33B – Down $0.37B (-21.7%) After a big drop in 2017, they began to slowly increase Services spending. In 2019, they moved up to the #2 spot in Services spending. A big drop in frequency drove spending down in 2020 but they are still #2. 2.2% more CU’s spent 1.9% less $, 21.9% less often.
  • 45>54 (17.2% of CU’s)- $75.38 per CU (-16.5%) – $1.70B – Down $0.31B (-15.2%) This highest income group was the leader in Services $ until 2016. They regained the top spot in 2019 and held on in 2020 despite a 20% drop in frequency which drove spending down -$0.31B. 1.5% more CU’s spent 5.2% more $, 20.6% less often.
  • 35>44 (17.0% of CU’s) – $56.91 per CU (-18.8%) – $1.27B – Down $0.30B (-18.9%) Spending exploded in 2018 with a $1B increase pushing them to #1. In 2019 they spent $1.6B more on Veterinary and Food and cut back on Services and Supplies. In 2020 both their spending and frequency fell. 0.1% fewer CU’s spent 8.9% less $, 10.9% less often.
  • 25>34 (16.0% of CU’s) – $52.85 per CU (-1.9%) – $1.11B – Down $0.03B (-3.0%) This group of Millennials “found” the Services segment in 2018 with a 36% increase in $. Their spending has slowly fallen since then. In 2020, their 3% decrease was primarily driven by a -9.7% drop in frequency. 1.2% less CU’s spent 8.6% more $, 9.7% less often.
  • <25 (3.8% of CU’s) – $32.44 per CU (+24.6%) – $0.16B – Down $0.03B (-14.3%) After 2018 this group returned to being a very minor player. 31% fewer CUs is significant. 31.2% fewer CU’s spent 19.7% less $, 55.1% more often.

In 2019, when overall Services spending fell $0.1B, the over 45 age group spent $0.51B more. The situation was reversed in 2020 as they spent -$1.38B less, 79.8% of the total $1.73B drop in Services spending.

Finally, here are some key demographic “movers” that drove the big drop in Pet Services Spending in 2020. The segments that are outlined in black “flipped” from 1st to last or vice versa from 2018. The red outline stayed the same.

In 2018 the Services spending increase was very widespread with (88%) of all segments spending more. 6 of 12 demographic categories had no segments that spent less on Services in 2018. 2019 was very different and reflected the slight decrease in spending for the segment. All categories had segments that spent less on Services and 49 total segments (51%) had decreased Services $ from 2018. In 2020, the situation got markedly worse as 76 segments (79%) spent less and in 3 categories, no segments spent more.

You see from the graph that the biggest negatives were all substantially larger than the small increases. This speaks to the severity and widespread nature of the loss in $ in the segment. There was also considerable turmoil in Services spending. 3 groups maintained their position but 7 flipped from 1st to last or vice versa.

There was only 1 “usual” winner – Self-Employed, which have the highest income in their category. There were some winners that were definitely a surprise – Renters, Rural, $50>69K Income, Gen Z, High School Grads, Hispanic and Under 25 years old. That means that more than half of the winners were not expected.

In terms of “usual” losers, there really were none in 2020. The losing segments are where we find these usual winners:

  • 2 People
  • Married Couple Only
  • Homeowner w/Mtge
  • Managers & Professionals
  • Suburban
  • $100>149K
  • College Degree
  • 2 Earners
  • White, Not Hispanic

This actually makes some sense. The drop in spending was largely due to restrictions and closures caused by the COVID Pandemic. This would most impact the groups that usually spent the most and would produce the biggest decreases.

In our earlier analysis, we didn’t see any truly distinct spending patterns. The only lift in any age or income group, and it was miniscule, was from the $30>69K income group. However, it is significant that they are the only income group under $150K that didn’t spent less in 2020 than they did in 2015. The 50/50 spending point moved down slightly from $125 to $123 but that is somewhat deceptive. The highest income group, $150K> actually gained ground. This group has 14.1% of CUs but did 40.1% of the Services spending in 2020. That’s up from 37.7% in 2019.

After the huge lift in spending in 2018, Services spending plateaued in 2019. There were a lot of ups and downs, but overall the segment remained essentially stable at its new elevated level of spending. That changed with the pandemic in 2020. Like many retail services segments, Pet Services outlets were deemed nonessential and subject to restrictions This resulted in a radically reduced frequency of visits and was the biggest reason behind the 20% drop in spending.

