U.S. PET INDUSTRY $ALES IN 2019: $95.7B – TAKING A CLOSER LOOK

Global Pet Expo was the showcase of the Pet Industry. It also was the forum for a major announcement from the American Pet Products Association (APPA). The revenue for the Total Pet Industry in 2019 was stated to be $95.7B. This was a huge change from 2018 numbers of $72.56B. The difference “is a result of APPA’s efforts to refine and improve its research methodology. In some cases, categories have been revised to include services or products that were previously excluded as reliable data was difficult to obtain.”

The APPA also produced revised numbers for 2018 so a comparison between the 2 years is possible. They reported that in 2018 the Pet Industry totaled $90.50B. That is $17.94B (24.7%) more than they had previously reported. That is a big revision. Let’s put an $18B increase in Consumer Spending into better perspective. $18B is 40% more than we spent on bread in 2018 and about equal to the spending on each of these categories …

  • Fresh & frozen chicken
  • Fresh Milk & Cream
  • Coffee & Tea at home
  • Beer & Wine “out on the town”
  • All non-prescription drugs
  • Non-business computers & hardware

That is a big gap in data. We can’t compare current data to years earlier than 2018 so in effect 60 years of Pet Spending History has been wiped out. It has also been removed from the APPA website so, we are left with the “here and now”…

In 2019 the APPA reported $95.7B for the Total Pet Industry. This is a $5.2B (5.75%) increase over $90.5B in 2018. As we have done in the past, we will take the APPA Retail numbers and figure in the impact of inflation or deflation so that we can see the true change in the amount of goods and services.

Since 2009 and the Great Recession, inflation has not been a big factor in the Pet Industry. In fact, both Food & Supplies have had multiple years of deflation since then. The Services segments have also dialed back their price increases to a certain extent. 2017 saw an all-time record low inflation rate of 0.4% for Total Pet. In 2018, it moved up slightly to 1.25% but in 2019, it almost tripled to 3.25%, the highest rate since 2009. Increasing prices can slow consumer spending in discretionary segments, like Supplies. In Veterinary Services spending, strong inflation has reduced the frequency of visits, especially among lower income groups.

Here are the specifics from 2019.

Pet Food and Services had the best year of any groups but still over 40% of the spending lift came from price increases.

  • Pet Food – In 2018 Pet Food prices deflated slightly, -0.02% so a CPI increase of 2.88% in 2019 was a big turnaround. However, the segment still generated a relatively strong “real” increase of 4.09%.
  • Pet Services – There has been strong competitive pressure in this segment as more outlets began offering services. This expansion may have stabilized as inflation returned to a more “normal” rate of 2.51% for this segment. The demand for Services is still there as real growth of 3.68% was the second best of any industry segment.
  • Veterinary – The Veterinary segment is known for strong inflation. Since they began measuring it in 1997, Veterinary prices have increased at a rate 35% faster than human medical care. The inflation had slowed in the last two years, but it bounced back in 2019 with a rate of 4.14%, the highest rate since 2011 and 18% higher than human medical care. We see the impact on the numbers as over 71% of a 5.8% Retail increase was from prices.
  • Supplies – Since the great recession, many categories in this segment have been commoditized. This means that inflation/deflation noticeably affects consumer spending. The tariffs which began late in 2018 drove prices up 2.83% in 2019. As a result, real growth was only 0.38% as prices accounted for over 88% of a 3.2% increase.

The next chart puts the 2019 increases into a more “visual” perspective.

This makes it readily apparent that the major driving force behind the increase in Retail Pet $ in 2019 was inflation. This is somewhat of a surprise compared to recent years. Since 2009, the depth of the great recession, the average annual inflation rate for Total Pet through 2018 was 1.31%. During the same period, the overall U.S. annual inflation rate averaged 1.76% so Total Pet was a relative “value” compared to other consumer expenditures. However, as we all know by now, we need to look deeper. While both of the Services segments maintained an inflation rate above the national CPI, Total Pet prices were driven down by 5 deflationary years in both Food and Supplies. In fact, Supplies’ prices in 2018 were 4.3% below the level in 2009. In 2019 Total Pet Inflation jumped up to 3.25%, 148% higher than the average of the previous 9 years. Is it any wonder that it was such a big factor in spending?

As we have seen in our demographic analysis of Pet Spending from the US BLS Consumer Expenditure Survey, money (income) is the single biggest factor in increased spending. Price changes can cause significant changes in spending behavior in the more discretionary segments. Since 2009 Supplies have been on a spending roller coaster as prices moved up and down in the short term. Veterinary inflation has caused a reduction in visit frequency and depressed spending in lower income groups. The Services Segment is the most discretionary, but an increased number of outlets and the resulting competition have reduced inflation and driven big increases because pet parents do like and want the convenience of Services. For years, Pet Food was immune from the impact of inflation. After all, you don’t buy more pet food than you need just because it is cheaper.  Then came the era of Super Premium Foods. At first, these foods were only available at an exceptionally high price so the first wave of consumers to upgrade were generally better educated with higher incomes. Then came a savior, (or demon, if you prefer) the internet. Suddenly prices were more affordable for more people. The mass market stores also stepped in. The overall increased competition flattened and even deflated prices, so a new wave of Super Premium upgrades produced a much deeper market penetration of this food category.

Now, let’s get back to the present. Although we can’t compare 2019 to any year other than 2018, we can look back to the beginning of the Pet Industry and compare it to the industry’s long term growth, even with the revised numbers.

The earliest data that we have from any source is from the US BLS Consumer Expenditure Survey in 1960. Total Pet Spending in that year was $1.08B. That may seem incredibly small but becomes believable when you consider…

  • 57% fewer H/Hs (73m less)
  • Only 40% of H/Hs had a pet
  • Value of $1 in 1960 was $8.64

Let’s do the math and compare the long term Retail $ & Real Growth rates to the 2018>2019 increase:

  • Average annual retail growth
    • 1960 > 2018: +7.9%
    • 2018 >2019: +5.7%
  • Average “Real” annual growth
    • 1960 >2018: +4.2% (53.2%)
    • 2018 >2019: +2.5% (43.4%)

Obviously, 2019 wasn’t an auspicious start to a new “era”. The lower retail growth is understandable as it becomes more difficult to maintain a % growth rate over a long period. The big concern is the percentage of growth that is real. It was below 50%, which is certainly below the norm. To generate a “normal” year, the growth in 2019 needed to be +$6.3B,  $1.1B more than we got. Veterinary inflation needs to be dialed back and we need relief from tariffs on Supplies.

Now, we have an unexpected and even bigger factor, COVID-19. The rapidly growing pandemic has had an immediate and sometimes devastating impact on the U.S. marketplace. Together, we will get through this health and business crisis. However, the long term impact on consumer spending behavior is unknown. We’ll just have to wait and see.

 

 

Comparing the Spending Demographics of the Industry Segments – SIDE BY SIDE

The first six reports of our Pet Spending Demographics analysis have been very detailed, data driven and intense. We looked at the industry as a whole and each of the individual Industry segments separately. 2017 was a year of Value and consumers responded with a $9.8B Pet spending increase. 2018 was a different story. We saw the very real impact of outside influence on the industry. The mid-year FDA warning on grain free dog food caused an immediate $2.3B drop in spending in the second half as many consumers reversed their 2017 upgrade. New tariffs flattened spending in Supplies in the second half, after a $1B lift in the first 6 months. Inflation increased in Veterinary and the small spending lift came almost totally from price increases. On the upside, the Service segment had the best year ever. There were unusual “heroes” and “villains” in the 2018 Pet story. Baby Boomers have long driven the growth of the industry. 2018 was their worst year ever – spending drops in every segment – Total: -$6.5B. The good news is that everyone else stepped up, especially the Gen Xers and Millennials. This produced a small increase, but these younger groups have different characteristics, so the spending demographics changed to reflect the younger lifestyle.

We have often referenced the similarities and differences in spending between Total Pet and the individual industry segments. Total Pet Spending is a sum of the parts and not all parts are equal. In this final report we are going to put the segments side by side to make the parallels, differences and changes from 2017 more readily apparent. We will address:

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

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

Before we get started, let’s take a look at the current market share of the industry segments. The following 2 charts show the 2018 share of spending for each segment and the evolution over the past 26 years. 1992 was the last year that the Food Segment accounted for 50% of Total Pet Spending. By the way, Total Pet Spending was $16.2B in 1992. We have come a long way – +385%; annual growth rate of 6.26%. This will help put our comparisons into better perspective.

Food: 36.7%; Down from 40.3%

Supplies: 25.2%; Up from 24.1%

Veterinary: 27.0%; Up from 26.8%

Services: 11.1%; Up from 8.8%

The Food segment dropped below the 40% level again, to its lowest level since 2011. In 2015 it was 43.5%, the highest level since 1998. All other segments increased share, although the Veterinary gain was slight. The biggest gain was by Services as they reached a historic new high. Prior to this year their share had been relatively stable, as was Veterinary Services. The most visible long term trend has been the decline of Food share as Supplies gained in importance. The 90’s brought “Pet Parents”, the rise of Pet Chains and Super Stores and a big expansion in the Mass Market. Retailers filled their shelves with Supplies and Consumers filled their Homes. The 2012 and 2018 shares for Food and Supplies look fairly stable but they mask an annual roller coaster ride caused by new premium food trends and deflation in Supplies.

Now let’s get started with a look at the “Big Spenders”. The following 2 charts will compare the market share and performance in all Pet Industry segments by the groups responsible for the bulk of the spending in 10 demographic categories. These are the groups that we identified in our Total Pet analysis to generate at least a 60% market share of spending. As you recall, in some segments, we had to alter some groups slightly to better target the spending. However, to have a true side by side comparison we need to use the same groups for all. The market share dips below 60% in 3 situations, to a low of 53.5%. Two are related to Food, which is yet more evidence that pet parenting is demographically widespread. The other is in Services and reflects the urbanization trend. Even the low point is within 10.8% of our target and 94% of all measurements meet or exceed the 60% requirement, so the comparison is very valid.

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

  • White, Non-Hispanic – This group has an 83+% market share in every Segment. Minorities account for 31.5% of CUs but only 9 to 17% of spending in any segment. Factors: Lower income for Hispanics and African Americans and lower Pet ownership in Asians and African Americans. They maintained share in Total, but loss share in Food and Services. Food replaced Supplies at the bottom. Supplies and Veterinary gained share and slightly increased performance.
  • 2+ People in CU – 2 is the magic number in pet ownership. In the past, performance has been remarkably even across all segments. This year, all segments but Supplies fell in share and performance because Singles had a great year. This group is still under 120% because spending tends to go down in larger CU’s, with the exception of 4 person CUs in Supplies. In both Service segments the performance of 5+ person CUs is actually worse than singles.
  • Homeowners – Homeownership is very important in Pet Ownership and subsequently in all Pet Spending. It also increases with age. Due to the youth movement, this group’s share of spending fell below 80% for the first time. Veterinary and Supplies gained some ground, but Food and Services had big drops. It was also a pretty good year for Renters which correlates to the urbanization movement.
  • Over $50K Income INCOME MATTERS MOST IN PET SPENDING! Food still has the lowest share and performance as Pet Ownership remains common across lower incomes. The importance of income increases as spending in industry segments becomes more discretionary – like Supplies and Services, or higher priced – like Veterinary. This group gained share in all segments but Food. Performance fell slightly in all but Services due to a subpar year by some groups in the $50>99K range.
  • Associates Degree or Higher – Higher education often correlates with higher income and we see a similar spending pattern. The group gained in share and performance in all segments, but especially in Food where the less educated groups reversed their 2017 upgrade. Formal Education after HS returned to prominence in all pet spending.

First Note: 2 Big groups have segments with performance under 100%. This truly indicates more balanced spending.

  • All Wage & Salary Earners – Incomes vary widely in this group, so performance tends to be lower. However, all segments, but Food gained in share and performance. The drops in Food were driven by Self-employed and Retirees who were among the few groups to spend more on Pet Food.
  • Everyone Works – Income is important, but the # of Earners tends to be less important, with one new exception. Younger CUs have more earners. Services spending skewed younger in 2018, in part because they recognized and needed the convenience. This was the first segment to break the 120% mark for this group.
  • 35 to 64 yrs – Includes the 3 highest income segments. This group increased both share and performance in all segments but Food. Gen Xers and Millennials both had a very good year, so spending is becoming more balanced across age groups and even moving younger as the 55>64 year olds had a bad year. The exception is Food where the Boomers still dominate.
  • Married Couples – Being married makes a big difference in spending in all segments. A minimum performance of 122% says it all. However, Singles had a great year in 2018, so Married Couples fell in share and performance in all but Supplies. Married Couples w/children spent more. It was Married Couples only that caused the drop.
  • All Suburban – Most Pet $ are spent here but the share and performance of this group has become more volatile. Supplies and Veterinary have been fairly stable. However, in 2017 the Suburbs lost ground in Food due to a spending lift by Rural. In 2018, this turned around but was replaced by a huge lift in Services by Central City.

Now we’ll drill a little deeper to look at the Best and Worst performing segments in each category. Color Highlighted cells are different from Total Pet; * = New Winner/Loser; ↑↓ = 5+% Performance Change from 2017. We will divide the categories into related groups. First, those related to Income.

  • Income – Higher Income = Higher Performance. Lower Income = Lower performance. Income matters and it matters most in the nonfood segments. Last year the top performer in Food was the over $200K group but it is still a high income group. The performance and disparity are astronomical in the service segments. The winning performance in these segments is dropping, but so is the losing one. This shows that gains are being made in the mid-range.
  • # Earners – More earners = more income. Once again, income is even more important to the nonfood segments. In Food, the 1 Earner, 2+ CUs had a bad year as their spending fell -17.5% but they still hung on to the top spot and the performance disparity gap is closing. In Supplies and Services, the number of Earners is becoming more important.
  • Occupation – Self-Employed and Mgrs & Professionals are #1 and #2 in CU income and expenditures. They now occupy all the top spots. The Self-Employed rebounded incredibly strong after a bad 2017. Blue Collar workers won in Food last year, but the victory was short lived as they dialed back their upgrade in 2018. As you can see by the arrows, the disparity is growing in 2 segments and Total Pet. This category clearly demonstrates the importance of income in Pet Spending.

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

  • Racial/Ethnic – As expected, White Non-Hispanics are the top performer in all segments. African Americans have the lowest average income and only 25% own Pets. Asians have high income but only 24.7% own pets. (Ownership data from the 2017 American Housing Survey)
  • Age – The 55>64 group had a bad year. They were replaced at the top by 35>44 in Services and 45>54 in Total. The 45>54 year olds have the highest income and the most CU expenditures. Now they are the leaders in pet spending.
  • Generation – 55>64 are all Boomers. The vast majority of 45>54 and 35>44 are Gen Xers so this data closely mirrors the age group category. We should also note that Millennials got off the bottom in both Food and Services.

