2015 Pet Products Spending $44.4B – Part 2: The “Winners” & “Losers”

2015 Pet Products Spending $44.4B – Part 2: The “Winners” & “Losers”

Spending on Pets, Food and Supplies in 2015 totaled $44.4B, an increase of $3.3B (8.2%) over 2014. In part 1 of this report we established who was doing most of the spending (60>80+%) in the major demographic categories. In this section, we will drill deeper into the data to determine:

  • Which segments are performing best…and worst in each demographic category
  • Which segments had the biggest gain or loss* in Spending $. (*or smallest gain)
  • Some non-winners whose performance merits “Honorable Mention”
  • The “Ultimate” Pet Products Spending Household in 2015

Performance

We’ll get started with the best “Performing” segments. To determine a segment’s performance we simply compare their share of the overall Pet Products Spending to their share of the total CU’s. (Financially independent Consumer Units) Example: If a segment spends 15% of all Pet Product $ and has 10% of all the CU’s, then their performance rating is 15/10 = 150% – very good. If their share of spending was only 5%, then their performance rating is 5/10 = 50% – not so good. This method puts every segment on a level playing field…then, may the best one win. All numbers in this report were calculated from data provided by the US BLS in their Consumer Expenditure Survey.

Here are the best and worst performers for 11 demographic categories, ranked by performance – from high to low.

Most of the “winners and losers” are the same as last year and largely due to the extraordinary lift in Food spending, all the winners match the Total Pet Spending honorees. Let’s look at some differences of note from the 2014 list.

  • The average winning performance is 6% higher than last year and the average” loser” is 4% lower so the differences are becoming more extreme.
  • The influence of the Baby Boomers’ upgrade in Food is apparent across several demographic categories
    • Age – Last year the 45>54 group won and was 8th This year age has more impact – ranked 3rd.
    • # in CU – Last year the winning number was 5+. This year it is 2
    • CU Composition – Last year it was all married couples with children. This year, only those with a child over 18.
  • CU Composition – Although singles always have low performance, usually the lowest in this category goes to single parents because of their extreme financial pressures. But not in 2015.
  • Age – In 2014 the lowest performers were the <25 group. In 2015 they achieved a greater share of Pet Products spending. The falling share of the over 75 group is not unexpected as their Pet Parenting days inevitably end.

Now let’s truly “Show you the money”. In the next chart, we’ll look at the biggest $ changes in spending from 2014. In most cases there are both positive and negative situations. However, in 2 categories every segment spent more in 2015.

In this chart, we truly see the Boomer’s influence on Pet Products spending and how 2015 was radically different from 2014. Not only are there new winners and losers in virtually every category, but in many cases they just switched positions. 2015’s winner was 2014’s loser and vice versa. We’ll take a look at one demographic category at a time.