There is no doubt that the Covid pandemic with widespread closures and “staying at home” had a big impact on this most discretionary Pet Industry segment. However, in recent years, with the increasing humanization of our pets, Pet Services have become more important to Pet Parents and the Pet Industry. For Pet retail outlets, offering Services provides a key point of differentiation and a reason to shop in their store. You can’t get your dog groomed on the internet or even in a Mass Market retailer. We expect this segment to come back strong in 2022.

 

2020 U.S. PET SUPPLIES SPENDING $15.16B…DOWN ↓$1.65B

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Total Pet spending grew to $83.74B in 2020, up $5.31B (+6.8%) from 2019, a big turnaround. Unfortunately, the Supplies segment was on the other side as spending dropped to $15.16B, down $1.65B (-9.8%). (Note: All numbers in this report come from or are calculated by using data from the US BLS Consumer Expenditure Surveys)

After flattening in the 2nd half of 2018, spending turned sharply down in the 1st half of 2019 and continued to decline through 2020 as the pandemic also contributed to the drop. 2019 & 2020 wiped out 93% of a 24 month $5B gain. We’ll “drill down” into the data to try to determine what and who are “behind” the 2020 drop in Supplies Spending.

In 2020, the average household spent $115.52 on Supplies, down 9.1% from $127.15 in 2019. (Note: A 2020 Pet CU (67%) Spent $172.42) This doesn’t exactly match the -9.8% total $ decrease. Here are the specific details:

  • 0.8% less CU’s
  • Spent 3.6% less $
  • 5.8% less often

Let’s start with a visual overview. The chart below shows recent Supplies spending history.

Since the great recession, spending trends in the Supplies segment have been all about price – the CPI. Although many supplies are needed by Pet Parents, when they are bought and how much you spend is often discretionary. Additionally, many of the product categories in this segment are now considered commodities, so price is the main driver behind consumer purchasing behavior. When prices fall, consumers are more likely to buy more. When they go up, consumers spend less and/or buy less frequently.

2014 was the third consecutive year of deflation in Supplies as prices reached a level not seen since 2007. Consumers responded with a spending increase of over $2B. Prices stabilized and then moved up in 2015.

In 2015 we saw how the discretionary aspect of the Supplies segment can impact spending in another way. Consumers spent $5.4B for a food upgrade and cut back on Supplies – swapping $. This, in conjunction with inflation, caused supplies to suffer as consumers spent 4.1% less, but they bought 10% less often. That drop in purchase frequency drove $1.6B (78%) of the $2.1B decrease in Supplies spending.

In 2016, supplies’ prices flattened out and consumers value shopped for their upgraded food. Supplies spending stabilized and began to increase in the second half. In 2017 supplies prices deflated, reaching a new post-recession low. The consumers responded with a huge $2.74B increase in Supplies spending that was widespread across demographic segments. An important factor in the lift was an increase in purchase frequency which was within 5% of the 2014 rate.

In 2018 prices started to move up in April and rapidly increased later in the year due to the impact of new tariffs. By December, Supplies prices were 3.3% higher than a year ago. This explains the initial growth and pull back in spending.

In 2019 we saw the full impact of the tariffs. Prices continued to increase. By yearend they were up 5.7% from the Spring of 2018 and spending plummeted -$2.98B. The major factor in the drop was a 13.1% decrease in purchasing frequency.

2020 brought the pandemic, with retail restrictions and the consumers focus on needed items. Both the amount spent and frequency of purchase of Supplies fell slightly. This could be the result of a strong consumer move to the internet.

That gives us an overview of the years leading up to 2020. Now let’s look at some specifics regarding the “who” behind the 2020 numbers. First, we’ll look at spending by income level, the most influential demographic in Pet Spending.

National: $115.52 per CU (-9.1%) – $15.16B – Down $1.65B (-9.8%).

All big income groups spent less but the 50/50 $ divide remained the same as 2019, $92K, the lowest of all segments.

