Spending, CPI, demographics of overall market

Pet Products Spending by Generation: Mid-Year 2018 Update

Pet Products spending totaled $51.17B for the 12-month period ending 6/30/18. This was an increase of $5.3B (+11.5%). Total U.S. spending for the period totaled $7.95 Trillion, up $370B (+4.9%). Driven by big increases in both Food and Supplies, Pet Products Spending growth far exceeded the pace of Total U.S. spending.

In this report we will update Pet Products Spending for arguably the most popular demographic measurement – by Generation. Baby Boomers built today’s Pet Industry, but they are getting old. What happens next? Gen Xers are next in line but most of the discussion revolves around Millennials. Last year at this time the Gen Xers had a big year. Are they still performing? What about the youngsters? Are they stepping up in life and spending? Have the Boomers still got it? Let’s take a closer look. The numbers come from or are calculated from data in the US BLS Consumer Expenditure Survey.

First, let’s define each generation and look side by side at their share of Consumer Units (H/H’s) and Total Spending.

          Generations Defined:

  • Millennials: Born 1981 and after
    • In 2018, age 19 to 37
  • Gen X: Born 1965 to 1980
    • In 2018, age 38 to 53
  • Boomers: Born 1946 to 1964
    • In 2018, age 54 to 72
  • Silent: Born 1928 to 1945
    • In 2018, age 73 to 90
  • Greatest: Born before 1928
    • In 2018, age 91 and over

  • Boomers are still the largest group with 44.4M CUs (34.0%) and the biggest spenders – $2.8T. Their numbers are down but their spending is still growing and over performing as their share in relation to their share of CUs is 105%.
  • Gen X is the second largest CU group. Their overall numbers are down slightly as more singles “pair up”. However, their spending was up $123B to $2.56T. They are the leaders in spending performance, and it got even better, 121%.
  • Millennials are the largest generation in sheer numbers, but third in CUs. More are developing financial independence as CUs grew by 2.7M – up 5M (+17%) in 2 years. They also had the biggest increase in spending +$228B. Their total spending was $1.77T – 3rd However, their spending performance is only 86%.
  • The Silent generation actually gained slightly in CUs and their overall spending was up $18B so they remain a viable force in the marketplace. The Greatest Generation will soon be too small to be a measurable, separate spending group. They will be replaced by Gen Z by 2020.

There is the obvious difference in age to be considered and differences in behavior. However, we have also learned that there are key Consumer Unit characteristics, like income, family situation and home ownership that make a difference both in Total Spending and in Pet Spending. Let’s look at some of these key differences.

  • It just takes 2. CUs with 2 or more people account for 84.8% of all Pet Products Spending. (up from 81% last year)
  • The size of the CU and number of children is all about Family responsibility and all the financial pressures that this generates. The CU size overall is unchanged from Mid-2017 and still peaks with the Gen Xers. However, the Boomer and Gen X generations decreased by 0.1 person. Perhaps, their Millennial kids are moving out.
  • Married couples with children under 18 are an important segment, 23.4% of all CUs. They account for 26.5% of all Pet Products spending and 32.8% of Supplies Spending. However, as the number of children grows, the increased financial responsibility can slow Pet Spending.
  • Boomers still average 2+ people in the CU. However, they are much less likely to have children <18 at home. As their human children leave home, they turn their attention and spending to their Pet Children who are still with them.
  • Pet Products spending is also tied to the number of earners in a CU. 2+ Earner CUs account for 41% of the total but they spend 49% of Pet Products $. As you can see the “earning” is being done in America by Gen Xers, Millennials and Boomers with Gen Xers at the top, as to be expected. Boomers are down 0.1 as more move into retirement.
  • Homeownership – Owning and controlling your own space has always been a key to increased Pet Ownership and spending. Homeowners currently account for 80.2% of all Pet Products Spending, which increased by $4.89B (+13.5%). Renters’ spending was up too, but only $0.4B (+4%), which highlights the importance of homeownership.
    • Nationally, Homeownership remained steady at 63%. Gen Xers remain at or near the national average. Homeownership continues to increase until we reach the oldest Americans.
    • The Millennials are obviously lagging behind but they did increase from 34% to 36% and are up from 32% in 2016. This is encouraging. Boomers also moved up 1% to 78%. The homeownership rate for the over 25 Millennials still remains 20% below the rate for the older generations when they were the same age.