Now, we’ll go back to demographics in which we have some control.

  • Education – Winning and losing is closely tied to more and less Education which also correlates with income.
  • CU Composition – Married Couples Only had a bad year but are still on top in 3 categories. In Supplies and Services, you see the family/youth trends. Singles had a good year but are still at the bottom in 3 segments, but not Total.
  • CU Size– “2” is still the top number in Pet but 2>4 are all strong. Performance drops off at both ends of the CU size spectrum – 1 or 5+.

  • Housing – Homeowners w/Mortgage and Renters are the perennial winner and loser.
  • Area– Areas <2500 population (which includes Rural) perform the best except for the new winner, Central City in Services. In terms of worst performer, it is Central City in the Products segments and Rural in the Services segments.
  • Region – Same winners as 2017 with the West on top. The South is the overall worst but 92.5% is not too bad.

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

It is immediately apparent that the difference grows as you move from Food to Supplies to Services. Spending becomes more discretionary. The difference between winners and losers dropped significantly in Total Pet and all segments but Supplies. This indicates a growing balance in spending in these segments.

  • Food – In Food the best and worst are actively moving together – more balance in more demographics.
  • Supplies – In Supplies the relative performance remained rather stable. The increase in the difference came from slightly poorer performance by the worst segments.
  • Veterinary – The winners performance fell significantly, and the losers turned up a little, so the gap narrowed.
  • Services – The record spending increase positively affected 91% of 92 demographics segments and the Best and Worst moved closer together.

This chart shows the number of new winners/losers.

 

 

2018 Veterinary Spending was $21.23B – Where did it come from…?

Now we will turn our attention to the final Industry Segment – Veterinary Services. We’ll see some similarities to Services but some big differences from the Product Segments. For years, Veterinary Services prices have had high inflation. This has resulted in CU income becoming the most dominant factor in spending behavior and a reduction in visit frequency. Consumers paid more, just used Veterinary Services less often. The high inflation and prices also resulted in consumers trading Veterinary $ in reaction to big spending changes in other segments, primarily Pet Food.

Things changed in 2017 as Veterinary pricing had an all-time record low inflation rate.  Consumers responded with a 7.2% increase in visit frequency and spent $2.5B more on Veterinary Services. In 2018 inflation began to return to more normal levels. Visit frequency fell slightly -0.2% and spending essentially plateaued. Consumers spent $0.56B more (+2.7%) but since inflation was 2.6%, virtually all of the lift was from increased prices. In this report we’ll look deeper.

We’ll start with the groups who were responsible for the bulk of Veterinary spending in 2018 and the $0.56B increase. The first chart details the biggest pet Veterinary spenders for each of 10 demographic categories. It shows their share of CU’s, share of Veterinary spending and their spending performance (Share of spending/share of CU’s). One difference from the product segments is immediately apparent. In order to better target the bulk of the spending we have altered the income group. Another difference is in performance – 6 of 10 groups perform above 120%. This is down from 7 in 2017 and now equal to Supplies. Services leads with 7 and Food trails with 4. This means that these big spenders are performing well but it also signals that there is a large disparity between the best and worst performing segments. Income is clearly the biggest factor in Veterinary Spending.  The categories are presented in the order that reflects their share of Total Pet Spending which highlights the differences of the 9 matching categories.

  1. Race/Ethnic – White, not Hispanic (90.9%) up from (90.0%) This group accounts for the vast majority of spending in every segment., but a 91% share is extraordinary. The 131.7% performance rating ranks #3 in terms of importance in Veterinary Spending demographics and reflects the spending disparity. Hispanics, African Americans and Asians account for 31% of U.S. CU’s, but they only spend 9% of Vet $. Asians and African Americans have a significantly lower percentage of pet ownership and African Americans have the lowest average CU income.
  2. # in CU – 2+ people (81.6%) down from (84.1%) This group, which is over 70% of U.S. CUs, lost share and their performance fell from 118.0% to 115.7%. Even with a drop in performance, they still rank 7th in terms of importance in terms of Veterinary Spending. The loss in share and performance was driven by decreased spending by  2 and 3 person CUs in conjunction with a huge, $0.61B increase by singles.
  3. Housing – Homeowners (83.4%) up from (82.5%) Homeownership is a major factor in pet ownership and spending in all industry segments. In terms of importance to Veterinary spending, their 131.4% performance rating, up from 131.2%, keeps homeownership in 4th place. The slight increase in share and performance was driven by a $1.1B increase in spending by Homeowners w/Mtge. Everyone else spent less. We should note that Homeownership is not as important to Veterinary Spending as it once was. In 2015 their share was 88.4% with performance of 141.8%.
  4. Education – Associates Degree and Higher (76.3) up from (73.8%) Income generally increases with education. It is also important in understanding the need for regular Veterinary care. Market share was up as was performance, which went from 137.3% to 140.0%. Education became stronger as the 2nd most important factor in Vet spending. The lift came from BA/BS and Associates Degrees. All groups with a formal degree after HS performed at 119+%.
  5. Age – 35>64 (66.1%) up from (65.9%) This group switched back to 35>64 after a year as 45>74 because the 35>44 yr olds were up $0.8B while the 65>74 yr olds spent $0.2B less. Performance was also up, going from 123.4% to 124.9%. The gains would have been greater, but 55>64 spent $0.6B less. Age remained 5th in terms of importance.
  6. Occupation – All Wage & Salaried (66.5%) up from (65.8%) – All Wage and Salary Earners took over from “I’m the Boss”, which included Mgrs & Professionals, Self-employed and Retirees. Mgrs & Professionals and Self Employed drove the increase but they are not in the same group. This kept the the group’s share gain down and performance only increased from 107.5% to 108.3%. Occupation was #6 in importance. Now, it is the least important category.
  7. # Earners – “Everyone Works” (66.5%) up from (65.9%) In this group, all adults in the CU are employed. The share gain comes from a big year by working singles. Performance was basically steady, 115.1%, up from 115.0%. The gain from Singles was balanced by a spending drop by 2 earner CUs.
  8. Income – Over $70K (68.2%) up from (65.0%) We changed this group from over $50K because Veterinary Spending is so affected by CU income and the $70K level is where the behavior changes. Only the <$30K group spent less but the decrease was huge, -$0.8B. The performance of the $70K group stayed at 169.2%, clearly showing that higher income is THE most important factor in increased Vet spending.
  9. CU Composition – Married Couples (60.6%) down from (63.8%) Married couples have a big market share and 120+% performance in all segments. They loss share due to a big decrease from Couples only and an increase from singles and Unmarried, 2+ Adult CUs. Their performance also fell to 122.2% from 128.9%, but they moved up to 6th place in importance because the Occupation Category had an even worse year.
  10. Area – Suburban (63.2%) up from (62.9%) Suburban CU’s are the biggest spenders in every segment. They gained a little in share and in performance, which was 113.9%, up from 113.1%. They maintained the middle ground as Center City was up $0.79B while Rural america spent $0.64B less.

We changed 1 of the groups because Higher income is by far the biggest single factor in Veterinary spending. We see the impact of this in many groups as it often contributes to the big spending disparity between segments. The most notable changes were that occupation became less important, education moved up and spending skewed a little younger.

Now, we’ll look at 2018’s best and worst performing Veterinary spending segments in each category.

Almost all of the best and worst performers are those that we would expect. However, there are 6 that are different from 2017. This is much more than Supplies (3) but less than Services (8) and Food (7). This suggests some instability but unlike Food or Services, there is no big change in $, up or down. The changes from 2017 are “boxed”. We should note:

  • Income – The 258.8% Performance by the $200K> group is down from last year’s 286.0% but is still very high.
  • Generation – This is a Big Change. Boomers have “owned” this segment since….
  • Occupation – Self -Employed took over from Mgrs & Professionals. They are the 2 highest income segments.
  • Education – The BA/BS group took over from the usual winner, Adv. College Degree.
  • Age – The 45>54-year olds, the group with the highest income, solidified their position at the top. By the way, only CUs in the 35>64 age range perform above 100%.
  • CU Composition – It was a bad year for Married Couples Only and a good year for Singles, but both maintained their positions at the top and bottom of performance.
  • # in CU – 2 people CUs, married or unmarried are the best performers. Single people perform better than only one other type of CU – the ones with 5 or more people.
  • Region – Northeast won again – 4 straight years. The South is the only region performing below 100%.

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

Spending was up a modest 2.7% but there was turmoil, and this is where we see it. There were only 2 repeats and 10 segments flipped from 1st to last or vice versa. The only segment with more turmoil was Food. There were surprise winners – Gen X, 35>44, Center City, Singles and surprise losers – Boomers, Adv. Degrees, 55>64, Married Couple only. Last year there were 4 categories where all segments spent more . This year there were none. Here are the specifics:

  • Housing – Homeowners w/o a Mtge flipped from 1st to last.
    • Winner – Homeowner w/Mtge – Veterinary: $11.90B; Up $1.13B (+10.5%)
      • 2017: Homeowner w/o Mtge
    • Loser – Homeowner w/o Mtge – Veterinary: $5.80B; Down $0.49B (-7.7%)
      • 2017: Renter
    • Comment – Last year all groups spent more. This year it was only Homeowners w/Mtge. The Homeowners w/o mtge numbers were driven down by a big spending decrease by Retirees.
  • Generation – Gen X just edged out Millennials for the win.
    • Winner – Gen X – Veterinary: $6.67B; Up $0.91B (+15.9%)
      • 2017: Baby Boomers
    • Loser – Baby Boomers – Veterinary: $8.21B; Down $1.76B (-17.7%)
      • 2017: Silent
    • Comments – The Boomers were the only generation to spend less on Veterinary Services. One factor was their adult children moving out to their own homes. The other Generations spent more producing a positive result.
  • Education – Those with a BA/BS Degree are repeat winners and are up $2.48B (+44%) since 2015.
    • Winner – BA/BS Degree – Veterinary Spending: $8.06B; Up $0.90B (+12.6%)
      • 2017: BA/BS Degree
    • Loser – Adv. College Degree – Veterinary Spending: $5.39B; Down $0.50B (-8.5%)
      • 2017: Associates Degree
    • Comment – Associates Degree had a big turnaround and got out of the cellar with the biggest increase of any segment, +24.9%. They were replaced at the bottom by Adv. Degrees, an unusual spot for this group.
  • Age – Last year the winner was the older Gen Xers – 45>54. This year it is their younger siblings – 35>44.
    • Winner – 35>44 yrs – Veterinary Spending: $3.83B; Up $0.84B (+28.3%)
      • 2017: 45>54 yrs
    • Loser – 55>64 yrs – Veterinary Spending: $4.78B; Down $0.64B (-11.9%)
      • 2017: 75+ yrs
    • Comment: Veterinary spending by age group was a mixed bag. <25: +$0.14B; 25>34: -$0.02B; 35>54: +$1.03B; 55>74: -$0.88B; 75+: +$0.31B. As you look at the ups and downs, a spending rollercoaster ride “ for the ages” might be a more apt description of the pattern in this category. By the way, the 75+group was up 39%.
  • Region – A dual flip in this category.
    • Winner – Midwest – Veterinary Spending: $5.00B; Up $0.80B (+19.0%)
      • 2017: Northeast
    • Loser – Northeast – Veterinary Spending: $4.33B; Down $0.33B (-7.2%)
      • 2017: Midwest
    • Comment – The South finished second again. The Northeast lost but are still the best performing segment.
  • Area Type – Central City flipped from last to first.
    • Winner – Central City – Veterinary Spending: $6.47B; Up $0.79B (+13.8%)
      • 2017: Suburbs >2500
    • Loser – Rural – Veterinary Spending: $1.34B; Down $0.64B (-32.2%)
      • 2017: Central City
    • Comment – Central City led the way, but all areas except Rural spent more.
  • Race/Ethnic – With a 91% share of Veterinary $, White, non-Hispanics increased their dominance in this segment.
    • Winner – White, Not Hispanic – Veterinary: $19.31B; Up $0.71B (+3.8%)
      • 2017: White, Not Hispanic
    • Loser – Asian American – Veterinary: $0.17B; Down $0.24B (-58.9%)
      • 2017: African Americans
    • Comment – Asian Americans have low pet ownership but the highest income. They spent 59% less. African Americans have low pet ownership and the lowest income. They spent 60% more. Hispanics are 2nd in pet ownership and 3rd in income. They spent 20% less. There is no clear pattern for minority spending.
  • Occupation – Self-Employed flipped from last to first.
    • Winner – Self-Employed– Veterinary Spending: $2.11B; Up $0.64B (+43.5%)
      • 2017: Mgrs & Professionals
    • Loser – Retired – Veterinary Spending: $3.54B; Down $0.62B (-15.0%)
      • 2017: Self-Employed
    • Comment – Self-Employed and Mgrs & Professionals spent $1.02B more. This overcame the $0.62B decrease by Retirees. Blue Collar workers also posted a $0.12B increase, but the Tech/Sls/Clerical group spent $0.04B less.
  • CU Composition – A final double flip.
    • Winner – Single – Veterinary: $3.90B; Up $0.61B (+18.6%)
      • 2017: Married, Couple Only
    • Loser – Married, Couple Only – Veterinary: $6.77B; Down $0.57B (-7.8%)
      • 2017: Single
    • Comment – Singles had a strong year in every category. In Veterinary spending Unmarried 2+ Adult CUs and Single Parents also spent more. For all Married CU’s, only those with an oldest child over 6 had an increase.
  • # in CU – Singles flipped from last to first.
    • Winner – Single – Veterinary Spending: $3.90B; Up $0.61B (+18.6%)
      • 2017: 2 People
    • Loser – 3 People – Veterinary Spending: $3.60B; Down $0.32B (-8.3%)
      • 2017: Single
    • Comment: The winning numbers were 3 and 1. CUs of all other sizes spent less.
  • # Earners – The winner flipped from last to first and would be a big surprise in most years.
    • Winner – 1 Earner, Single – Veterinary Spending: $2.57B; Up $0.55B (+27.5%)
      • 2017: 2 Earners
    • Loser – No Earner, 2+ CU – Veterinary Spending: $1.61B; Down $0.39B (-19.4%)
      • 2017: 1 Earner, Single
    • Comment – While Income is of primary importance to increased Veterinary Spending, the number of earners remains on the lower tier of spending drivers. The 2018 Veterinary spending data reinforces this. 1 Person CUs, with 1 or no earner spent more. In 2+ person CUs, No Earners and 2 Earners spent less while 1 and 3+ Earners spent more. 2 and 3+ Earner CUs have the highest incomes but are in opposite “camps”. There is no clear spending pattern in the # of Earners category.
  • Income – In 2018, $150 to $199K was the winner. The winner is inevitably an over $100K group in this segment.
    • Winner – $150 to $199K – Veterinary Spending: $2.74B; Up $0.33B (+13.7%)
      • 2017: $100K>149K
    • Loser – <$30K – Veterinary Spending: $1.79B; Down $0.77B (-29.9%)
      • 2017: $30 to $39K
    • Comment – The only group to spend less was <$30K but the lift was driven by $70K>, +$1.05B.