  • <$30K (25.4% of CU’s)- $57.73 per CU (+2.1%) $1.93B– Down $0.09B (-4.6%). This group is very price sensitive, but they actually spent more per CU. 6.5% fewer CUs caused the decrease and put them even further below 2015 $.
  • $30K>70K (31.1% of CU’s)- $97.38 per CU (-5.1%) $3.97B Down $0.30 (-7.0%). This big, lower income group closely matches both the national pattern and that of the $150K+ group. The tariff prices had a big impact and COVID a lesser one. Amazingly enough, until 2019 they were the leader in Total Supplies Spending $.
  • $70>$100K (15.0% of CU’s) – $117.65 per CU (-21.3%) – $2.32B Down $0.54B (-19.0%). This middle-income group had been consistent in Supplies spending. 2020 hit them hard in all segments, including a 19% drop in Supplies $.
  • $100K>$150K (14.4% of CU’s) – $146.42 per CU (-14.4%) – $2.76B Down $0.36B (-11.4%). This higher income group is also sensitive due to family needs. They had the 2nd biggest % drop and traded Supplies $ for Food & Veterinary.
  • $150K> (14.1% of CU’s) – $225.91 per CU (-13.0%) $4.18B Down $0.36B (-8.0%). The $150>199K was up $0.01B but the $200K+ group spent $0.38B less. Money matters in Supplies, but the pandemic impact was widespread.

Every group spent less but the biggest negative impact occurred in the middle range – $70K >$150K. This group has the biggest family and career pressures, so it is not surprising that their discretionary spending on Supplies was less.

Now, we’ll look at spending by Age Group.

National: $115.52 per CU (-9.1%) – $15.16B – Down $1.65B (-9.8%).

It’s split, but simple. Young Millennials and old Boomers spent more. Everyone else spent less. Here are the details.

  • 55>64 (19.1% of CU’s) $108.93 /CU (-33.0%) – $2.73B – Down $1.26B (-31.5%). Low Supplies prices in 2017 got them on the Supplies Band Wagon. When prices turned sharply up in the 2nd half of 2018 and 2019, spending stalled then dropped. Spending fell again in 2020 as 2.2% more CU’s spent 26.2% less on Supplies, 9.2% less often. Part of the cut back on Supplies was to help pay for a huge spending increase in Food as they traded $.
  • 45>54 (17.2% of CU’s) $146.36 per CU (-13.2%) – $3.31B – Down $0.45B (-11.9%). Until 2019, this highest income age group had been the leader in Supplies spending since 2007. More CU’s (+1.5%) spent 6.8% less on supplies, 6.9% less often. They had a 12% drop but returned to the top $ spot, now battling the 35>44 group.
  • 35>44 (17.0% of CU’s) $141.94 per CU (-2.1%) – $3.17B; Down $0.07B (-2.2%). This group is second in income and overall expenditures but also has the biggest families. After 3 strong years, the strong inflation drove the $ down in 2019. However, the Pandemic had little impact. 0.1% less CUs spent 5.5% more $, 7.2% less often.
  • 25<34 (16.0% of CU’s) $133.17 per CU (+29.8%) – $2.80B; Up $0.62B (+28.3%). After trading Supplies $ for upgraded Food and Vet Care in 2016, these Millennials turned their attention back to Supplies. The rising prices hit them hard in 2019 but they reversed this in 2020 as 1.2% fewer CUs spent 30.4% more $, 0.5% less often.
  • 65>74 (15.6% of CU’s) $96.07 per CU (+2.1%) – $1.96B – Up $0.11B (+5.8%). This older group is very price sensitive. When prices turned up in 2018, they immediately cut back on spending which continued into 2019. They came back in 2020 but not as strong as the 25>34 group. 3.7% more CUs spent 4.9% more, 2.7% less often
  • 75> (11.2% of CU’s) $43.04 per CU (-31.4%) – $0.63B, Down $0.29B (-31.5%). This lowest income group is truly price sensitive. They began to cut back on spending in the 2nd half of 2018 and this behavior continued in 2019. Their spending was severely impacted by the Pandemic as 0.2% less CU’s spent 19.4% less, 14.9% less often.
  • <25 (3.8% of CUs) $110.71/CU (-6.4%) $0.56B – Down $0.31B (-35.6%). 31.2% fewer CUs spent 8.8% less $, 2.6% more often. This group was fundamentally impacted by COVID as they lost 2.2M CUs, down 31.2%.

The impact of COVID was widespread but mixed. Only 2 disparate groups – 25>34 and 65>74 spent more.

Next, let’s take a look at some other key demographic “movers” in 2020 Pet Supplies Spending. The segments that are outlined in black “flipped” from 1st to last or vice versa from 2019. The red outline stayed the same.

In 2019, in 9 of the 12 demographic categories all segments spent less on Supplies. In 2020 it was only 1. Also in 2019, 97% of 96 demographic segments spent less. In 2020 it was 81%. 2020 was bad but still an improvement over 2019.