Next, we’ll compare the Generations to the National Average in Income, Spending, Pet Products Spending and Pet Products Share of Total $pending:

  • CU Avg Income – $76,335 
  • Total Spending – $60,815
  • Pet Products Spending – $391.90
  • Pet Products Share of Total Spending – 0.64%

  • Income – The 38>53-year-old Gen Xers are the leaders. The Boomers earn about 20% less and their income will continue to fall as they age. The big drop begins with the Silents as retirement becomes almost universal. The Millennials income is still 20% less than the Boomers and only 64% of the Gen Xers.
  • Total Spending – The Gen Xers make the most and spend the most, but their spending is not out of line with their income. Boomers also spend more than the average, but their income can still support it. Spending doesn’t fall as fast as income with the older generations. In fact, they are actually deficit spending in relation to their after tax The Millennials under 25 are also in an after tax income deficit spending situation. The rising income from the 25>37 group makes up the difference and brings their overall generational spending more in line with income.
  • Avg CU Pet Products Spending – The Boomers have been alone at the top since they made the move to upgrade to Super Premium Food in 2015. Their lead began dropping when they began value shopping for food in 2016 but it has bounced back with the 2nd wave of Super Premium. The Millennials are closing the gap but still trail the Gen Xers by 27% and the Boomers by 41%. The Gen Xers made a big move in Pet Products spending last year as they broke the national average for the first time since 2014. However, they lost ground this year – down to 104.9% from 112%.
  • Pet Products Share of Total Spending – One measure of the level of commitment to their Pets.
    • The Pet Products share of total spending increased to 0.64%. Only Boomers exceed the National Average but everyone under 91 years of age is at least 87% of the national average.
    • In a flip flop from last year, Gen Xers were the only big group to decrease their pet products spending in terms of its share of their overall spending. The drop was small and should be put into perspective. This group not only makes and spends the most money, they had by far the biggest increase per CU in these areas.
    • Millennials are in 3rd place in both income and total spending and moved up to 3rd place in Pet Products Spending share. Their Total Spending was up 5.5% but their Pet Products Spending was up 18.5%.
    • You can see that spending for the very Oldest, “Greatest” Americans continues to drop but the 73 to 90-year-old Silent Generation is still making “noise” with their commitment to their pet companions.

Now let’s look at Pet Products $ spent by Generation and their share of the total.

  • In terms of 2018 Mid-Yr Performance, all but the Greatest were up, but the lift was driven by Boomers & Millennials.
  • Boomers still have the largest share, but the Millennials gained the most, moving up to 19.4% from 17.3% last year.
  • Overall – Ave CU spent $391.90 (+37.98); 2018 Mid-Yr Pet Products spending = $51.17B, Up $5.3B (+11.5%)
    • The bulk of the lift is coming from 2017. July>Dec 17, Up $3.82B; Jan>Jun 2018, Up $1.48B
  • Boomers – Ave CU spent $502.14 (+$56.71); 2018 Mid-Yr Pet Products spending = $22.47B, Up $2.52B (+12.6%)
    • Big lift in 2017 but spending turned down in 2018. – Jul>Dec 17, Up $3.25B; Jan>Jun 18, Down $0.73B.
  • Gen X – Ave CU spent $411.04 (+$14.03); 2018 Mid-Yr Pet Products Spending = $14.39B, Up $0.47B (+3.3%)
    • Relatively flat but turning up in 2018. – Jul>Dec 17, Down $0.24B; Jan>Jun 18, Up $0.70B
  • Millennials – Ave CU spent $298.37 (+$46.65); 2018 Mid-Yr Pet Products Spending = $9.95B, Up $2.00B (+25.2%)
    • The most consistent, strong growth of any group. – Jul>Dec 17, Up $0.77B; Jan>Jun 18, Up $1.23B.
  • Silent Gen. – Ave CU spent $262.63 (+$23.33); 2018 Mid-Yr Pet Products Spending = $4.29B, Up $0.36B (+9.1%)
    • Growth in both halves but the bulk of the lift came in 2018. Jul>Dec 17, Up $0.07B; Jan>Jun 18, Up $0.28B.
  • Greatest Gen.– Ave CU spent $71.37 (-$0.83); 2018 Mid-Yr Pet Products Spending= $0.08B, Down $0.04B (-35.3%)

The increase was driven by Boomers in 2017 and  Millennials in 2018. Let’s look at individual segments. First, Pet Food