  • Age – This category had the biggest influence of any category. In 2014 it was ranked 7th.
    • Winner – 55>74 yrs – Products Spending: $19.85B; Up $5.6B (+39.3%)    
      • 2014: 25>34 yrs
    • Loser – 25>44 yrs – Products Spending: $12.16B; Down $2.16B (-16.8%)
      • 2014: 45>54 yrs
    • Comment: This category most shows the influence of the Boomers since they are all in the winning segment. The 25>44 yr age group is very value conscious since they are at the peak of their family responsibilities. It appears that the 25>34 group were the first to upgrade their Pet Food in 2014, then backed off in 2015…perhaps price?
  • Education – Pet Parents are widespread across all education levels. You can see that from the 2014 winner.
    • Winner – College Graduates – Products Spending: $22.52B; Up $4.25B (+23.2%)
      • 2014: Less than College grad
    • Loser – High School Graduates or less – Products Spending: $8.45B; Down 2.16B (-20.4%) 
      • 2014: Advanced Degrees
    • Comment – In 2014 all Education segments had gains. In 2015 Education level seemed to truly matter. Perhaps the value upgrading to the nutritionally superior but higher priced foods was more apparent. With generally lower income, the big drop in the less educated group could have been a result of increased financial pressures.
  • # in CU – In 2014 all CU sizes had an increase in Pet Products Spending. This was not true in 2015.
    • Winner – 2 People – Products Spending: $18.57B; Up $3.87B (+26.4%)
      • 2014: 3+ People
    • Loser – 4+ People – Products Spending: $9.82B; Down $1.66B (-14.5%)
      • 2014: 2 People
    • Comment: In 2014, more people meant more spending. In 2015 it was the opposite story. Only 2 or 3 person CU’s had an increase. Spending fell slightly for 1 person CU’s, dropped further for 4 people, then fell precipitously at 5. Financial pressures are once again the likely cause for the spending decrease in the larger CUs. Of note, a 2 person CU is very common in the older age groups and in the under 25.
  • # Earners – Usually more earners means a higher income and more Spending.
    • Winner – 2 Earners – Products Spending: $18.03B; Up $3.7B (+25.8%)
      • 2014: 2+ in CU w/1 Earner
    • Loser – 2+ in CU with 1 Earner – Products Spending: $8.88B; Down $2.3B (-20.6%)
      • 2014: 2 Earners
    • Comment – In this category we are seeing the impact of 2 trends. The 2014 lift in Food and subsequent drop in 2015 due to financial pressure by the 25>34 yr olds and the Boomer Food upgrade in 2015. Note: In the 25>34 age group one person often suspends employment for a time to devote themselves to child care.
  • CU Composition – You will see a strong interrelationship between this group and the # Earners and Age groups.
    • Winner – Married Couple Only – $14.07; Up $3.42B (+32.2%)
      • 2014: Married Couple w/Children
    • Loser – Married, with all children <18 – $7.46B; Down $1.9B (-20.3%) 
      • 2014: Married Couple Only
    • Comment – The Married Couple only group tends to be under 25 or over 55. Both of these groups had a big lift from upgrading Food in 2015. Married w/children reflects the 2015 pull back in Food $ from the 25>34 group.
  • Area Type – All Urban includes Center City and Suburban areas.
    • Winner – All Urban – Products Spending: $38.06B; Up $3.32B (+9.5%)
      • 2014: Rural (Pop. <2500)
    • Loser – Rural – Products Spending: $6.63B; Up $0.01B (0.1%)
      • 2014: Suburbs
    • Comment – All areas had an increase. The $ increase in All Urban was equally divided between city & suburbs.
  • Race/Ethnic – The vast majority of Spending comes from the White, Not Hispanic group.
    • Winner – White, Not Hispanic – Products Spending: $37.78B; Up $3.13B (+8.8%)
      • 2014: White. Not Hispanic
    • Loser – African American – Products Spending: $1.54B; Down $0.04B (-2.5%)
      • 2014: African Americans
    • Comment – There is some good news. African Americans had the only decrease and it was relatively small.
  • Income – Increasing Income generally increases spending…but not always.
    • Winner – Over $100K – Products Spending: $16.48B; Up $2.89B (+21.3%)
      • 2014: Over $70K
    • Loser – $70 to $99K – Products Spending: $6.94B; Down $0.68B (-8.9%) 
      • 2014: Under $30K
    • Comment – Most, but not all of the increase came from over $100K. The income of the $70>$99K group is all above the national average. However, it was the only segment with a decrease in spending.
  • Region – Regions vary in size and demographics like race/ethnicity and income. Plus, the South is growing rapidly.
    • Winner – West – Products Spending: $11.91B; Up $2.65B (+28.6%)
      • 2014: Midwest
    • Loser – Midwest – Products Spending: $9.7B; Down $0.96B (-9.0%)
      • 2014: West
    • Comment – All regions had a lift in Food, especially the West and South. The West also spent more on Supplies which made them #1. The Midwest was driven down by a big decrease in Supplies after a big increase in 2014.
  • Housing – Homeowners dominate, but every group increased spending for the second consecutive year.
    • Winner – Homeowner, w/No Mtge – Spending: $12.25B; Up $2.24B (+21.8%)
      • 2014: Homeowner w/Mtge
    • Loser – Renter – Products Spending: $8.69B; Up $0.49B (+6.0%)
      • 2014: Renter
    • Comment – Homeowners with No Mortgage are usually older and many are retired. The lift in spending by Renters was smaller than in 2014 but they also were the only segment with an increase in Supplies.
  • Occupation – Pet Parents are widespread across occupations. Spending depends more on income than occupation.
    • Winner – Mgrs & Professionals – Products Spending: $13.03B; Up $2.12B (+19.4%)
      • 2014: Self-employed
    • Loser – Operators & Laborers – Products Spending: $2.35B; Down $0.06B (-2.4%)
      • 2014: Tech/Sales/Clerical
    • Comment – Mgrs & Professionals are usually near the top in Spending. In 2015, they were the only segment with an increase in both Food & Supplies. Retired & Self Employed also spent significantly more. All Wage & Salary Earners spent more on Food. The overall decrease by Operators/Laborers was due to a big drop in Supplies.