Only 2 segments flipped from last to 1st as Managers/Professionals and Homeowners w/Mtge returned to their usual position at or near the top. 5 Segments held their position – 1 on top, 4 on the bottom. All of these are surprises as they are often in the opposite spot.

On the “winning” side there are a couple “usual suspects” – Mgrs/Prof & Adv. College Degree. The others are all somewhat surprising although Supplies has trended younger in recent years which would include Millennials & 25>34 yr olds. On the losing side, we already mentioned 4 surprises but there are a couple more – Suburban & 2 Earners.

Supplies is a discretionary segment, so it is more susceptible to market factors than the more needed segments. In fact, Supplies spending has decreased in 16 years since 1984. Since 2010, it has become very commoditized and price sensitive. 2 years of deflation drove spending up $5B. Then inflation hit and things turned around, -$2.98B. The 2020 Pandemic caused Pet Parents to focus on Pet Needs. This means that the more discretionary categories, Supplies & Services, lost ground. The overall decrease in Supplies was relatively small, under 10%, compared to the changes in other segments but it still shows the vulnerability of this more discretionary segment.

2015 U.S. PET SERVICES SPENDING $6.3B…UP ↑$0.6B

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Although Non-Vet Pet Services is the smallest industry segment, it continues to grow and 2015 was another good year. Spending reached $6.26B, a 0.58B (10.2%) increase over 2014. (Note: All numbers in this report come from or are calculated by using data from the US BLS Consumer Expenditure Surveys)

Pet Services Spending per H/H in 2015 was $48.70, up from $44.68 in 2014. (Note: A 2015 Pet H/H (65%) Spent $74.92) More specifically, the increase in total spending came as a result of:

  • 1.2% more H/H’s
  • Spending 11.1% more $
  • …1.9% less often

The chart below gives a visual overview of recent spending on Pet Services.

2015-services-1

The increase has been consistent since 2013 with a definite spending “lift” in the second half of both years. Now we’ll start “drilling down” to look at spending by demographic categories. First, by Income…

2015-services-2

Observations

  • <$70K; >$70K – Although it looks like the entire increase comes from the >$70K group, it is not that simple.
  • $100K – This group is 21.5% of H/H’s and generated an increase of $0.78B – 132% of the total increase for the segment. If they were up this much, somebody had to be down…
  • $30K to <$100K – They had a $0.31B (-13%) decrease in spending. This mid-income group is 46.5% of U.S. H/H’s and was responsible for 42% of the Services Spending in 2014. They can be very price sensitive and Services are often considered discretionary spending. The $30>$70K group also spent $1.7B more on Food.
  • <$30K – It’s not all about $. This group (32% of H/H’s) had a $0.12B (18%) increase. This increase is not coming from the retired people in this group. It was generated by low income wage earners.

Now let’s look at spending by Age Group.

2015-services-3

Observations

  • 25>54 – (52.1% of H/H’s) – Service Spending is generally more discretionary in this group and they spent $0.75B more. They have the money to spend as they are the 1st, 2nd and 4th highest income groups. Also remember, the 25>45 group spent $1.7B less on Food.
  • 55>74 – (32.3% of H/H’s) – As consumers age, Pet Services often become more of a “need”. However, they spent slightly less -$0.14B. These are primarily Baby Boomers and they just spent $6.1B more on Pet Food.
  • <25 & >75 – (15.7% of H/H’s) Spending by these Age “Bookends” was basically flat. Each was down $0.01B.

Take a look at some Key Demographic “Movers” then we’ll wrap it up.

2015-services-4

Summary

Overall, the increase in Services Spending was about convenience, rather than physical need, as it was driven by the younger crowd – Gen X and the older Millennials. The Boomers spent so much in upgrading their Pet Food that a small decline was not unexpected. Income was also important in order to afford the rising service prices. Whether the household consists of 1 or 2+ members, all the adults worked. College educated, managers or professionals accounted for the vast majority of the increase. Retired people had a big decrease.

It really didn’t matter in what region of the country that you lived, as long as it was in a city or the suburbs. Homeowner ship also wasn’t a big factor as both homeowners and renters had increases. The spending increase by Hispanics was good news. Singles had the biggest growth while the “traditional” married couple with one earner and 2 children was almost certain to spend less. Basically, the increase was driven by busy “younger” (25>54) groups who needed help with Pet Parenting and could afford to pay for it.