  • Boomers drove the lift in the 2nd half of 2017, then they began value shopping at the start of 2018.
  • The Millennials had a big lift at the beginning of 2018. Perhaps this is the start of a Pet Food new trend?
  • Overall – Ave Cu spent $240.44 (+$21.01); 2018 Mid-Yr Food spending = $31.36B, Up $2.92B (+10.2%)
    • After a big lift in the 2nd half of 2017, growth slowed markedly. Jul>Dec 17 (+$2.67B); Jan>Jun 18 (+$0.25B)
  • Boomers – Ave CU spent $333.30 (+$45.96); 2018 Mid-Yr Food spending= $14.96B, Up $2.11B (+16.5%)
    • July>Dec 17 (+$2.86B) – Wave to Super Premium continues. Jan>Jun 2018 (-$0.75B) – In 2018: Value shopping.
  • Gen X – Ave CU spent $222.45 (-$10.83); 2018 Mid-Yr Food spending= $7.83B, Down $0.32B (-3.9%)
    • Some value shopping in 2nd half of 2017 then began to bounce back. Jul>Dec 17 (-$0.43B); In Jan>Jun 18 (+0.11B)
  • Millennials – Ave CU spent $177.16 (+$26.95); 2018 Mid-Yr Food Spending $5.85B, Up $1.06B (+22.1%)
    • Jul>Dec 17 (+$0.26B); Jan>Jun 18 (+$0.80B). Some of the lift is coming from a big increase in CUs. However, we could be seeing the start of a new food trend. Remember, Millennials pioneered the move to Super Premium.
  • Silent Generation – Ave CU spent $164.31 (+$8.53); 2018 Mid-Yr Food spending $2.65B, Up $0.09B (+3.6%)
    • Spending was flat in the 2nd half of 2017, then picked up in 2018. Jul>Dec 17 (+0.01B); Jan>Jun 18 (+$0.08B)
  • Greatest Gen. – Ave CU spent $56.32 (-$1.57); 2018 Mid-Yr Food spending= $0.06B, $0.03B (-34.9%) – fading.

We are still seeing the impact of the 2nd wave of Super Premium in 2017. However, 2018 started off strong for Millennials while Boomers began value shopping. It could signal the beginning of a new Food trend. Now, Supplies.

  • Boomers still have the largest share but Supplies spending skews younger – Gen X and Millennials control 53.7%.
  • The lift is consistent and widespread. The Oldest Americans are losing CUs, driving spending down.
  • Overall – Ave CU spent $151.46 (+$16.97); 2018 Mid-Yr Supplies spending = $19.81B, Up $2.38B (+13.6%)
    • Supplies spending has been strong and growing for 24 months. Jul>Dec 17 (+$1.15B); Jan>Jun 18 (+$1.23B)
  • Baby Boomers – Ave CU spent $158.09 (+$10.75); 2018 Mid-Yr Supplies spending= $7.50B, Up $0.40B (+5.7%)
    • With a big increase in Food $, the Supplies lift is more subdued. Jul>Dec 17 (+$0.39B); Jan>Jun 18 (+$0.01B)
  • Gen X – Ave CU spent $188.59 (+$24.86); 2018 Mid-Yr Supplies spending= $6.56B, Up $0.78B (+13.4%)
    • Consistent growth with biggest lift in the 1st half of 2018. Jul>Dec 2017 (+$0.19B); Jan>Jun 18 (+$0.59B)
  • Millennials – Ave CU spent $121.21 (+19.70); 2018 Mid-Yr Supplies spending= $4.09B, Up $0.94B (+29.9%)
    • More CUs and a strong lift in both halves. Jul>Dec 17 (+$0.51B); Jan>Jun 18 (+$0.43B)
  • Silent Generation – Ave CU spent $98.32 (+14.80); 2018 Mid-Yr Supplies spending= $1.64B, Up $0.26B (+19.2%)
    • Surprisingly consistent growth in both halves for this older group. Jul>Dec 17 (+$0.05B); Jan>Jun 18 (+$0.21B).
  • Greatest Gen. – Ave CU spent $15.05 (+$0.74); 2018 Mid-Yr Supplies spending= $0.02B, Down $0.01B (-36.8%)

2015 saw a steep drop in Supplies spending as consumers upgraded to Super Premium Pet Food and reduced the frequency of Supplies purchases. Spending flattened out in the first half of 2016 but then this segment began a magical 24 month run. Consumers began value shopping for Pet Food and spent some saved money on Supplies. There were great values to be had as Supplies prices deflated for 22 months. This combination of circumstances generated an incredible $4.97B Supplies spending lift. The increase was driven by Gen X and Boomers, +$3.62B, but the Millennials stepped up in the last year, +$0.94B. Only the Greatest Generation spent less which was due to their declining numbers.