We’ve now seen the winners and losers in terms of increase/decrease in Veterinary Spending $ for 12 Demographic Categories. 2018 saw slow growth in Veterinary spending, mostly in the second half. There was a surprising amount of turmoil with 22 of 24 winners/losers being new or flipping positions. Most of the winners were not unexpected but there were some surprises like Gen X, 35>44 and Singles. This reinforces the “youth movement” in Veterinary Spending. However, there were also “hidden” segments that didn’t win but made a significant contribution to the 2018 spending increase. These groups don’t win an award, but they certainly deserve….

HONORABLE MENTION

First let’s call out a Blue Collar subsegment. Construction/Mechanics, +98.5%. African Americans also earned their spot, +60.3%. It wasn’t all about youth as the oldest Americans spent 38.9% more. Formal Education is also important but not just College Grads. Assoc. Degree spent $0.55B more. 4 People CUs and Millennials also had big increases reinforcing the youth movement. While the lift wasn’t as big as last year, it was still widespread as 58 of 92 demographic segments (63%) spent more on Veterinary Services in 2018.

Summary

2016 and 2017 produced a combined increase of $3.6B in Veterinary Spending as inflation moved to record low levels. In 2018 we had the Baby Boomer Spending “Bust” which especially impacted Food and Veterinary. They dialed back their Food upgrade and cut back on Veterinary. Another significant factor was that many adult children moved out of their parents’ homes to become financially independent. This group, plus the Gen Xers stepped up to overcome the decrease from the Boomers. Veterinary Spending became a little more balanced in terms of age and also occupation in 2018.

Veterinary services and spending should be a definite need, like Food, but there are many indications that it is becoming more discretionary and determined by income. It is very obvious when we look at performance. (Share Vet $/Share CUs)

  • <$30K – 29.4%
  • $30>50K – 71.7%
  • $50>70K – 80.3%
  • $70>99K – 119.1%
  • $100>149K – 161.5%
  • $150>199K – 209.1%
  • $200K> – 258.8%

The “break even” point (100%) occurs at $70K+. CU’s over $70K (40.3%) account for 68% of Veterinary $. In 2018 this group continued to grow in numbers and gained share. Performance remained steady at 169%. One lower income group, $40>49K had a strong year, +28%. However, the <$30K group has almost become a non-participant in Veterinary.

The performance of other big spending groups is also very important in the Veterinary segment. We identified six demographic categories with high performing large groups. (There were 7 for Services, 6 for Supplies and 4 for Food) .  Consumers have no control over Race/Ethnicity or Age but in addition to Income – Education, Homeownership, and Marriage are important factors in Veterinary spending. The high performance in these groups also demonstrates the big spending disparities among segments within these categories.

There were some changes of note. Occupation ceased to be a major factor in spending, but formal Education after HS became even more important. Marriage lost ground as Singles stepped up their spending. Veterinary spending also skewed younger in 2018 so the big age group changed back to 35>64 from 45>74.

2018 saw a small spending increase (+2.7%) for Veterinary Services. 63% of all segments increased spending but with a 2.6% inflation rate, almost all of the lift came from prices. The lift was driven by Gen Xers and Millennials which was reflected in the strong performance of numerous segments like Singles, Married with oldest Child over 6, Center City and 35>44 yr olds. The importance of income to spending in this segment was reinforced and a definite concern came to the forefront. CUs with income <$30K (29%) spend 15% of Food $ but only 8% of Veterinary $. Is inflation putting necessary Vet Care out of reach for this group? In 2019 Veterinary Inflation jumped to 4.14%. We’ll see what happens.

Finally – The “Ultimate” Veterinary Services Spending Consumer Unit consists of 2 people – a married couple only. They are in the 45 to 54 age range. They are White, but not of Hispanic origin. At least one of them has a BA/BS Degree. They both work in their own business and their total income exceeds $200K. They live in a small suburb, adjacent to a big city in the Northeastern U.S. and are still paying off the mortgage on their home.

 

2018 Pet Services Spending was $8.72B – Where did it come from…?

Next, we will look at Pet Services. They are by far the smallest Segment at $8.72B but in 2018, they made the most “noise”. Spending increased $1.95B (+28.9%). This was by far the biggest increase in history. The number of outlets offering Services has been strongly increasing in recent years as brick ‘n mortar retailers look for a way to combat the growing influence of online outlets. After all, you can certainly buy products, but you can’t get your dog groomed on the Internet. This created a highly price competitive market for Pet Services. In 2017 there was a slight increase in visit frequency, but Pet Parents just paid less. This resulted in a 1.0% decrease in Services spending. In 2018 consumer behavior changed as a significant number decided to take advantage of the increased availability and convenience of Pet Services and spending literally took off.

To better appreciate the significance of this huge spending lift, let’s put it into historical perspective. The $1.95B increase in Pet Services spending was larger than the total annual spending for the segment for every year prior to 1999. It was also more than twice as big as the previous largest increase of $0.82B in 2012. This is great news as Pet Services now has a stronger “presence” at the Pet Industry “table” and Pet Spending becomes a little more balanced. Let’s look a little deeper into the demographics.

Let’s start by identifying the groups most responsible for the bulk of Services spending in 2018 and the $1.95B increase. The first chart details the biggest Pet Services spenders for each of 10 demographic categories. It shows their share of CU’s, share of Services spending and their spending performance (Share of spending/share of CU’s). The differences from the products segments are immediately apparent. In order to better target the bulk of the spending we had to alter the groups in three categories – income, education and area. The performance level should also be noted as 7 of 10 groups have a performance level above 120%. This compares to 6 for Total Pet, Veterinary and Supplies but only 4 for Food. These big spenders are performing well but it also indicates that there is a large disparity between the best and worst performing segments. Income is absolutely the biggest factor in Services Spending. The categories are presented in the order that reflects their share of Total Pet Spending which highlights the differences of the 7 matching groups.

  1. Race/Ethnic – White, not Hispanic (85.5%) down from 87.9%.This big group accounts for the vast majority of spending in every segment but Services Spending became slightly more diverse in 2018 as their performance fell from 128.3% to 123.8%. However, they are still tied for 5th in terms of importance.
  2. # in CU – 2+ people (77.3%) down from 79.8% The share of market for 2+ CU’s is very close for all segments but lowest in Services and the only one with a share less than 80%. Their performance of 109.6% is down from 111.9% also last. The explanation is that Singles had a great year. They are 29.5% of CUs and spent 44% more on Services.
  3. Housing – Homeowners (80.8%) down from 86.4%. Homeownership is a big factor in pet ownership and spending in all industry segments. The Homeowners’ share of Services spending fell sharply in 2018 as did their performance, from 137.4% to 127.3%. Homeownership fell from 3rd to a tie for 5th in terms of importance for increased Services spending. Homeowners w/mtge spent 34% more, but those w/o a mtge spent 5% less and … Renters $ were up 82%.
  4. Income – Over $70K (72.3%) up from 71.2% This group’s performance rating is 179.4%, down from 185.2% but still shows that CU income is the single most important factor in increased Pet Services Spending. The slight gain in share with a slight drop in performance can be explained by the slowly growing CU income. CUs under $70K spent 27% more on Services but they had 2% fewer CUs. The over $70K spent 23% more but gained 6% in CUs.
  5. Education – College Grads (68.9%) up from 68.8% Income generally increases with education. Services spending moves up with each increasing level of education. This is why we again shifted the group up to College Grads. Performance of 157.9% was down from 161.9% but a college education is still the 2nd most important factor.
  6. Occupation – All Wage & Salaried (71.4%) up from 64.1% – Last year we had a special group called “I’m the Boss” which consisted of Mgrs & Professionals, Self-employed and Retirees. This year regular workers took the lead. Their performance rating increased from 104.9% to 116.9%, but Occupation is no longer a member of the influential 120% club. As many “non bosses” stepped up, Services spending became more balanced in terms of Occupation.
  7. # Earners – “Everyone Works” (71.5%) up from (64.9%) All adults in the CU are employed. Income is important so a relatively high market share is expected. However, their performance grew to 123.8% from 113.3% and they returned to the 120% club at #5. This lift reflects the youth movement. Younger CUs generally have more earners.
  8. Age – 35>64 (63.7%) up from 61.0%. Their performance also increased significantly from 114.3% to 120.4%. A big lift in spending by the 35>44 yr olds caused the big spending group to grow younger from 45>74 yr olds. Services spending is becoming a little more balanced in this category, but age still ranks 7th in importance for Services $.
  9. CU Composition – Married Couples (62.8%) down from 64.5%. Married couples are a big share of $ and have 120+% performance in all segments. Their performance fell to 126.6% from 130.3% but they moved up to 4th place in terms of importance to Services spending. Married Couples spent 25.5% more on Services but that wasn’t as big a lift as the +44% by Singles or even the +30% by Single Parents, so they lost a little ground.
  10. Area – City/Suburbs >2500 (85.3%) up from 79.8% in share, while performance increased from 97.7% to 104.7%. Last Year the big group was all Suburban. In 2018 Central City virtually tied Suburbs >2500 for the spending lead. To get 60% and properly reflect the urban trend in this segment, we combined those 2 groups.

We changed 3 of the groups for Services – Income, Education and Area, to better target the biggest spenders. Income is even more important to Services spending than it is to Veterinary, where we only changed Income. The performance levels in Services spending in categories related to income – Income, # Earners, Occupation and Education, are markedly higher than Veterinary which shows an even  bigger spending disparity between the segments in Services.

Now, we’ll look at 2018’s best and worst performing Pet Services spending segments in each category.

Most of the best and worst performers are not a surprise. However, there are 8 that are different from 2017, the most of any segment – 4 of the best and 4 of the worst. Also, half the changes were in 2 categories – Age & Generation. The 4 new winners, Gen X, 35>44, Center City and Married, Oldest Child < 6, do reflect the very definite “youth movement” behind the big 2018 lift in Services Spending. Changes from 2017 are “boxed”. We should note:

  • Income is even more important to Pet Services. While the 364.0% Performance by the $200K> group is less than last year’s 398.8%, it is 41% higher than Veterinary and 130% higher than the best performing income segment in Food.
  • Generation – Gen X took over the Top Spot from the Boomers and Millennials got off the bottom. It was a good year for the younger generations.
  • Age – The 35>44 group reflects the youth movement. They are the best performers and spend the most $. It is also significant that the <25 group got off the bottom. All groups from 35>64 perform at 100+%. In 2017 it was 45>74.
  • Area –Center City became the performance leader, going from 90% to 117.3%, and was within $0.02B of taking the Spending $ lead from Suburbs >2500. Areas >2500 pop. were up $2B and accounted for 85.3% of total Services $.
  • CU Composition Married Couples, with an oldest child <6 may seem like a surprise, but they won in 2016. They also had the biggest % increase of ANY segment, +152.6%. Marriage and children are important factors in Services spending. Married Couples only and those with children of any age all perform over 100%. They all earn their share.

In Pet Services spending performance, we see 2 major factors – income, which is not a surprise in this most discretionary segment and youth, which is a surprise in a segment that has skewed older.

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

Pet Services Spending was up $1.95B, the biggest lift in history. In this chart you see the strong demographic impact as 9 of 12 categories had an individual segment that accounted for at least 47% of the increase. At the same time, the drops were small. The largest was only $0.17B. In fact, 6 of 12 categories had no segments that spent less. There were 7 repeats, 4 winners and 3 losers from 2017 but only 5 of 24 segments switched their position from first to last or vice versa, the same as Supplies. All of this indicates little turmoil, just strong, widespread growth. Here are the specifics:

  • Area Type – The winner and loser flipped as spending became more urbanized. Areas >2500 were up $2.04B.
    • Winner – Center City – Pet Services Spending: $3.71B; Up $1.51B (+68.5%)
      • 2017: Suburbs <2500
    • Loser – Suburbs <2500 – Pet Services Spending: $0.94B; Down $0.07B (-7.0%)
      • 2017: Center City
    • Comment – Center city won in 2015 & 2016 then lost in 2017. In 2018, they returned to the top.
  • Race/Ethnic – African Americans flipped from 1st to Last but all racial/ethnic groups spent more.
    • Winner – White, Not Hispanic – Services: $7.46B; Up $1.51B (+25.3%)
      • 2017: African American
    • Loser – African American – Services: $0.41B; Up $0.10B (+33.3%)
      • 2017: Hispanic
    • Comment – White, Non-Hispanics returned to their “usual” position at the top of this category.
  • Generation – The Winner and Loser are repeats.
    • Winner – Gen X – Services: $3.34B; Up $1.44B (+75.9%)
      • 2017: Gen X
    • Loser – Baby Boomers – Services: $2.76B; Down $0.17B (-5.9%)
      • 2017: Baby Boomers
    • Comment – Gen X became the biggest Services Spenders in 2018, taking over from the Baby Boomers. Boomers spent less in all segments, but their smallest decrease was in Services. Over 1/3 of their decrease came from fewer CUs, down 2.1%.
  • Housing – The winner and loser in Housing are also repeats from 2017.
    • Winner – Homeowner w/Mtge – Services: $5.19B; Up $1.31B (+33.7%)
      • 2017: Homeowner w/Mtge
    • Loser – Homeowner w/o Mtge – Services: $1.86B; Down $0.11B (-5.4%)
      • 2017: Homeowner w/o Mtge
    • Comment – Renters also spent a lot more, +$0.88B. The drop by Homeowners w/o mtge is tied to Retirees.
  • Occupation – The high income group, Mgrs & Professionals, was a repeat winner.
    • Winner– Mgrs & Professionals – Pet Services Spending: $3.89B; Up $1.06B (+37.5%)
      • 2017: Mgrs & Professionals
    • Loser – Retired – Pet Services Spending: $1.23B; Down $0.17B (-12.1%)
      • 2017: Self-employed
    • Comment – The Services spending increase was widespread as only Retirees spent less.
  • # Earners– No repeats or flips. 2 Earners was the big winner and No Earner, 2+ CUs was the only group to spend less.
    • Winner – 2 Earners – Pet Services Spending: $3.91B; Up $1.01B (+34.9%)
      • 2017: 1 Earner, 2+ CU
    • Loser – No Earner, 2+ CU – Pet Services Spending: $0.53B; Down $0.04B (-7.4%)
      • 2017: 3 Earners
    • Comment – The # of Earners became more important as “Everyone Works” CUs provided 94% of the increase.
  • Age – No repeats or flips and no real surprise as the 35>44 year olds do have the second highest income.
    • Winner – 35>44 yrs – Pet Services Spending: $2.00B; Up $0.96B (+93.3%)
      • 2017: 75+ yrs
    • Loser – 65>74 yrs – Pet Services Spending: $1.24B; Up $0.01B (+0.5%)
      • 2017: 55>64 yrs
    • Comment: All age groups spent more on Services as even the 65>74 yr olds eked out a $0.01B increase. The 35>44 yr olds led the way, followed by 45>54, then 25>34. In fact, CUs under 55 spent $1.89B more on Services, 97% of the increase. CUs 55 and over are 44% of the population but only generated 3% of the increase.
  • Region – The Midwest flipped from 1st to last, but the South is a new winner.
    • Winner – South – Pet Services Spending: $3.05B; Up $0.96B (+45.6%)
      • 2017: Midwest
    • Loser – Midwest – Pet Services Spending: $1.63B; Up $0.14B (+9.1%)
      • 2017: West
    • Comment – All regions spent more and all, but the Midwest, had at least a 21% increase.
  • Education – College Degree flipped from last to first and returned to the top after a year in the cellar.
    • Winner – Adv. College Degree – Pet Services Spending: $3.09B; Up $0.91B (+41.5%)
      • 2017: BA/BS Degree
    • Loser – HS Grad – Pet Services Spending: $0.55B; Up $0.02B (+3.8%)
      • 2017: Adv. College Degree
    • Comment – Again, all segments in this category spent more on Services. BA/BS had the second biggest increase, so College Grads accounted for 70% of the $1.95B spending lift.
  • # in CU – 2 Person CUs were the repeat winner.
    • Winner – 2 People – Pet Services Spending: $3.58B; Up $0.63B (+21.4%)
      • 2017: 2 People
    • Loser – 5+ People – Pet Services Spending: $0.52B; Up $0.06B (+12.3%)
      • 2017: 4 People
    • Comment: All size CUs spent more on Services. Singles finished a strong second with a $0.61B increase,
  • CU Composition – The winner and loser are both new and Singles are definitely an unusual winner.
    • Winner – Singles – Services: $1.98B; Up $0.61B (+44.2%)
      • 2017: Unmarried, 2+ Adults
    • Loser – Single Parents – Services: $0.21B; Up $0.05B (+30.0%)
      • 2017: Married, Oldest Child <6
    • Comment – CUs of every possible composition spent more on Services. Singles won, but Married Couples with children of any age spent $0.59B more, a 31% increase.
  • Income – The winner is new but not unexpected. The loser is a repeat from 2017.
    • Winner – $200K+ – Pet Services Spending: $2.07B; Up $0.58B (+38.5%)
      • 2017: $100 to $149
    • Loser – $30 to $39K – Pet Services Spending: $0.27B; Down $0.08B (-22.8%)
      • 2017: $30 to $39K
    • Comment – All income groups but one spent more on Pet Services. However, as expected the increase was skewed more towards the higher income groups. Income groups over $100K represent 25.8% of all CUs. They spent $1.36B more on Services, 69.7% of the increase. The $30>39K group had the only decrease. This income range corresponds to the average income of Retirees, so they undoubtedly were the primary negative driver.

We’ve now seen the winners and losers in terms of increase and decrease in Services Spending $ for 12 Demographic Categories. 2018 was a fabulous year. In 6 categories all segments spent more. Moreover, the winning increase in each category averaged +$1.04B up from +$0.25B in 2017, while the biggest decreases averaged -$0.02B up from -$0.27B.  That certainly shows a widespread lift . The major trend was definitely to the younger groups. Income reasserted its importance, certainly in terms of the number of Earners. Singles definitely stepped up and we also saw a spending move back to more populated areas. The $1.95B increase was the biggest in history and we have detailed the winners in performance and $. However, there were many who performed well but didn’t win an award. They deserve….

HONORABLE MENTION

It wasn’t all higher incomes, the $40>49K group more than doubled their Services Spending. With +$.75B, Renters definitely contributed. The Blue Collar workers rolled back their Food Spending in 2018 but increased Services $ by 70%. The 2017 winner for biggest increase, 1 Earner, 2+ CU actually did better in 2018. Gen X won the awards, but the Millennials weren’t far behind. The 45>54 yr olds are mostly Gen Xers and they did their part, finishing 2nd in Age Groups. The spending increase was widespread. In fact, only 8 of 92 demographic segments less on Pet Services in 2018. That means 84 (91.3%) spent more.

Summary

The Services segment has usually been “above” changes in other segments. Since 2010 prices have steadily increased but so did Spending …until 2017. An increase in outlets offering Services created a much more competitive environment. While prices didn’t deflate, inflation slowed significantly, and “deals” abounded as Retailers began a pitched battle for Consumers’ Services $. The net result was turmoil and a 1% decrease in spending. In 2018, the abundance of outlets and competitive prices finally had their intended impact. Many more consumers took advantage of the convenience of Pet Services and spending literally took off.

Pet Services are definitely needed by some groups. However, for most demographics, Services are a convenience and spending is very discretionary in nature. The result of this is that CU income is of paramount importance to increased Services spending. This impacts many demographic categories and we adjusted the big spender groups in 2 categories specifically to accommodate this difference in behavior and to better target where most of the $ are coming from. Just how important is income? 40.3% of CU’s have an income over $70K and account for 72.3% of Services Spending. This is a performance rating of 179.4% – the highest rating earned by any group in any category in any industry segment.

Performance is an important measurement. We identified 7 categories with high performing big groups. There were 6 for Veterinary and Supplies but only 4 for Food. This indicates greater demographic disparity in Services Spending.

  • Income  · Occupation     · Higher Education     · Homeownership    · CU Composition     · Race/Ethnicity    · Age

3 of these groups are directly related to income – Education, Occupation and Income. However, for 2 – Race/Ethnicity and Age, the consumer has no control over their inclusion. They can’t control their age, but it turns out that age was the single biggest factor in Pet Services spending in 2018. The biggest spending group changed from 45>74 to 35>64. However, it wasn’t just the added Gen Xers. The Millennials also stepped up.

Although the lift was widespread, as 91% of all demographic segments spent more on Services, there was a big disparity in the amount spent. This is apparent as 10 of the 12 best performing segments also had the biggest $ increase and the average increase was $1B, up from $0.25B in 2017.

The Youth movement was apparent in the improved performance of segments which reflect their demographics:

  • Preference for Urban areas
  • Higher education
  • More CU Earners
  • Presence of children…or Singles

… to name a few. In 2018, the Gen Xers and Millennials stepped up and took a position of prominence in Services Spending and raised the visibility of the Services Segment.

At Last – The “Ultimate” Pet Services Spending Consumer Unit consists of 3 people – a married couple, with 1 child under 6. They are White, but not of Hispanic origin. At least one of them has an advanced College Degree. They are 35 to 44 years old and both of them work, in managerial positions. They’re doing well with an income over $200K. They live in the Center City of a metropolitan area of over 2.5 million in the Western U.S. and are still paying off their mortgage.

 

 

 

 

2018 Pet Supplies Spending was $19.8B – Where did it come from…?

Next, we’ll turn our attention to Pets and Supplies. We’ll see some differences from Pet Food as the spending in the Supplies segment is more discretionary in nature. There are other factors too. Many supplies categories have become commoditized so pricing changes (CPI) can strongly impact Consumers’ buying behavior in this segment. Supplies’ Spending can also be affected by the spending behavior in other segments, especially Food. Consumers often trade $ between segments. In the second half of 2016, Supplies began a 24 month spending lift. The increase totaled $4.97B and ended in the second half of 2018 with a slight drop, -$0.01B. Coincidentally, the drop correlated with new added tariffs on Supplies. The net 2018 result for Supplies was a $1.22B (6.6%) spending increase.

Let’s see which groups were most responsible for the bulk of Pet Supplies spending in 2018 and the $1.22B lift. The first chart details the biggest pet supplies spenders for each of 10 demographic categories. It shows their share of CU’s, share of Supplies spending and their spending performance (Share of spending/share of CU’s). Although their share of the Pet Supplies $ may be different, all of the big spending groups are the same as Total Pet. Remember, for Food the age group is slightly older. The categories are presented in the order that reflects their share of Total Pet Spending. This highlights the differences in importance. All 10 of the groups have over a 60% market share. Pet Food had 9. We’re also back to 6 groups with performance over 120%. Pet Food had only 4. Education and Age dropped out. Higher Education correlates with higher income and income is more important in Supplies spending. Supplies spending also skews younger

  1. Race/Ethnic – White, not Hispanic (86.3%) up from (84.2%) This large group accounts for the vast majority of spending in every segment. Their performance rating was up from 122.9% to 125.0%. They are #4, but in a virtual 3 way tie for 3rd in terms of importance in Supplies Spending. Minority groups account for 31% of all CUs but spend only 13.7% of Supplies $. This is primarily due to lower income for Hispanics and African Americans and a lower rate of pet ownership in African American and Asian American CUs.
  2. # in CU – 2+ people (82.7%) down from (82.8%) Their Supplies performance was 117.3%, up from 116.1%. They lost share but increased performance because of a big increase in the number of single CUs, but singles perform so poorly. 2 People CUs dominate share. However, the performance in 2+ CUs is 100+% for all sizes. In Supplies spending, it definitely “just takes two.”
  3. Housing – Homeowners (79.9%) up from (79.4%) Homeownership is a major factor in pet ownership and spending in all industry segments. Their performance was down slightly to 125.9%, from 126.2%, but they held on to 3rd place in terms of importance for increased Pet Supplies spending. All groups, Homeowners and Renters spent more. However, the bulk of the spending lift – $0.8B (65%) came from Homeowners with a mortgage.
  4. Income Over $50K (73.3%) up from (71.3%) With a performance rating of 137.6%, down from 138.8%, CU income is the single most important factor in increased Pet Supplies Spending. The increased discretionary nature of much of Supplies spending pushes the share and performance level  higher than that of Pet Food. However, it is still significantly below the Service Segments. Higher Income still generally generates Higher Pet Supply Spending.
  5. Education – Associates Degree or Higher (68.2%) up from (65.6%) Higher Education gained market share and their performance level rose from 122.2% to 125.0%. They stayed 4th in importance for generating greater Supplies spending. Higher Education generally produces higher income.
  6. Occupation – All Wage & Salary Earners (65.2%) up from (63.4%) – The performance of this group was 106.8%, up from 103.8%. In a marked contrast to Pet Food, they gained in share and performance as all wage/salary groups spent more on Supplies. However, half of the group’s spending comes from the higher income Mgrs/Professionals.
  7. # Earners – “Everyone Works” (65.4%) up from (62.5%) In this group, all adults in the CU are employed. Income is important in Supplies Spending and the only thing holding this group back is the poor performance by 1 earner, singles. CUs with 2+ Earners spent $1.22B more on Supplies. The group performance went from 109.1% to 113.2%.
  8. Age – 35>64 (65.2%) up from (64.1%) Traditionally, Supplies Spending skews more towards the younger groups. The 35>64 group maintained their dominance and even gained a little ground. Supplies Spending was up in all age segments of this group, but it was primarily driven by the 35>44-yr olds. The 65>74 yr olds spent less which contributed to the 35>64 performance level increasing to 123.2% from 120.0%. However, they stayed in 6th place.
  9. CU Composition – Married Couples (64.8%) up from (64.2%) Married couples are a big share of $ and perform well whether alone or with children. They gained slightly in share, as all segments spent more, especially Couples Only. Their performance also grew slightly from 129.7% to 130.5% and they remain 2nd in importance.
  10. Area – Suburban (63.3%) up from (63.0%) Suburban CUs are the biggest spenders in every segment. They gained a little ground in Supplies and their performance improved to 114.4%, from 113.3% in 2017. All areas spent more but the Suburbs over 2500 population had the biggest lift.

The biggest spending groups for Pet Supplies are the same as Total Pet and 9 of 10 are the same as Food. However, the discretionary nature of Supplies causes spending to be more impacted by income than Food. Groups associated with higher income, like Education and # Earners, perform better than in Food. Homeownership and Marriage had the most growth in Supplies $. Having 6 groups with 120+% performance also indicates greater disparity between segments.

Now, we’ll look at 2018’s best and worst performing Pet Supplies spending segments in each category.

Almost all of the best and worst performers are those that we would expect. In Pet Supplies spending, there are only 3 that are different from 2017. That is by far the least change of any segment, 4 fewer than Pet Food and 2 less than for Total Pet. As we move deeper into the data, we will start to see even more differences between the Industry Segments. Changes from 2017 are “boxed”. We should note:

  • Income matters in Supplies spending.
    • The 228.5% Performance by the $200K> group is 44.1% better than the best income segment in Food.
    • 9 of the 12 winners for best performance had the highest income of any segment in the category. The other three came in 2nd – White, not Hispanics, Suburbs <2500 and the West.
    • In Categories associated with Income, including # Earners, Occupation and Higher Education, the disparity between the best and worst performers grew in 2018. This indicates less balance in spending.
  • Occupation – Blue-Collar workers lost last year. This year it was Retirees. After a huge lift in all segments in 2017, they cut back spending on everything but food in 2018. They still spent $0.5B more in 2018 on supplies than in 2016.
  • # in CU –In 2018 the performance of 2 to 4 people CUs was again very close. 4 edged out 3 for the win. However, even 5+ earned their share at 100.6%. That truly leaves Singles “standing alone”. It just takes 2.