We’ve now seen the best overall performers and the “winners” and “losers” in terms of increase/decrease in Pet Product Spending $ for 11 Demographic Categories. Not every good performer can be a winner but some of these “hidden” segments should be recognized for their outstanding performance. They don’t win an award but they deserve…

Honorable Mention

  • Age – <25 yrs – Products Spending: $1.31B; Up $0.4B (+42.3%)
    • Comment – This small group is just getting started with life and Pet Parenting. Their percentage of increase was more than the 55>74 age group and second only to the 55>64, all “Boomer” segment. They had a significant increase in the average CU spending for both Food and Supplies so they are adding pets and even buying upgraded Food. The only reason that their increase in $ wasn’t more is that there was a 9% drop in # of CU’s.
  • Occupation – Retired – Products Spending: $7.7B; Up $1.45B (+23.2%)
    • Comment – Income is a big factor in spending but not the only factor. This lower income group is showing a lifetime commitment to their companion animals.
  • Type of Area – Center City – Products Spending: $9.91B; Up $1.67B (+20.3%)
    • Comment- Usually the weakest performer of any they segment in this category, they had by far the biggest percentage increase and actually “nosed out” the Suburbs by $0.03B to also have the biggest increase in $.
  • CU Composition – Single Parents- Products Spending: $1.6B; Up $0.25B (+18.5%)
    • Comment – This segment has strong financial pressures and invariably is last in performance – share of spending vs share of CU’s, but that was not the case in 2015. An increase in Food $ allowed them to slip past Single CU’s.
  • Income – $50>$69K – Product Spending: $7.03B; Up $0.8B (+12.9%)
    • Comment – The income for this segment is below the national average but it still performed very well. In fact the under $70K group also showed an increase. Yet another argument that pet spending is not just about income.

Summary

My earlier analysis of the Demographic factors in Pet Products spending indicated that there were 3 major factors behind the $3.3B increase in spending.

  1. Plus: The Baby Boomers upgraded their Food and increased their Food spending by $5.8B.
  2. Minus: Supplies Spending fell almost across the board – down $2.1B
  3. Minus: The 25>34 yrs age group upgraded their Food in 2014 but rolled back in 2015 – Down $1.02B

This in depth Demographic view strongly supports these assertions especially in the categories of Age, # in CU, CU Composition, Housing, Income and Occupation. In fact, the list should be expanded to include the 35>44 age segment as a Minus: (-$1.04B) and the under 25 age group as a Plus: Up (42.3%). The underlying reasons are a mixture of “financial pressure” for the decrease and “commitment to their companion animals” for the increase. The 25>44 age group are building careers, buying houses and taking care of most of the under 18 children in America. Their income is growing but not as fast as their responsibilities. On the other hand, the Boomers’ children have generally left the nest and now they can focus even more of their attention on their Pet family…and whatever they need, they get. The value of the new high quality foods caught their attention. They read and appreciated the facts and said “count me in”. However, they did cut back on spending in other segments because Food was their top priority. There was another significant positive move…but from the other end of the Age Spectrum. The Under 25 group stepped up with a radical increase in spending – adding pets and opting for high quality food. This bodes well for the future of the Pet Industry.

AND NOW…FINALLY, WHAT YOU HAVE ALL BEEN WAITING FOR…THE ULTIMATE PET PRODUCTS CONSUMER UNIT

The “Ultimate” Pet Products Spending Consumer Unit consists of 3 people – a married couple with an 18+ year old child, still living at home. Mom and Dad are in the 55 to 64 age range. They are White, but not of Hispanic origin. At least one of the Parents has an advanced College Degree. Everyone works in the H/H. Mom and Dad have their own business but their child also works, at least part time. They’re doing very well with a total Household income in excess of $150K. They own their home or to be more accurate, share ownership with the bank. They live in a rural area (under 2500 pop.) in the West, but it is adjacent to a good sized metropolitan area. This gives them plenty of space for their companion animals, but they are still close enough to commute to the City for business, shopping and entertainment – the benefits of the Urban environment…We all wish that there were more of them.

(↓Here are some CU Spending Fun Facts↓)

That “wraps it up” for this part of the report. In the final segment we “drill even deeper”- comparing Food to Supplies.