In the final chart we will compare each generation’s share of spending on Total Products, Pet Food and Pet Supplies to their share of CU’s and see “Who is earning their share?” Then we will review their actual performance numbers.

Performance = Share of Spending/Share of CU’s;    100+% indicates you are “earning your share”

If a share of market is outlined , then performance exceeds 100%.

  • Greatest Generation – is not included in this section as both their market share and CU share are too small.
  • Silent Generation Performance – Pet Products: 65.7%; Pet Food: 66.2%; Pet Supplies: 64.9%
    • This group ranges in age from 73 to 90. Pet ownership is more difficult after age 75 and this is reflected in the low share of Pet Products spending. However, the desire and the commitment are still there. Their performance is remarkably consistent between Food and Supplies, but it is definitely dropping as they age.
  • Baby Boomers Performance – Pet Products: 129.2%; Pet Food: 140.4%; Pet Supplies: 111.5 %
    • The Boomers truly led the way in building the pet industry and they are still at it. They are earning their share and are the spending leader in both Food and Supplies. Driven by their 2017 spending increase in Food, their overall performance is up from last year. Ultimately this will begin to fade as they age. However, based upon their history, they will continue to perform well for many more years.
  • Gen X Performance – Pet Products: 105.7%; Pet Food: 93.9%; Pet Supplies: 124.5%
    • The Gen Xers are next in line and next in performance to the Boomers. They outperform the Boomers on supplies. However, their Food performance fell below 100% as they were in the value shopping phase. Gen Xers range in age from 38 to 53. They already make and spend the most money. As they grow older, their children will start to move away from home and their focus will increasingly turn to their Pet Children. Expect their overall performance to continue above the 100% level and to ultimately surpass the Boomers.
  • Millennials Performance – Pet Products: 75.3%; Pet Food: 72.4%; Pet Supplies: 80.0%
    • The Millennials are widely touted as the future of the industry. This is ultimately true, but the future is still a ways off. The Millennials are currently 19 to 37 years old. They have a lot of pets, but their responsibilities are growing, and money is still in short supply. They continue to spend a lot on Supplies as they establish pet households and seek products that make Pet Parenting easier. There is also strong evidence that they are leading the way in each new food trend. One thing is certain. Value shopping is their golden rule, especially on the internet. They are 17 years away from occupying the highest income age group. Plus, they are having children later so the spending lift from children leaving will undoubtedly be delayed. They may be 20 years away from Pet Spending dominance.

A Final Word – In the 2017 mid-year update, Pet Products Spending belonged to the Gen Xers. They produced $2.33B of a $2.41B increase with a strong performance in both Food and Supplies. This year the honor should be shared between the Boomers and the Millennials. With a huge lift in Food, Boomers accounted for 85% of the spending increase in the 2nd half of 2017. Then the Millennials stepped up to provide 83% of the lift in the 1st half of 2018. Overall the Boomers won, with a $2.52B increase. The Millennials finished 2nd, +$2.0B but they win the consistency award as they spent more in both halves in both Food and Supplies. Note: An Honorable mention should go to the Silents, who also had a small lift in both halves in both segments. Overall, it was an incredible 12 months for Pet Products spending, up $5.3B.






U.S. Pet Services Spending (Non-Vet) $7.87B (↑$1.3B): 2018 Mid-Yr Update

The US BLS just released their Mid-Year Update of the Consumer Expenditure Survey covering the period 7/1/2017 to 6/30/2018. In our analysis of Pet Supplies Spending we saw that it remained “gold”. Spending was up across virtually every demographic segment for the second consecutive year. Pet Food Spending was also strong for the year but growth had slowed significantly in the first half of 2018. Now we turn our attention to Pet Services. The Mid-year numbers show that spending in this segment was $7.87B, up $1.30B (+19.9%) from the previous year. This segment is known for consistent, albeit small increments of growth. In 2017 spending fell 4% at mid-year and was down 1% for the year. This was the first decline in any 12-month period in 4 years and the first annual decline since 2011. Then, driven by a spectacular 1st half of 2018, Services rebounded with literally the single biggest $ increase in history. This deserves a closer look. First, we’ll review recent Services spending history.