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

In 2018 Supplies Spending was up $1.22B. However, the ongoing lift, which began in the second half of 2016 ended in the second half of 2018 as spending flattened and then turned down slightly. In the chart, there are 6 repeats from 2017 – 5 winners and 1 loser. 5 segments switched from last to first or vice versa. However, this is much less turmoil than in the Food Segment. Tech/Sls/Clerical, 4 People CU’s and Millennials were surprise winners. However, the biggest surprise or change from 2017 was that in 3 of 12 Demographic Categories every segment increased spending on Supplies. In 2017 it was 10. This provides perhaps the first indication of the impact of the spending downturn in the second half of 2018. Here are the specifics:

  • Race/Ethnic – The White, Non-Hispanics share of Supplies spending is 86.3%, but they produced 117%% of the lift.
    • Winner – White, Not Hispanic – Supplies: $17.08B; Up $1.43B (+9.1%)
      • 2017: White, Not Hispanic
    • Loser – Asian Americans – Supplies: $0.41B; Down $0.19B (-31.3%)
      • 2017: African Americans
    • Comment – African Americans spent 11.8% more in 2018 but Hispanics spent 6.7% less. In 2017 all groups increased Supplies Spending. In 2018 the White, Not Hispanic group increased their dominance in Supplies.
  • Generation – The Boomers flipped from 1st to last but everyone else spent more.
    • Winner – Millennials – Supplies: $4.57B; Up $0.90 (+24.7%)
      • 2017: Baby Boomers
    • Loser – Baby Boomers – Supplies: $6.86B; Down $0.62 (-8.3%)
      • 2017: Silent Generation
    • Comment – Just as they did in the Food Segment, the Millennials stepped up with the biggest increase, but once again, the Gen Xers weren’t far behind, +$0.85B
  • Housing – All segments maintained their positions and all increased spending.
    • Winner – Homeowner w/Mtge – Supplies: $10.80B; Up $0.80B (+8.0%)
      • 2017: Homeowner w/Mtge
    • Loser – Renter – Supplies: $3.98B; Up $0.15B (+3.8%)
      • 2017: Renter
    • Comment – Renters finished last but this year that meant a 3.8% increase. Unfortunately, Renters continue to lose ground to Homeowners. One factor is that the number of CUs is falling as Homeownership slowly increases.
  • # Earners – 1 Earner, 2+ CUs flipped for the second consecutive year and are back on the bottom.
    • Winner – 2 Earners – Pet Supplies Spending: $8.26B; Up $0.80B (+10.6%)
      • 2017: 1 Earner, 2+ CU
    • Loser – 1 Earner, 2+ CU – Pet Supplies Spending: $4.13B; Down $0.17B (-4.1%)
      • 2017: No Earner, Single
    • Comment – Income is always a big factor and the # of Earners became more important in 2018, at least for the 70.5% of CUs with 2 or more people. Singles spent more on Supplies regardless if they worked or not. However, in 2+ people CUs, unless there were 2 or more earners, Supplies spending decreased. The 2 Earner CUs beat out the 3+ Earner CUs for the biggest increase for 1 simple reason. There are 4 times more of them.
  • Occupation – The Tech/Sales/Clerical flipped to 1st from last.
    • Winner – Tech/Sls/Clerical – Pet Supplies Spending: $3.26B; Up $0.77B (+31.0%)
      • 2017: Mgrs & Professionals
    • Loser – Retired – Pet Supplies Spending: $3.05B; Down $0.42B (-12.0%)
      • 2017: Tech/Sls/Clerical
    • Comment – Last year all groups spent more on Supplies. In 2018 all groups but Retirees spent more, even Blue-Collar workers. However, 63% of the increase was driven by Tech/Sls/Clerical workers. Their “Bosses”- Managers & Professionals and the Self-Employed supplied 32%.
  • Education – BA/BS Degrees led the way for the second consecutive year.
    • Winner – BA/BS Degree – Pet Supplies Spending: $6.27B; Up $0.76B (+13.8%)
      • 2017: BA/BS Degree
    • Loser – < High School Grads – Pet Supplies Spending: $0.60B; Down $0.17B (-22.4%)
      • 2017: High School Grads
    • Comment – There was another clear dividing line. All High School Grads with some college courses, specific job training or a formal degree spent more. Those with only a High School diploma or less, spent less.
  • Area Type – Suburbs Over 2500 population kept the top spot.
    • Winner – Suburbs >2500 – Pet Supplies Spending: $8.89B; Up $0.70B (+8.6%)
      • 2017: Suburbs > 2500
    • Loser – Suburbs < 2500 – Pet Supplies Spending: $3.64B; Up $0.12B (+3.5%)
      • 2017: Rural
    • Comment – All areas spent more but those with a population over 2500 supplied 80% of the increase.
  • Region – In 2017 All groups spent more. In 2018 all but the Northeast spent more.
    • Winner – Midwest – Pet Supplies Spending: $4.27B; Up $0.67B (+18.6%)
      • 2017: Northeast
    • Loser – Northeast – Pet Supplies Spending: $3.35B; Down $0.40B (-10.7%)
      • 2017: Midwest
    • Comment – A dual flip. The Midwest flipped from last to first, but they now have 2 consecutive years of increases. They narrowly edged out the South for the win. The “score” was +$0.67B to +$0.64B.
  • Income – Last year all groups spent more. This year it was truly a mixed bag with a new winner and loser.
    • Winner – $200K > – Pet Supplies Spending: $2.95B; Up $0.61B (+26.2%)
      • 2017: $150 to $199K
    • Loser – $70 > 99K – Pet Supplies Spending: $2.88B; Down $0.16B (-5.2%)
      • 2017: <$30K
    • Comment – The Mixed Bag: <$40K and $70>99K groups spent less. $40>69K and Over $100K groups spent more.
  • Age – Last year all groups spent more. This year the 65>74 yr olds were the only group to spend less.
    • Winner – 35>44 yrs – Pet Supplies Spending: $4.05B; Up $0.56B (+16.0%)
      • 2017: 55>64 yrs
    • Loser – 65>74 yrs – Pet Supplies Spending: $2.36B; Down $0.09B (-3.8%)
      • 2017: <25 yrs
    • Comment: There were no repeats or flips and a very simple result with only 65>74 year olds spending less. The 35>44 year olds led the way but they had some help. In fact, the 25>54 year old range spent $1.13B more and accounted for 93% of the increase.
  • CU Composition – Married Couples Only had a bad year in Food but again had the biggest increase in supplies $.
    • Winner – Married, Couple Only – Supplies: $6.05B; Up $0.47B (+8.5%)
      • 2017: Married, Couple Only
    • Loser – Single Parents – Supplies: $0.63B; Down $0.19B (-23.4%)
      • 2017: Unmarried, 2+ Adults
    • Comment – The increases were small but widespread. All CUs but Single Parents and Married Couples with no children, but at least one other adult living with them spent more.
  • # in CU – For the second consecutive year, all groups registered an increase.
    • Winner – 4 People – Pet Supplies Spending: $3.11B; Up $0.34B (+12.3%)
      • 2017: 2 People
    • Loser – 5+ People – Pet Supplies Spending: $1.92B; Up $0.16B (+9.2%)
      • 2017: 3 People
    • Comment: The increases were very balanced across all sizes. 4 person CUs were up $0.34B. 5+ person CUs were up $0.16B. The smaller CUs, 1-3 people were all up from $0.22 to $0.28B.

We’ve now seen the winners and losers in terms of increase/decrease in Pet Supplies Spending $ for 12 Demographic Categories. In 2018, 24 months of strong growth slowed. 3 of 12 categories had no segments that spent less on Supplies but that was down from 10 in 2017. We saw many of the traditionally strong performers on the top again. There were 3 somewhat surprising winners, 4 Person CU’s, Tech/Sls/Clerical and Millennials, which all skew younger in age. However, not every good performer can be “the” winner and some of these “hidden” segments should be recognized for their outstanding performance. They don’t win an award, but they deserve…

HONORABLE MENTION

The numbers from these segments certainly merit their recognition for Honorable Mention. They also reinforce the gains in importance of Education, Income, Youth and Population density to increased Supplies spending. Adv. Degrees were the best performers and BA/BS had the biggest increase, but Assoc. Degree spent 20% more on Supplies. $100>149K finished 2nd but reinforces the importance of Income. Over $100K: +$1.31B. Under $100K: -$0.09B. The 25>34 yr olds had the second biggest increase, but the 25>44 yr olds provided 70% of the total lift. The South was within 5% of the winning Midwest region. Having “kids” was important as 3 people CUs was second only to 4 people CUs. Population mattered as Center City was second to Suburbs >2500. 2018 was not as great as 2017 but it was still pretty good as 72 of 92 Demographic Segments 78.3% spent more on Supplies.

Summary

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

That brought us to 2017. Both Supplies and Food prices deflated while the inflation rate in both of the Services segments dropped to lows not seen in recent years. Value was the “word” and it was available across the market. Perhaps the biggest impact was that the upgrade to super premium Food significantly penetrated the market. This could have negatively impacted Supplies Spending, but it didn’t. Supplies’ spending increased in 93% of 92 demographic segments.

2018 started out as expected with a $1B increase in Supplies and a small lift in Food. Then the government got involved. In July the FDA issued a warning on grain free dog food and spending dropped over $2B. New tariffs were implemented on Supplies and spending flattened out then turned down $0.01B in the 2nd half. Because of shipping timing, the retail impact of Tariffs is delayed. However, in the 2nd half of 2018 they seem to have started to affect Supplies spending.

Among the demographic categories in which a consumer has some control, Higher Income, Marriage, Homeownership and Higher Education are still the biggest factors in increased Supplies spending. In 2018 Income stayed on top but some categories directly associated with income, Occupation, # of Earners and Higher Education also increased in importance.

Increased Tariffs mean increased prices which negatively impacts Supplies Spending. Let’s take a demographic look. The 12 best performing segments were all 1st or 2nd in income. The 12 worst performers were all at or near the bottom in income. 8 of the 12 groups with the biggest increase were also in the top 2 in income. Half of the losers were in the income basement. There were 20 segments with decreased Supplies Spending. Half had very low income.

It appears that 2018 increased the overall importance and reach of income in Supplies Spending. The one exception was the Millennial Movement. They rank only 3rd in income but the older ones are at or above the national average.

It will be interesting to see how the tariffs affect 2019 Supplies Spending.

Finally – The “Ultimate” Pet Supplies Spending CU consists of 4 people – a married couple, with 2 children, the oldest is over 18. They are in the 45 to 54 age range. They are White, but not of Hispanic origin. At least one of them has an advanced College Degree. Both of them work, running their own business and their oldest child just started a part time, after school job. They’re doing well with an income over $200K. They live in a small suburb, adjacent to a big city in the Western U.S. and are still paying off the mortgage.

 

 

Attending Global Pet Expo 2020? – The Showcase of the U.S. Pet Industry – You Definitely Need a Plan!

The first Global Pet Expo (APPMA) occurred 62 years ago with 17 exhibitors in 30 booths. The industry and the show have both come a long way since then.  In 2020 attendees will see and experience:

  • 1072 separate exhibitor booths – with companies from the U.S. and 26 other countries – a Global experience!
  • Over 350,000 square feet of booths (Plus 30,000 sq ft for the New Product Showcase) Global Pet Expo 2020 actually occupies more than 18 acres of prime Florida “real estate”.
  • 1000 new items in the New Product Showcase plus 3000 more launched on the exhibit floor
  • Sharing the aisles with 16,000+ attendees, more than 6000 “buyers”.
  • The opportunity to choose from 50 different educational seminars – 57 hours of classes
  • 5 miles of aisles – just to walk the exhibit floor

The show floor is open for 26 hours so let’s put this in perspective and… “Do the Math!”

 If you don’t attend any seminars, visit the New Product Showcase, stop to chat with anyone in the aisles or for food, a drink or to go to the bathroom and maintain a walking speed of 2.5 mph, you can spend about 1 minute and 21 seconds with each exhibitor…You definitely need a plan!

Global Pet Expo definitely has it all… and more. Attendees will find the broadest selection of products and services while Exhibitors have the opportunity to reach a wide range of buyers across all retail channels.

First and foremost, Global is about Pet Products – Food, treats and a vast array of Supply categories. A regular flow of New Products is always critical to keep businesses and the whole industry strong and growing. Obviously, you must take the time to visit the New Product Showcase. You should also sign up for any relevant classes, network with other industry professionals and…walk the whole show.  There are 3 times as many new products being “launched” on the show floor as there are on display in the New Product Showcase. Plus, 30% of the exhibitors were not at Global 2019. Global is about gathering information and making decisions to improve your business – whether they are made on the spot or put on your “must do” list.

Every business can improve in terms of products. If you are a retailer, what sections of your store are not doing as well as you hoped and need a “facelift” or conversely, what areas are growing and need products to fill additional space? Category managers for distributors and retail chains may only be interested in targeted visits to exhibitors relevant to their “categories”. Representatives may be looking for new manufacturers…in specific product categories. Manufacturers could be looking to find distributors to handle their products or just looking to “check out” the competition. In regard to products, there is always something to see…for everyone!

And Global is the place to see it. It’s all there! With so much to see and do, Time is perhaps the most valuable commodity at the show. How do you make the most of your time on the show floor? Here’s an idea.

In 2014 I first designed a tool in Excel, the Super Search Exhibitor Visit Planner to make “working Global & SuperZoo easier and more productive for ALL attendees – retailers, distributors, reps, groomers, vets…even exhibitors. I have updated the data and produced a tool for every GPE and SuperZoo since then…including GPE 2020.

The “update” is not just exhibitor lists but also to the product category offerings for every exhibitor. I reviewed every exhibitor profile on the show site, but I also visited over 1100 websites and conducted separate internet searches to “validate” the product offerings. It is not 100% accurate, but it is close.

What does the SuperSearch do?… It searches for and produces a list of Exhibitors by product categories.

  • From the simplest – “give me a list that I can look at on my phone or tablet in either Booth # order or alphabetically”
  • To the most complex…”can do a simultaneous search for multiple specific product categories, allowing you to personally narrow down the initial results and see the “final” alphabetically or by booth number. The GPE Super Search Exhibitor Visit Planner does both…and more…and does it quickly! Take a look at the Quick Start Guide. You will see that it looks complex but is really quite simple.

GPE 2020 Super Search Exhibitor Visit Planner – Quick Start Guide

First: When you download the Excel file, Remember to Enable Saving, Editing & Macros!

The GPE Super Search Exhibitor visit planner is designed to make your time on the show floor more efficient and more productive. With the Super Search you can conduct up to 5 separate and distinct product category searches simultaneously with consolidated results produced in booth # order to facilitate your “journey”. There are detailed instructions for reference and to help you understand the nuances of the tool. However, it is really very simple so let’s get started. (Note: No changes in instructions from 2019) Here is the Dashboard where you set up your searches.

On the dashboard, the first things to note are the numerous category columns. There are 5 different floor sections, 11 different Exhibitor or Animal Types and 33 Dog and/or Cat Product categories. You can search exhibitors for any combination of these.

Let’s take a specific example running 3 simultaneous searches for several Dog/Cat categories:

  • Toys
  • Treats
  • Catnip & Litter (Must sell both)

Now referring to the Dashboard, let’s take it by the numbers:

  1. This column is where you activate each search. Type in a “Y” (Cells C3>C7 will auto-capitalize) This search “line” becomes active.(cell turns green) In our example we are running 3 searches, so we have 3 “Y”s.
  2. Now we enter a 1 in the correct column for each search line. Search Line 1: Toys; Search Line 2: Treats.
  3. In Search Line 3 we want exhibitors that sell both Catnip and Litter, so we put a 1 in both of these columns.
  4. Now we just “click” the Execute Search Button. The searches are done simultaneously, and the results combined into a single list in alphabetical order.
  5. If you would like to view the list in Booth # order, just click the Booth # Sort.
  6. You can switch the list back to an alpha view by clicking the Alpha Sort Button.
  7. To Clear all your search categories and start a new search, Click the Clear Criteria Button. Then click Execute (#4) again and you will be back to the full list

Note: Any Search Line with a Y and no 1’s in any column will always deliver the entire list regardless of what is selected in other lines. Change the Y back to an N in unused search lines. Now a sample of the results:

Company A – Has Toys Only; Company B has Dog Treats Only and is also a 1st Time Exhibitor at GPE; Company C is on the list for Treats and also has Catnip, but no Litter. This is not unusual as Catnip is often a Treat; Company D has Treats & Toys. Company E has both Catnip and Litter and in fact, actually has it all!