          Here are the Mid-Year 2018 Specifics:

  • Mid-Year 2018 vs Mid-Year 2017: ↑$1.30B (+19.9%)
    • Jul > Dec 2017: ↑$0.20B
    • Jan > Jun 2018: ↑$1.10B

Pet Services is by far the smallest industry segment. However, except for 2010 and 2011, the period immediately following the Great Recession, it had consistent annual growth from 2000 through 2016. Spending in Food and Supplies have been on a roller coaster ride during that period. Service Spending more than tripled from 2000 to 2016, with an average annual growth rate of 7.6%. Spending in the Services Segment is the most discretionary in the industry and is more strongly skewed towards higher income households. Prior to the great recession, the inflation rate averaged 3.9% with no negative impact. The recession affected every industry segment, including Services. Consumers became more value conscious, especially in terms of discretionary spending. Services saw a slight drop in spending in both 2010 and 2011, but then the inflation rate fell to the 2+% range and the segment returned to more “normal” spending behavior. In mid-2016 inflation dropped below 2% and continued down to 1.1% by the end of 2017. This was primarily due to increased competition from free standing businesses but also an increase in the number of Pet Stores and Veterinary Clinics offering pet services. While prices still went up slightly, there were deals to be had and consumers shopped for the best price. There was no change in purchase frequency. Consumers just paid less. There are 2 periods on the chart which best illustrate the impact of this behavior. In the 1st half of 2013, inflation fell to 0.7% and spending decreased by -$0.44B. In the first half of 2017, inflation dropped to a record low 0.4% and spending fell -$0.28B. Obviously, some inflation is necessary in Services. In the 2nd half of 2017 spending turned up again. That brings us to the huge $1.1B lift in 2018. This is unprecedented. Only increased purchase frequency and and/or deeper market penetration could have produced this spectacular increase.

Let’s take a closer look at some spending demographics – Age and Income.

In the graphs that follow we will compare spending for the Mid-year 12 months ending 6/30/18 to the previous period ending 6/30/17. In our graphs we will also include the 2017 yearend $pending. This will also allow you to see the spending changes in the 2nd half of 2017 and the 1st half of 2018.

The first graph is for Income, the single most important factor in increased Pet Spending, especially in Services. Here’s how you get the change for each half using the Over $70K group as an example:

  • Mid-yr Total Spending Change: $5.62B – $4.53B = Up $1.09B (Note green outline = increase; red outline = decrease)
  • 2nd half of 2017: Subtract Mid-17 ($4.53B) from Total 2017 ($4.82B) = Spending was up $0.29B in 2nd half of 2017.
  • 1st half of 2018: Subtract Total 2017 ($4.82B) from Mid-18 ($5.62B) = Spending was up $0.80B in 1st half of 2018.

  • Both the Over and Under $70K groups had a 12-month spending increase. However, Over $70K was responsible for 84% of the $1.3B national lift. The Under $70K group decreased spending in the 2nd half of 2017 so their overall increase was produced solely by a big lift in the 1st half of 2018.
  • The individual groups over $70K all showed growth in both halves. The over $150K had a minimal increase in the second half of 2017 but made up for it with a big lift in 2018. This group is also growing in CU’s, up +13.8%.
  • The lower income, $30>50K group had the only 12-month spending decrease, which was driven down by a drop in the 2nd half of 2017. The $50>70K group mirrored this pattern but their 2018 lift was enough to put them on the plus side. These groups caused the 2nd half spending drop in under $70K. Both had a big lift in Pet Food Spending during that time so they either found great values or cut back on discretionary spending.
  • Perhaps the most significant fact on the chart is somewhat “hidden”. If you look closely, you will see that every income group, from top to bottom, posted an increase in Services spending in the 1st half of 2018. In the industry segment that is most driven by income, this is a truly rare occurrence. Something was happening.

Now, Services’ Spending by Age Group.

  • The overall spending lift is being driven by the under 54 group, especially the 35>44-year olds. All of these groups had a small increase in the last half of 2017 followed by a big jump in spending in 2018.
  • The over 65 group also increased overall spending, but their lift occurred in the 2nd half of 2017. Spending actually fell in 2018. Retirees had a big lift in Pet Food spending in 2018 so the drop may be the result of trading $.
  • The 55>64-year-old Baby Boomers had the only decrease in Services spending. It was driven down by a sharp drop in the 2nd half of 2017. This corresponds with a movement to upgrade Pet Food by a substantial portion of this group. Their Services spending bounced back in the 1st half of 2018, but they may be in danger of losing the overall lead in Services spending to the 45>54-year olds. Their lead is down to $0.04B. ($1.69B to $1.65B)

Now let’s look at what is happening in Pet Services spending at the start of 2018 across the whole range of demographics. In our final chart we will list the biggest $ moves, up and down by individual segments in 11 demographic categories. Remember, the increase in the 1st half of 2018 was $1.1B, much more than the $0.2B in the 2nd half of 2017.

The first thing that is readily apparent is that the increases dominate. The decreases are minor. In fact, in 5 demographic categories all segments increased Services spending. It is actually even better than that. Only 7 of 82 individual demographic segments spent less on Services in the 1st half of 2018. That means that 94% spent more. That is a strong indication that the Services segment is making a deeper penetration into the market. Further evidence is that Services spending increased or held their ground in all segments in these 4 critical categories:

  • Income
  • Race/Ethnic
  • Area (Rural>City)
  • CU Size

At the same time, the importance of high income to significant increases in Services spending is also right out front. The “winners” group is a virtual list of demographic groups with high income. Including:

  • $150+K Income
  • Mgrs & Professionals
  • 2 Earners
  • 35>44 year olds (#2 Income)
  • White, Not Hispanic
  • Advanced College Degree
  • Homeowner w/Mtge
  • Gen X (#1 income)

We also see a definite connection in some of the “losing” groups. Retirees, 65>74-year olds, Homeowners without mortgages and the Silent Generation are all related in that they are primarily older Americans.

There are 2 other winners that deserve some notice – Center City and Married Couples with an oldest child under 6. Both of these segments had the biggest $ increase in their category and are also the top performers in terms of share of spending vs share of CU’s. Both demonstrate the “convenience” appeal of Pet Services, even in the younger groups.

So, what happened to cause the record lift in Services spending in the 1st half of 2018 and what comes next? We have noted the number of outlets offering Pet Services has radically increased. This created a highly competitive market and the inflation rate dropped to near record lows. Today’s value conscious consumers saw that deals were available, and they took advantage of the situation. However, they didn’t increase the frequency of purchase. They just paid less. This drove overall Pet Services spending down in the 1st half of 2017. The segment started to recover in the 2nd half but not enough to prevent the first annual decrease in Pet Services spending since 2011. However, it was a start. In 2018, consumers started to recognize the convenience offered by more outlets. The latest big food upgrade was also winding down. The result was that Services started a deeper penetration into the market. Much of it was in their existing prime segments, but it also spread to some lower income groups. The result – a $1.1B explosion in Pet Services spending.

Will this continue? What can we expect in the 2nd half of 2018? We can’t say for sure, but inflation could be a factor. Services prices turned up sharply in May 2018, +2.5% in 1 month. By year end the CPI was up +3.4%. This is a pre-recession rate. The last time we saw this was 2011. At that time, post-recession, value driven consumers rejected it and spending fell -7.2%. High income groups may not be affected by the price increase. We’ll see if it impacted other segments and total Services $pending.




In our mid-year analysis of Pet Food spending, we saw that the latest spending increase slowed in the 1st half of 2018 . Pet Supplies spending tells a different story, and it is all positive. Mid-Year 2018 Pet Supplies spending was $19.81B, up $2.38B (+13.6%). This comes on the heels of a $2.59B increase in the previous 12 months. Pet Supplies spending is now at the highest level since 2009, prior to the great recession. The following chart should put the recent spending history of this segment into better perspective.