Note: The Super Search highlights your search categories, so you know “why you are there”. However, it also shows all categories that are available. Some might “pique” your interest while you are visiting the booth.

You can review the exhibitors alphabetically then put the list in Booth # order to make it easier to “work”. The Super Search also allows you to “cut down” the list during your review. (Pg 2; Point #11 – “U Pick ‘em” in Detailed Instructions) But First, I suggest that you “play” with the Super Search to get a “feel” for the tool, then review the Detailed Instructions. With your “play” experience, the detailed instructions will become a “quick read” and a valuable reference. You will soon be “up to speed” on the full capabilities of Super Search. Good Luck and Good “Hunting” at GPE 2020!

Ready to Start Planning?

Use the links below to download the Super Search Tool (Be Sure to Enable Editing/Macros/Content if asked by your computer), the Quick Start Guide and the Detailed Instructions. Then GET STARTED!

NOW DOWNLOAD THE SEARCH TOOL

(For the Excel file to work on your computer, be sure to enable saving/macros/editing/content if asked.)

 

NOTE:Each Super Search will have a date in the file name. The file has been updated with changes since 2/15. The new exhibitors and booth changes are highlighted in yellow. The changes that occurred from 2/8 to 2/15 are highlighted in blue and the changes from 2/4 to 2/8 are still highlighted in pink.

SPECIAL NOTE!!: Due to the recent travel restrictions from mainland China to the U.S. because of the coronavirus, over 100 Chinese exhibitors have cancelled. Always check the date to be sure that you’re using the most up-to-date version.

 

 

GLOBAL PET EXPO 2020…Showcasing The World of Pets!

The premiere event of the U.S. pet industry gets under way on February 26th. This is the 62nd show in a tradition that began in 1958. Both the show and the industry have grown spectacularly since then. In 1960 spending in the pet industry totaled $1.1B. In 2018 it was $78.6B, with $49B in Pet Products alone. Even accounting for inflation, pet spending has grown 80% faster than H/H income and twice as fast as H/H spending. The GPE began as the APPMA with 17 exhibitors in 30 booths. It now is regularly over 1100 exhibitors, who occupy over 350,000 square feet of booths plus a 30,000 square foot new product showcase. Global Pet Expo is truly The Showcase of the World of Pets.

The industry’s growth over the past 60+ years was and is an evolutionary process. Perhaps, the most significant change was in our attitude towards our pets. Over the years they went from being pets to companion animals then to our pet children as pet parenting became the norm. Recently, this has gone a step further as we have personified and humanized our pets. We now project our needs to those of our pets.

The structure of the industry has also evolved as we saw the rise of pet chains and superstores and an explosion of “pet space” in mass market retailers which provided the room for the ever-growing product wants and needs of pet parents. The number of outlets selling pet supplies went from 86,000 in 1992 to over 200,000 today…plus the internet. This has produced a competitive market, unlike anything we have seen before. This competitive pressure has driven an ever increasing number of mergers and acquisitions and made it even more difficult for new companies to find success.

Then, in late 2018 the government also got involved. Even now, we are still dealing with the impact of the FDA warning on grain free dog food, concerns regarding CBD products and of course, the added tariffs on Supplies. Plus, Global is scheduled a month earlier this year. Some or all of these factors undoubtedly contributed to a small reduction in the number of exhibitors at the 2020 GPE, but the average booth size is again up 5%. Summary: No worries! Every product that you’re looking for and plenty that you’ve never seen are at GPE 2020. Let’s look at what awaits you in Orlando:

First, some 2020 GPE “booth” facts: (Note: These numbers reflect committed booths as of 1/25/20 – more to come)

  • 1064 booths – down 70 from the same time last year, but exhibitors are still opting in. Better late than never.
  • 349,000+ sq ft of exhibit booth space (Not counting the 30,000 sq ft new product area)
  • 20 x 10 is again the most popular size – 357 (33.6%), reflecting the need for more space.
  • Booths are larger than 2019 – the “average” booth is over 327 sq ft, up 5% from 2019.
  • Size matters – Booths 300 to 800 sq ft (29%) occupy 42% of the space. Those over 1000 sq ft (5%) cover 28%.

Will you see any new exhibitors or is it the usual group? The “usual” group is definitely there (760 from 2019) but…

  • 304 (28.4%) of the GPE 2020 Exhibitors didn’t exhibit at GPE19 – 2 of every 7 Exhibitors were not at GPE 2019!

Specially Designated “Floor Sections” at GPE account for 40% of Booths. Let’s compare them to last year.

  • International – Separate pavilions for 4 countries – China, Taiwan, Great Britain and Canada, Total: 59 Booths. However, this is only about 22% of the 268 exhibitors from 26 countries outside the U.S. – GPE is truly GLOBAL!
  • Natural – 174 Booths: Up 8 (+5%) “Natural” continues to have a very strong consumer appeal.
  • Boutique – 71 Booths: Up 9 (+14.5%) A continued resurgence, surpassing the previous peak (65) in 2014.
  • Aquatic – 37 Booths but 8 are still uncommitted. Popularity of this category is trending down.
  • 1st Time Exhibitors – 84 Booths, ↓27%. Most of the 193+ 1st Timers chose the regular floor or another special section. GPE is a “must do” for new companies and New – products and companies are a major focus of GPE.

There are large numbers of exhibitors in the “regular” floor space who would qualify for inclusion in these sections. You need to “work” the whole show to ensure that you get a full view of the product categories of interest to you. I will again be creating a GPE Exhibitor Visit Planner that allows attendees to plan their floor time by targeting the exhibitors with products of interest. The GPE 2020 SuperSearch will be made available on February 4th and be regularly updated with last minute changes. Now, let’s take a look at the results from this year’s research on exhibitors’ product offerings.

First, we’ll Compare Exhibitor Types – By function: By Animal type (Numbers are based assigned booths as of 1/25/20)

Because of the overall drop in booths, in this chart and others pay particular attention to the change in share. A change of (+/–) 0.5% is significant. In terms of booth count, any increase is significant and take note of any drop of 10% or more.

  • Dogs Still Rule – Although down a bit, to 4%, 5 out of every 6 booths are selling dog products.
  • Cats continue to gain shareIn 2020, Cat Products are offered by 56% of exhibitors. Up from 40% in 2014.
  • Fish/Aquatic – This category had the biggest decrease and is down 42% since 2017.
  • Other Animals – All held their share and Small Animals and Horses gained ground.
  • Business Services – Besides wellness products, this is the other big trend in the Industry. The huge lift is driven by private label/OEM and reflects the changing needs in the industry. There were only 8 exhibitors in 2014.
  • Distributors – This segment remains stable but is still double the number that exhibited in 2014.
  • Gift/Gen Mdse – This category has been declining since peaking at 91 in 2016.

Dogs and Cats are the undisputed royalty of Pet. Because of their huge impact on the industry. I have divided the products designed for them into 33 subcategories. Let’s see how this year’s GPE Top Ten (by booth count) are doing.

There was a shuffling in the rankings but 6 of 10 categories gained share – 5 were up 0.5% or more. Food was the only one with an increase in # and share. Waste Pickup made it into the Top 10, replacing grooming tools which fell to #12.

  • Treats are still #1 and continue to gain share. 1 in 3 booths offers treats. (Many supplements are in treat form.)
  • OTC Meds/Supplements/Devices also continues to gain share. In 2014 there were only 113 exhibitors.
  • Food and Feeding Accessories both moved up in rank, but only Food increased in numbers and share.
  • Toys – It’s not all about health and nutrition. Toys held onto #3. They lost a few booths but gained share.
  • Collars, Leads & Harnesses – They held their share but are significantly below their 2015 count of 247.
  • Beds/Mats – They had the biggest drop in number and share and fell to 6th place…just barely.
  • Apparel – They lost a little in count and in share but fell from 7th to 8th mainly because of the lift by Food.
  • Waste Pickup – They moved into the top 10, from #11 because Grooming Tools lost 24 exhibitors. (20%)

Pet Parents’ concern for the overall health and wellness of their “pet children” is still the current biggest trend.

The last chart details the specifics for all 33 of the Dog/Cat product categories that I defined. Of note: All the data inputs for this report and the SuperSearch tool come from  a review of the GPE online exhibitor product listings AND visits to over 1100 websites. They’re not 100% accurate, but pretty close. Which categories are of interest to your business?

GPE 2020 showcases the World of Pets with products, services and education to fulfill every need. However, to reap the benefits, you need a plan. Exhibitors must showcase the “right” items. Attendees need to strategically analyze their data, determine what they need to improve their business and develop a plan to find the products to fulfill their needs. Then…execute the plan. If they do nothing else at GPE, attendees have 1 minute and 21 seconds to spend with each exhibitor. The GPE 2020 SuperSearch will be released next week. It can help. Try it out and…Good luck in Orlando!

 

 

 

 

2018 Pet Food Spending was $28.85B- Where did it come from…?

As we continue to drill ever deeper into the demographic Pet spending data from the US BLS, we have now reached the level of individual Industry segments. We will start with Pet Food, the largest and arguably most influential of all. We have noted the trendy nature of Pet Food Spending – 2 years up then spending goes flat or turns downward for a year. This pattern began in 1997 but has become more pronounced since 2003. After the dip in 2016, Food spending increased by $4.6B in 2017 due to a deeper market penetration of super premium foods. We then expected a small increase in 2018 but what we got was a $2.27B decrease (-7.3%). This was likely due to the reaction to the FDA warning on grain free dog food. A pattern of over 20 years was broken by 1 statement. Let’s take a closer look.

First, we’ll see which groups were most responsible for the bulk of Pet Food spending and the $2.27B drop. The first chart details the biggest pet food spenders for each of 10 demographic categories. It shows their share of CU’s, share of pet Food spending and their spending performance (Share of spending/share of CU’s). 9 of the groups are the same as Total Pet. However, Pet Food spending by Age group has become more balanced and skewed slightly older. The categories are presented in the order that reflects their share of Total Pet Spending. This highlights the differences in importance. In Pet Food the # of earners is far less important while Marriage matters more. Also, while Income is still the highest performing demographic characteristic, it carries less weight in Food spending. Another big difference is that Total Pet had 6 groups performing at or above 120%. Pet Food had only 4. This indicates that Pet Food spending and Pet ownership is spread more evenly across demographic segments. Pet Products also had only 4 groups over 120%. This shows the influence of the Pet Food Segment which still accounts for 59% of Pet Products $ and 37% of all Pet Spending.

  1. Race/Ethnic – White, not Hispanic (83.2%) down from 86.6%. This large group accounts for the vast majority of spending in every segment. Like 7 other big groups, their performance fell. It was down to 120.5% from 126.4%, but this category still ranks #4 in terms of importance in Pet Food Spending demographic characteristics. While Hispanics, African Americans and Asian American account for over 31% of U.S. CU’s, they spend only 17% of Pet Food $. However, this is up from 13% last year. Pet ownership is relatively high in Hispanic households and they fueled the growth, but it remains significantly lower for African Americans and Asian Americans.
  2. # in CU – 2+ people (80.3%) – down from 82.4%.The share of market for 2+ CU’s is over 80% for all segments but Services. Their overall Food performance fell from 115.6% to 113.8% largely because it was a bad year for 2 person CUs and a good year for singles. 2 Person households are still the performance leader but in the 2+ group only 4 person CU’s underperform…slightly. Their lowest performance rating is 94%, which is not bad. The old adage about Pet Spending is still true, “It just takes two.”
  3. Housing – Homeowners (76.8%) – down from 80.9%. Homeownership is a huge factor in pet ownership and more pet spending. However their share dropped and their performance fell from 128.6% to 121.0%. Homeownership went from 2nd to 3rd in terms of importance for increased pet Food spending. It was an incredibly bad year for Homeowners w/o a mortgage and a good year for renters.
  4. Income – Over $50K (68.7%) – down from 70.5%. Although their performance rating dropped significantly from 136.9% to 128.9%, CU income is still the single most important factor in increased Pet Food Spending. However, the over $50K income group has its smallest market share and lowest performance in the Food Segment. Since Pet Food is a “must buy” for Pet Parents, this is evidence that pet ownership is common across all income levels. The drop in share and performance was largely driven by a $2.9B decrease in spending by the $50>149K group.
  5. Education – Associates Degree or Higher (62.8%) – up from 55.4%. Education regained importance in Pet Food Spending. The performance of higher education grew from 102.4% to 115.2%. All groups with a formal degree after High School spent more. The other groups, especially HS grads w/some college spent less.
  6. Occupation – All Wage & Salary Earners (60.4%) – down from 67.7% – In an exact reversal of 2017, the spending of Blue-Collar workers dropped precipitously while the Self-employed spent more. Even though Tech/Sls/Clerical workers increased spending, the performance of All Wage & Salary earners fell from 110.8% to 98.9%. This big group is no longer “earning their share” in Pet Food Spending.
  7. # Earners – “Everyone Works” (58.2%) – down from 58.4%. There was little change from last year as their performance also fell slightly from 101.9% to 100.7%. Income matters most in Pet Food Spending but it appears that the # of Earners matters very little, regardless of whether overall spending in the segment is up or down.
  8. Age – 45>74 (60.4%) – down from 65.9%. There was a huge decrease by the 55>64-yr olds but the 35>54 yr olds also spent less. The 65>74 group increased spending by $0.92B so the “big” group became 45>74. The performance of the new group fell from 128.2% to 118.7% so “Age” category dropped out of the 120+% club.
  9. CU Composition – Married Couples (61.3%) – down from 62.5%. Although they lost a little in share and their performance fell from 126.3% to 123.5%, they moved up from 5th to 2nd place due to Married CUs with children.
  10. Area – Suburban (60.1%) up from 55.4%. Suburban areas are the biggest Food spenders and they gained share. Their performance jumped from 99.6% to 108.4% due to a bad year by Rural and a $1.5B gain by Suburbs >2500

9 out of 10 big spenders for Pet Food are the same as those for Total Pet and Pet Products but generally have a lower market share and performance. Pet Food spending fell $2.27B in 2018. We have strong initial indications that much of the drop came from a complete reversal of spending from the groups that upgraded in 2017, possibly due to the FDA warning. Income is still important but there are indications of more balanced spending in most demographic categories.

Now, we’ll look at 2018’s best and worst performing Pet Food spending segments in each category.

Even as we drill down to the Industry segment level, many of the best and worst performers are the ones that we would expect. In Pet Food spending, there are  7 that are different from 2017, which is 2 more than for Total Pet but the same as Pet Products. 7 of 12 winners are the same as Pet Products but all the losers match. This demonstrates the impact that the Food spending decrease had on overall Pet Products. Changes from 2017 are “boxed”. We should note:

  • Income is important in every segment. However, Food is the only segment in which the winner is not $200K+. Also, every income group above $50K is performing at or above 100% in Pet Food Spending.
  • # Earners – 1 Earner, 2+ CU’s took the top spot for the second consecutive year. While income is still the biggest factor, the number of earners is far less important in Pet Food than any other segment – more balanced spending.
  • Occupation & Education – The winners and losers returned to more “normal” segments.
  • Generation – As usual, the Boomers won, but the Millennials are no longer the worst performers – finally!
  • Age – Despite a terrible year, the 55>64-yr olds finished on top. The big news is the <25 group got off the bottom.
  • CU Composition – Married, Couples Only won for the 4th straight year.
  • Area – Rural won again but their performance fell from 238.9% to 154.2% and they dropped from 1st to 2nd

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

There is 1 repeat from 2017 – the South lost again. 17 of the 24 segments (71%) flipped from 1st to last or vice versa – talk about turmoil! 6 of the 12 categories had dual flips but we still had some surprise winners, like Millennials, 65>74 yr olds and Renters. It is at this level where the demographic uniqueness of the different industry segments truly shows up. Here are the specifics:

  • Income – The winner and loser flipped in 2018.
    • Winner – $150 to $199K – Pet Food Spending: $2.83B; Up $1.08B (+62.3%)
      • 2017: $40 to $69K
    • Loser – $50 to $69K – Pet Food Spending: $3.77B; Down $1.38B (-26.8%)
      • 2017: $150 to $199K
    • Comment – Only the $150>199K and $30>39K group spent more on Food in 2018, +$2.03B. The other groups – High, Middle and Low were down -$4.3B.
  • Generation – The Millennials finally earned some of their publicity with a win.
    • Winner – Millennials – Pet Food Spending: $6.04B; Up $0.99B (+19.6%)
      • 2017: Boomers
    • Loser – Boomers – Pet Food Spending: $11.78B; Down $3.93B (-25.0%)
      • 2017: Silent
    • Comment – Boomers are still the biggest spenders but are subject to big $ swings with their 4th consecutive flip.
  • Area Type – Rural gave back all of their 2017 gains and flipped from 1st to last.
    • Winner – Suburbs >2500 – Pet Food Spending: $12.97B; Up $0.78B (+6.4%)
      • 2017: Rural
    • Loser – Rural – Pet Food Spending: $3.70B; Down $2.47B (-40.0%)
      • 2017: Central City
    • Comment – Areas over 2500 pop. spent more, +$0.88B. Areas under 2500 spent a lot less, -$3.15B
  • Occupation – A dual flip from 2017.
    • Winner – Self-Employed– Pet Food Spending: $2.41B; Up $0.78B (+47.6%)
      • 2017: Blue-Collar Workers
    • Loser – Blue-Collar Workers – Pet Food Spending: $4.64B; Down $3.58B (-43.6%)
      • 2017: Self-Employed
    • Comment – This is where the spending flip becomes better defined. Blue-Collar Workers clearly backed down from their 2017 food upgrade, which was a likely reaction to the FDA warning. At the same time, the Self-Employed grew in number and took the opposite route by spending significantly more per CU on Pet Food.
  • Age – The 65>74 yr olds are truly a surprise winner.
    • Winner – 65>74 yrs – Pet Food Spending: $4.80B; Up $0.75B (+18.5%)                  
      • 2017: 55>64 yrs
    • Loser – 55>64 yrs – Pet Food Spending: $6.73B; Down $03.51B (-34.3%)
      • 2017: <25 yrs
    • Comment: The 55>64-yr olds flipped from 1st to last but all groups from 35>64 spent less. However, the older and younger groups spent more. The result was that Pet Food spending became more balanced in terms of age.
  • Housing – The unusual growth from renters came from both younger and older groups.
    • Winner – Renters – Food: $6.69B; Up $0.74B (+12.4%)
      • 2017: Homeowners w/o Mtge
    • Loser – Homeowners w/o Mtge – Food: $7.13B; Down $3.06B (-30.0%)
      • 2017: Homeowners w/Mtge
    • Comment – Homeowners w/o Mtge flipped from first to last but the decrease didn’t come from Retirees. Their spending was up. It likely came from Baby Boomers who have paid off their home but are still working.
  • # Earners – No Earner, Singles were the only group to increase CU spending on Pet Food.
    • Winner –– No Earner, Single – Pet Food Spending: $2.28B; Up $0.64B (+38.8%)
      • 2017: 1 Earner, 2+ CU
    • Loser – 1 Earner, 2+ CU – Pet Food Spending: $7.12B; Down $1.51B (-17.5%)
      • 2017: 2 Earners
    • Comment – 1 Earner, 2+ CUs flipped from biggest increase to biggest decrease but still remained the top performing group. This happened often in 2018 and shows just how big of a lead that they had on other groups.
  • Race/Ethnic – A dual flip as Hispanics moved to the top with a 29% spending increase.
    • Winner –– Hispanic – Pet Food Spending: $24.01B; Up $0.62B (+29.3%)
      • 2017: White, Not Hispanic
    • Loser – White, Not Hispanic – Pet Food Spending: $2.74B; Down $2.93B (-10.9%)
      • 2017: Hispanic
    • Comment – The U.S. is slowly becoming more racially/ethnically diverse. In 2014 White, Not Hispanics were 70.2% of U.S. CUs. In 2018 their share was down slightly to 69.0%. This group is by far the biggest spender in every Pet Industry Segment. However, they have their smallest share in Food, and it is slowly shrinking. In 2014 it was 86.7%. In 2018 it was down to 83.2%. Since it is a necessity, Food spending is one indicator of Pet ownership. Pet Ownership by Hispanics is relatively high. It may be increasing in Asian American and African American CUs.
  • CU Composition – A dual flip, but Married Couple Only is still the performance leader.
    • Winner – Married, Oldest Child <6 – Food: $1.16B; Up $0.56B (+93.4%)
      • 2017: Married, Couple Only
    • Loser – Married, Couple Only – Food: $9.06B; Down $2.05B (-18.4%)
      • 2017: Married, Oldest Child <6
    • Comment – In 2017 Married Couples with the oldest child <6 was the only segment in this category to have a decrease. In 2018, they were on top. However, Married, Oldest Child 6>17, Single Parents and Singles also spent more. Every other group spent less. It was an unusual year in Pet Food spending.
  • Education – Another dual flip and more evidence of the reversal of the 2017 upgrade.
    • Winner – Assoc. Degree – Food Spending: $3.4B; Up $0.52B (+18.0%)
      • 2017: HS Grad w/some College
    • Loser – HS Grad w/some College – Food Spending: $5.67B; Down $3.44B (-37.7%)
      • 2017: Assoc. Degree
    • Comment – Those with an Associate’s degree, College Grads, High School Grads and even those who didn’t finish High School all spent more on Food, but they couldn’t overcome the huge drop by HS Grads with some College.
  • # in CU – A final dual flip, but once again the loser remains the best performing segment in the category.
    • Winner – 3 People – Pet Food Spending: $4.67B; Up $0.47B (+11.2%)
      • 2017: 2 People
    • Loser – 2 People – Pet Food Spending: $12.28B; Down $2.53B (-17.1%)
      • 2017: 3 People
    • Comment: 3 person CU’s and singles were the only sizes with increased Food spending. This means that married couples with only 1 child had the biggest increase in pet food spending in 2018.
  • Region – Last year every region spent more. This year they all spent less.
    • Winner – West – Pet Food Spending: $6.78B; Down $0.14B (-2.1%)
      • 2017: Midwest
    • Loser – South – Pet Food Spending: $10.73B; Down $1.16B (-9.7%)
      • 2017: South
    • Comment – Although The South kept the “loser” position, the fact that every region spent less shows the widespread impact of the 2018 Pet Food spending reversal.

We’ve now seen the “winners” and “losers” in terms of increase/decrease in Pet Food Spending $ for 12 Demographic Categories. The results strongly reinforce our initial observations of a spending reversal by the groups that largely drove the $4.6B increase in 2017. Since the spending drop occurred in the second half, it is likely a reaction to the FDA warning about grain free dog food made in July of 2018. In this situation there were a number of segments with a huge decrease in spending. However, we have identified 11 of the 12 “winning” segments which unsuccessfully tried to reverse the $2.27B decrease in Pet Food Spending. They were not alone. Not every good performer can be a winner. Some “hidden” segments should also be recognized for performance. They don’t win an award, but they get…

HONORABLE MENTION

The spending lift by the <25 group may be the most significant because it signals increased involvement with pets. The $30>39K income group reflects the positive performance by Retirees. Asian Americans’ spending was up 35.5% which is a great sign as this group has the lowest percentage of pet ownership. Single Parents rarely win any spending awards. Their 13.7% increase deserves recognition. Also, the “bosses” generally get the credit, but the Tech/Sales/Clerical workers spent $0.54B more in 2018. Finally, the Millennials had the biggest increase, but the Gen Xers weren’t far behind, +$0.61B. The drop in Pet Food Spending was widespread, but 2018 wasn’t all bad news. 43 of 92 demographic segments, 46.7% spent more on Food.

Summary

As we have noted, the Pet Food spending drop in 2018 was unexpected as it broke a pattern of 2 years up followed by 1 year of flat or declining sales which has been going on since 1997. This trendy nature increased with the first significant move to premium foods in 2004. The Melamine crisis in 2007 intensified the pattern and resulted in a series of “waves” which became a tsunami with the introduction of Super Premium Foods.

The 25 to 34 yr old Millennials were the first to “get on board” with Super Premium in the second half of 2014. In 2015 a substantial portion of consumers began to upgrade to this new trend. The result was a $5.4B spending increase. These consumers were generally more educated, often worked as managers or were self-employed and had higher incomes. One negative was that they often paid for the upgrade by spending less in other segments. In 2016 the anticipated drop in spending happened. The “upgraded” group began value shopping for their new food and found great deals online and in some stores. They spent some of the $3.0B “saved” Food dollars in other segments but not enough to make up for the drop in Food. Total Pet Spending was down $0.46B. In 2017 we were ready for a new “wave”. Thanks to a very price competitive market, what we got was a deeper penetration of Super Premium foods. This group of upgraders was mostly middle-income, not college educated and often Blue-collars workers. Most also were in the 55>64 year old age group. The result was a $4.6B increase but this time there was no trading $ with other segments.

That brings us to 2018. We expected a small annual increase in Pet Food and spending in the first half was up $0.25B. Then the bottom dropped out as spending fell $2.51B in the second half. The timing of this spending drop, in correlation with the FDA warning on grain free is too close to be a coincidence. When we got the 2018 data, we began an in depth demographic analysis of Pet Food Spending. It turns out that the big decrease in pet food spending was coming directly from the groups who had fueled the big 2017 increase. They had obviously backed off from the previous year’s upgrade “en masse”. Fear for their pet’s welfare is the obvious reason for such an abrupt turnaround. This is especially true since the primary motivator for pet parents is the health and well-being of their pet children, especially regarding nutrition.

As you have seen from our analysis, it certainly caused turmoil in the segment as 71% of the demographic groups with the biggest change in Pet Food $ switched from first to last or vice versa from their position in 2017. However, It wasn’t all turmoil and bad news. 47% of 92 democratic segments increased pet food spending. They may have upgraded even more, added supplements or wanted more facts on grain free. The other good news is that the average gap between the best and worst performing segments in 12 categories fell by 23%. Pet Food spending is becoming even more demographically balanced in America. We’ll see what 2019 brings. Are we starting a new pattern or maybe no pattern?

Finally – 2018’s “Ultimate” Pet Food Spending CU is 2 people – a married couple, alone. They are 55>64 years old. They are White, but not of Hispanic origin. At least one has an advanced college degree and they both work in their own business. They earn $150 to $200K but are still paying for a mortgage on their house in a small suburb in the Midwest.

 

 

2018 Pet Products Spending was $48.65B – Where did it come from…?

We looked at the Total Pet Spending for 2018 and its key demographic sources. Now we’ll start drilling down into the data. Ultimately, we will look at each individual segment but the first stop in our journey of discovery will be Pet Products – Pet Food and Supplies. Food and Supplies are the industry segments that are most familiar to consumers as they are stocked in over 200,000 U.S. retail outlets, plus the internet. Every week over 22,000,000 U.S. households buy food and/or treats for their pet children. Pet Products accounted for $48.65B (61.9%) of the $78.6B in Total Pet spending in 2018. This was down $1.046B (-2.1%) from the $49.69B that was spent in 2017. We have seen that this drop was caused by the reaction to the FDA warning on grain free dog food which drove food spending down in the second half combined with new tariffs on Supplies, which flattened spending in that segment in the second half.

Overall, in 2018 Pet Food spending fell -$2.27B, while Supplies spending growth slowed to +$1.22B. We’ll combine the data and see where the bulk of Pet Products spending comes from.

We will follow the same methodology that we used in our Total Pet analysis. First, we will look at Pet Products Spending in terms of the same 10 demographic category groups that were responsible for 60+% of Total Pet spending. Then we will look for the best and worst performing segments in each category and finally, the segments that generated the biggest dollar gains or losses in 2018.

The first chart details the biggest pet product spenders for each demographic category. It shows their share of CU’s, share of pet products spending and their spending performance (spending share/share of CU’s). Although their share of the total products $ may be different from their share of the Total Pet $, the biggest spending groups are the same. The categories are presented in the order that reflects their share of Total Pet Spending. This highlights the differences. In Pet Products spending, the # of earners and occupation are less important while marriage and area type matter more. We should also note that, like Total Pet Spending, Income is the highest performing demographic characteristic. In Pet Products there are 4 groups with a performance rating of over 120%, which is down from 5 last year. This is two less than Total Pet, which indicates that Pet Products spending is spread more evenly across the category segments.