                Here are this year’s specifics:

  • Mid Yr 2018: $19.81B; $2.38B (+13.6%) from Mid Yr 2017.
  • The +$2.38B came from:
    • Jul > Dec 2017: ↑$1.15B
    • Jan > Jun 2018: ↑$1.23B

Like Pet Food, Pet Supplies spending has been on a roller coaster ride. However, the driving force is much different. Pet Food is “need” spending and has been powered by a succession of “must have” trends. Pet Supplies spending is largely discretionary, so it has been impacted by 2 primary factors. The first is spending in other major segments. When consumers ramp up their spending in Pet Food, like upgrading to Super Premium, they often cut back on Supplies. However, it can go both ways. When they value shop for Premium Pet Food, they take some of the saved money and spend it on Supplies. The other factor is price. Pet Supplies prices reached their peak in September of 2009. With a few brief exceptions they have been generally deflating since then – down -5.3% from 2009 at the end of 2017. Although it is not a hard and fast rule, Price inflation in this largely discretionary segment can retard sales, usually by reducing the frequency of purchase. On the other hand, price deflation generally drives Supplies spending up. Innovation can “trump” both of these influencers. If a new “must have” product is created, something that significantly improves the pet parenting experience, then consumers will spend their money. The perfect example of this is the successive waves of new food trends. Unfortunately, we haven’t seen much significant innovation in the Supplies segment recently.

Recent history gives a perfect example of the Supplies roller coaster. In 2014 Supplies prices dropped sharply, while the movement to Super Premium Food was barely getting started – Supplies spending went up $2B. In 2015, consumers spent $5.4B more on Pet Food. At the same time, Pet Supplies prices went up 0.5%. This was a “killer” combination as Supplies spending fell $2.1B. In 2016 consumers value shopped for Food, saving $2.99B. Supplies spending stabilized by mid-year then increased by $1B in the second half when prices fell sharply. Consumers spent some of their “saved” money on Supplies. Supplies prices continued to deflate throughout 2017. Food spending increased $4.61B in 2017 but this came from a limited group, generally older CUs, less focused on Supplies. The result was a $2.74B increase in Supplies spending. This appeared to be somewhat of a break with the overall pattern of trading $ between segments.

That brings us to the first half of 2018. The spending increase in Pet Food slowed to +$0.25B. However, Supplies’ prices switched from deflation to inflation. Prices increased 0.6%, but not until May so most of the spending in the 1st half was already done. During this period Supplies Spending increased by $1.23B so there was no major impact from the upturn in prices. Although, we should note that the less price sensitive over $150K group accounted for $0.91B of the increase. If the Supplies segment could become less sensitive to minor inflation and increased spending in other segments it would be great news for manufacturers and retailers, encouraging stronger, stable growth like the last 24 months.

Now we will take a closer look at the two most popular demographic measures – age and income. In the graphs that follow we will compare spending for the Mid-year 12 months ending 6/30/18 to the previous period ending 6/30/17. In our graphs we will also include the 2017 yearend $pending. This will also allow you to see the spending changes in the 2nd half of 2017 and the 1st half of 2018.

The first graph is for Income, which has been shown to be the single most important factor in increased Pet Spending, especially in Pet Supplies and both of the Service segments.

Here’s how you get the change for each half using the $50>70K group as an example:

Mid-yr Total Spending Change: $2.47B – $2.30B = Up $0.17B (Note green outline = increase; red outline = decrease)

  • 2nd half of 2017: Subtract Mid-17 ($2.30B) from Total 2017 ($2.55B) = Spending was up $0.25B in 2nd half of 2017.
  • 1st half of 2018: Subtract Total 2017 ($2.55B) from Mid-18 ($2.47) = Spending was down $0.08B in 1st half of 2018.

  • The increase in Supplies Spending was widespread across income groups. The only yearly decrease came from the $70>100K group. They were down in both halves. They did have a big increase in Food spending during this time so they may have been dialing back their Supplies spending.
  • The biggest increase came from the over $150K group. Their $1.54B lift (+40.2%) accounted for 65% of the segment’s total increase while they only have 11.9% of the CU’s. However, we also should note that this group is gaining members faster than any other income segment. Their CU count is up 13.9% from a year ago.
  • There are 2 other minor dips in spending. Pet Supplies spending fell -$0.06B in the second half of 2017 for the upper middle income $100>150K group and by -$08B in the first half of 2018 for lower middle income $50>70K group.
  • Another interesting situation is the remarkably even distribution of Supplies spending among the under $100K groups. In fact, the under $50K group spent $5.7B while the $50>100K group only spent $5.3B. However, the <$50K group accomplished this with 47.6% of the CU’s in the U.S., while the $50>100K group only has 27.6%. There is no doubt that Money Matters in Supplies Spending.

Now let’s look at Pet Supplies spending by Age Group.