  1. Race/Ethnic – White, not Hispanic (84.5%, down from 85.7%) They are no longer the largest group but still account for the vast majority of spending in every segment. With a 122.3% performance rating, this category still ranks #4 in terms of importance in Pet Products Spending demographic characteristics. Hispanics, African Americans and Asian American account for over 30% of U.S. CU’s, but they only spend 15% of Pet Products $. Although pet ownership is relatively high in Hispanic American households, it is significantly lower for African Americans and Asian Americans.
  2. # in CU – 2+ people (81.3%, down from 82.5%) The spending numbers for Pet Products are higher than those for Total Pet, 80.9%. If you put 2 people together, pets very likely will follow. If you have a pet, you must spend money on food and supplies. Their overall performance of 115.2% is lower because of a bad year for 2 person CUs and a great year for singles. Performance decreases as the number of people in the CU increases but all CU sizes with 2 or more people perform above 100% so they all “earn their share”. The key is “It just takes two.”
  3. Housing – Homeowners (78.1% down from 80.3%). Controlling your “own space” has long been the key to pet ownership, larger pet families and more pet spending. At 123.0% performance, homeownership fell from to second to third place in terms of importance for increased pet products spending. Homeownership increased by 0.6% in 2018, but Renters had a big year in Pet Products spending, +9.0%.
  4. Income – Over $50K (70.5%, down from 70.9%). Pet Parenting is common in all income groups but money does matter in spending behavior for all industry segments. With a performance rating of 132.4%, (down from 137.7%) CU income is still the single most important factor in increased Pet Products Spending. As a general rule,  Higher Income = Higher Pet Products Spending. However, in 2018 much of the decrease in share and performance was due to decreased spending by the middle income groups. $50>99K was down -$2.17B.
  5. Education – Associates Degree or Higher (65.0%, up from 59.0%). Their performance level also skyrocketed from 109.9% to 119.2%. In 2017 there was a big spending lift by High School Grads with some College. They reversed course in 2018, down -$3.3B. All education levels below Associates Degree spent less, every group with a formal degree spent more. Pet Parents don’t need a College degree, but higher education once again produces increased $.
  6. Occupation – All Wage & Salary Earners (62.4%, down from 66.1%). Pet ownership is widespread across all segments in this group. The low performance, 102.1%, down from 108.2%, reflects increased balance, but some turmoil. There was a big spending drop from blue-collar workers but a lift from Tech/Sls/Clerical and self-employed.
  7. # Earners – “Everyone Works” (61.2%, up from 59.9%). Their performance is 105.8%, up from 104.5%. In this group, all adults in the CU are employed. After a great 2017 by CU’s with 2+ people and only one earner, their spending fell $1.7B in 2018. 2 & 3 Earner CUs spent more in 2018, along with No Earner, Singles. Income is a still a priority in Pet Products Spending, but not how many people work to get it.
  8. Age – 35>64 (61.9%, down from 66.4%). Their performance also decreased from 124.3% to 117.0% and they dropped out of the 120+% performance club. Although the 35>54 group increased spending by $.45B, the 55>64 year old Baby Boomers’ spending fell $3.33B. Increases by every other age group made spending more balanced.
  9. CU Composition – Married Couples (62.7%, down from 63.1%). Pet parenting and marriage both represent strong commitments. Their performance decreased from 127.5% to 126.4%, but they moved up to 2nd place. Married Couples only spent less. Married w/children spent more but overall, Marriage is very important in Pet Products $.
  10. Area – Suburban (61.4%, up from 58.2%). Their performance also jumped from 104.7% to 110.7%. Suburban households are the biggest pet spenders. However, population truly mattered in 2018. Suburban and Rural areas under 2500 population were down $2.9B. Suburban areas over 2500 were up $1.5B and Center City was up $0.36B.

Although the biggest spending groups are the same for Pet Products as for Total Pet, there are subtle differences in market share and performance. Money still matters most but how you earn it matters less. It appears that Pet Products Spending is becoming more balanced  across almost all demographic categories.

Now, let’s drill deeper and look at 2018’s best and worst performing Products spending segments in each category.

Most of the best and worst performers are the ones that we would expect. However, there are 7 that are different from 2017. That is the same as last year but 2 more than Total Pet. Changes from 2017 are “boxed”.

We should note: Only 1 of the Product winners is different from Total Pet – 55>64 yr olds, who won despite a 30 point drop in performance. The performance of the matching segments is lower than Total Pet, with 1 exception – the Suburbs <2500. Their performance fell from 170% to 160% but they still grabbed 2nd place, behind the $200K+ group.

The average performance of the 2018 Product winners was 134.6%, down sharply from 142.8% – 9 were down. The average for the losers was 63.4%, up from 60.0% – 9 were up. The narrowing of the gap between best and worst reinforces that Pet Products spending is becoming more balanced across America. We should also note:

  • Generation – The biggest change was Gen X replaced the Boomers at the top for the first time since….
  • Occupation – Self-employed bounced back in income and their spending reflects the increase. Blue Collar workers were the group most affected by the second half drop in Food spending.
  • Region – The West held on to the top spot but now only 2 regions are performing above 100%
  • Age – The under 25 group got involved with pets and moved out of last place.

Except for Gen X, the winners are the ones we expected, but the gap between top and bottom has narrowed.

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

In this section we will see who drove Pet Products spending down. There is only one repeat from 2017 – the Midwest won again. There was definitely turmoil as 15 Segments switched positions – from first to last or vice versa. However, there are other surprises, like the performance of 65>74 yr olds, Tech/Sales/Clerical workers, Hispanics and Millennials.

  • Generation – Millennials edged out Gen X for the top spot and had the biggest lift of any segment in any category.
    • Winner – Millennials – Products Spending: $10.61B; Up $1.89B (+21.7%)
      • 2017: Baby Boomers
    • LoserBaby Boomers – Products Spending: $18.65B; Down $4.55B (-19.6%)
      • 2017: Silent Generation
    • Comment – Only Boomers spent less, everyone else combined couldn’t make up the difference.
  • Area Type – After a big 2017, Rural flipped from first to last.
    • Winner – Suburbs >2500 – Products Spending: $21.86B; Up $1.49B (+7.3%)
      • 2017: Rural
    • Loser – Rural – Products Spending: $5.36B; Down $2.34B (-30.4%)
      • 2017: Central City
    • Comment –Urbanization? All areas under 2500 pop. down $2.9B; Areas over 2500 pop. up $1.85B.
  • Occupation – Another flip, as Blue-Collar workers gave back their big 2017 lift in food.
    • Winner – Tech, Sales, Clerical – Products Spending: $8.22B; Up $1.31B (+18.9%)
      • 2017: Blue-Collar Workers
    • Loser – Blue-Collar Workers – Products Spending: $7.88B; Down $3.34B (-29.8%)
      • 2017: Self-employed
    • Comment – The non-manager, white collar workers stepped up and the Self-Employed returned to prominence, but they couldn’t overcome the negative Blue Wave.
  • Education – In 2017 Education was less of a factor in Pet Products spending. In 2018 it returned to prominence.
    • Winner – BA/BS Degree – Products Spending: $14.16B; Up $1.28B (+9.9%)
      • 2017: HS Grad w/some College
    • Loser – HS Grad w/some College – Products Spending: $9.05B; Down $3.3B (-26.7%)
      • 2017: Assoc. Degree
    • Comment – Once again there is a simple dividing line. If you have a formal degree after HS, you spent more on Pet Products, +$2.3B. All other education segments spent less, -$3.35B.
  • Income – The lower Middle Income group was the most impacted by the decline in Food Spending.
    • Winner – $150 to $199K – Products Spending: $5.10B; Up $1.22B (+31.5%)
      • 2017: $40 to 69K
    • Loser – $50 to $69K – Products Spending: $6.39B; Down $1.32B (-17.1%)
      • 2017: $30 to $39K
    • Comment – The total middle-income group, $50>99K was down $2.17B. Only the Over $150K and the $30>39K groups generated positive numbers, but not enough to overcome drops from everyone else.
  • Housing – The 2017 winner and loser swapped places. This year’s winner also reflects the Millennial influence.
    • Winner – Renter – Products: $10.67B; Up $0.88B (+9.0%)
      • 2017: Homeowner w/o Mtge
    • Loser – Homeowner w/o Mtge– Products Spending: $12.14B; Down $2.78B (-18.6%)
      • 2017: Renter
    • Comment– The biggest group, Homeowners w/Mtges hasn’t been on the radar for 2 years. They were up $.88B.
  • # in CU – A dual flip. The loser reflects the spending drop by Married Couples Only – The Winner: Married, w/1 child.
    • Winner – 3 People – Products Spending: $8.08B; Up $0.75B (+10.2%)
      • 2017: 2 People
    • Loser – 2 People – Products Spending: $20.21B; Down $2.31B (-10.3%)
      • 2017: 3 People
    • Comment: All CU sizes spent more on Supplies but only singles and 3 person CUs spent more on Food. The result was that they were the only groups to increase Pet Products spending.
  • # Earners – Another dual flip but No Earner, Singles was truly a surprise winner.
    • Winner – No Earner, Single– Products Spending: $3.57B; Up $0.72B (+25.1%)
      • 2017: 1 Earner, 2+ CU
    • Loser –– 1 Earner, 2+ CU Products Spending: $11.25B; Down $1.69B (-13.0%)
      • 2017: No Earner, Single
    • Comment – The # of Earners is less of a factor in Pet Product spending, unless you have 2 or more people in your CU. In those cases, (81% of America) only CUs with 2 or more earners spent more.
  • CU Composition – One last dual flip. The winner reflects the strong performance by the younger groups.
    • Winner – Married, Oldest child <6– Products: $1.94B; Up $0.66B (+51.9%)
      • 2017: Married, Couple Only
    • Loser – Married, Couple Only – Products: $15.11B; Down $1.57B (-9.4%)
      • 2017: Married Oldest Child <6
    • Comment – Married Couples only are perennially the best performers but 2018 was a bad year…for Food. They spent more on Supplies. Married Couples with children, oldest child from 6>17 and singles also spent more on both Food and Supplies. The overall lift by Supplies for most groups couldn’t overcome the drop in Food.
  • Age – These results show that the Boomers’ product spending drop came from the younger members of the group.
    • Winner – 65>74 yrs – Products Spending: $7.15B; Up $0.66B (+10.1%)
      • 2017: 55>64 yrs
    • Loser – 55>64 yrs – Products Spending: $11.08B; Down $3.33B (-23.1%)
      • 2017: <25 yrs
    • Comment: All groups <45 or 65+ spent more on Products. The 45>64 yr olds spent less, but it gets complicated. The under 35 and over 75 groups spent more on both Food and Supplies. 35>64 age range spent less on food but more on Supplies. The “winning” 65>74 yr olds did the opposite. – A very good reason to look at each segment.
  • Race/Ethnic – White, Non-Hispanics account for 84.5% of Pet Products’ $, but the minorities are very slowly gaining.
    • Winner – Hispanic – Products Spending: $4.25B; Up $0.51B (+13.7%)
      • 2017: White, Not Hispanic
    • Loser – White, Not Hispanic – Products Spending: $41.09B; Down $1.50B (-3.5%)
      • 2017: Asian Americans
    • Comment – The spending by African Americans and Asians was essentially flat. However, the Hispanics stepped up with a big lift in Food $. The U.S. is becoming more ethnically/racially diverse. Let’s hope that Pet Products spending does too.
  • Region – The Midwest hung on to the top spot by having the biggest increase in Supplies Spending
    • Winner – Midwest – Products Spending: $11.12B; Up $0.39B (+3.6%)
      • 2017: Midwest
    • Loser – Northeast – Products Spending: $7.84B; Down $1.08B (-12.1%)
      • 2017: South
    • Comment – Every region spent less on Food but only the Northeast also spent less on Supplies.

We’ve now seen the “winners” and “losers” in terms of increase/decrease in Pet Products Spending $ for 12 Demographic Categories. 2018 was not a great year for Pet Products Spending due to Food. Many 2017 big spenders like Boomers, Blue Collar Workers, HS Grads with some College and Rural areas did a reversal in 2018. A lot of Segments spent more but their efforts failed to counter the drop in Food spending. Of course, not every good performer can be a winner but some of these “hidden” segments should be recognized for their outstanding effort. In 2018 there were actually quite a lot of them. I’ve narrowed it down to 6. They don’t win an award, but they deserve….

HONORABLE MENTION

Pet Products spending was down $1B in 2018. However, It was a mixed bag. An increase in Supplies couldn’t quite counter the big drop in Food. A significant increase, +39%, came from the <25 group. This bodes well for the future. It also wasn’t “all about money” as the $30>39K income group spent 25% more. Education once again became more important in Pet Products spending but not just college degrees. The Associates Degree group finished second behind the BA/BS group, but had a 19% increase. Marriage is the second most important factor in Pet Products spending but the CUs with Children were the drivers. Regardless of their children’s age, all groups increased spending. We can’t leave out singles. They are the worst performing group but are 30% of U.S. CUs. They stepped up with a 5% increase. Finally, the large Suburbs had the biggest increase, but Center City also spent more. In 2018, more population, at least in the West and Midwest, meant increased spending. Pet Products spending was down in 2018 but it wasn’t all bad news. 50 of 92 segments had an increase, so 54% spent more.

Summary

Spending on Pet Products has been on a roller coaster ride since 2015. Many consumers upgraded to Super Premium Food and cut back on Supplies in 2015. In 2016 they value shopped for Food and Spent some of the saved money on Supplies. In 2017 there was increased availability and value in both segments. More Consumers recognized the opportunity and spent $7B more.

2018 was calm, until the second half when the FDA warning on grain free caused many consumers to downgrade their food and new tariffs on Supplies flattened spending growth. On the surface, big changes weren’t immediately apparent. The demographic groups responsible for most of Pet Products Spending were the same as those in 2017. However, there were changes in their spending share and rankings. Higher Education and Marriage moved up while the number of Earners and Age became less important. In terms of their performance, Income, Marriage and Homeownership stayed on top. However, there were now only 4 groups with 120+% performance as the Age Group dropped out of the club. Total Pet has the same 4, Plus Age and Higher Education. This indicates that Pet Products spending is more balanced than Total Pet in certain demographic categories and this movement continues.

When we looked at the performance of individual segments, the winners were “back to normal” with the groups that we have come to expect through the years, with one major exception – Gen X replaced Baby Boomers as the top performing generation. This was a huge change and the impact became more apparent when we looked at $ changes.

The first thing that we note is that the Boomers spending fell $4.6B. You see the widespread impact as 2017’s big winners like Blue Collar, HS Grads with Some College and Rural “gave it all back” in 2018. In an apparent reaction to the FDA Dog Food warning, they undoubtedly downgraded their Food. This along with the new tariffs on Supplies created incredible turmoil in the 2018 market. 15 of the 24 segments switched positions compared to 2017, from 1st to last or vice versa. However, it wasn’t all bad news. 50 of 92 demographic segments (54%) actually increased Pet Products spending in 2018. Both young and old stepped up. You see this in the performance of winners like Millennials, Renters, 65>74 yr olds, Married with an oldest child under 6 and many more. Although they weren’t able to overcome the massive influence of the Boomers, it bodes well for the future. What about 2019? Hopefully, the Food segment will return to a more normal market. The big question is how will a full year of added tariffs affect Supplies spending?

Finally…The “Ultimate” 2018 Pet Products Spending CU is a married couple, alone. They are in the 45 to 54 age range. They are White, but not of Hispanic origin. At least one of them has an advanced College Degree. Both of them work in their own business, earning over $200K. They still have a mortgage on their house located in a small Suburb  in the West.