  • This is very consistent. Every Age group had an overall increase and an increase in each half. The groups from 25>64 each increased Supplies spending by approximately a $0.5B. The older and younger groups had smaller increases.
  • Obviously, the factors affecting Pet Supplies Spending in the last 12 months were relatively evenly dispersed across America, at least in the 25 to 64 year olds.

Now let’s look at what is happening in Supplies spending at the start of 2018 across the whole range of demographics. In our final chart we will list the biggest $ moves, up and down by individual segments in 11 demographic categories. Remember, the increase in the 1st half of 2018 was $1.23B, slightly more than the $1.15B in the 2nd half of 2017.

  • In 4 of the 11 categories all segments increased Supplies Spending. Actually, only 9 of 82 demographic segments started out 2018 by spending less on Supplies. That means 89% are ↑. Very widespread growth.
  • There are a lot of the usual “suspects”. Winners: $150+K, Homeowner w/Mtge, White, Not Hispanic, Suburban, 2 earners. Losers: Single Parents, Retirees, Hispanic.
  • There are a couple of surprise losers: $70>99K & Advanced College Degrees. Both had a big lift in Food – Trading $ ?
  • The lift is demographically widespread but Supplies Spending does skew slightly younger: 35>44, 4 People, Gen X

The Supplies segment had a great 12 months and 2018 is off to a good start but the “winning streak” is actually 24 months. It began in the second half of 2016. Since then, spending on Pet Supplies has increased $4.97B (+33.5%). It has also been widespread across America. Of 82 separate demographic segments, only 1 has spent less on Supplies in the last 24 months – the Greatest Generation. The reason for this decline is unfortunate but can’t be helped. The number of CU’s for these 91+ year old Americans has decreased by over 40% during the period.

What are the market conditions that helped to foment this “wave” of Supplies spending? We have to first note that the world changed for Supplies because of the great recession. Prices have been generally deflating since then and spending in the segment has become more sensitive to changes in price. Prices go up…spending drops, usually due to reduced purchase frequency. Prices go down… spending turns up. This situation did not exist prior to the recession.

The other factor is spending in other segments, especially Food. Whether it is a conscious decision or not, pet spending comes out of “one bucket”. A big increase in one segment can result in a cut back in others and big savings can generate more spending. The recent upgrade to Super Premium Food was such a big $ commitment that it magnified this effect.

In Mid-2016, the market was just coming off the first big wave to Super Premium and consumers were starting to value shop so $ were available. Supplies pricing turned down and continued to decline for 22 months. The time was ripe for a big lift in Supplies Spending, and it happened. At the same time a new wave was starting in the Super Premium movement, which could have derailed the Supplies lift. However, it turned out that the demographic segments that were upgrading  to super premium food were less focused on Supplies, so the impact was negligible. Supplies Spending continued to grow. That brings us to mid-2018. What comes next?

A new food trend may be starting but the lift may be minimal in 2018. Of bigger concern is inflation. Supplies prices turned up in May and by year end had increased +2.3%. We have not seen anything like this since the pre-recession, price glory days of 2009 when prices increased (+3.2%). Unless price sensitivity has gone away, this does not bode well for Supplies spending in the second half of 2018. We will have to wait and see. We’ll get the data in September.






The US BLS just released their Mid-Year Update of the Consumer Expenditure Survey covering the period 7/1/2017 to 6/30/2018. The report shows Pet Food Annual Spending at $31.36B (Food & Treats). The following charts and observations were prepared from calculations based upon data from that report and earlier ones. The first chart will help put the $31.36B into historical perspective and truly show you the roller coaster ride that is Pet Food Spending.

Here are the current numbers:

  • Mid 2018: $31.36B; $2.92B (+10.2%) from Mid-17. The net +$2.92B in Mid 2018 came from:
  • Jul>Dec 2017: Up $2.67B from 2016.
  • Jan>Jun 2018: Up $0.25B from 2017

2017 was a great year for Pet Food Spending. The 1st half was up $1.94B and this trend grew stronger with a $2.67B increase in the 2nd half. However, the increase slowed markedly in the 1st half of 2018. We have noted in previous reports that Pet Food spending has been on a roller coaster since 2000, with 2 years up, followed by a flat or even declining year. This chart perfectly reflects this pattern since the recession driven, down year in 2010. This up and down “ride” has been driven by a succession of Food trends. 2011 saw the movement to “Natural” begin. This trend and spending increased through the 1st half of 2013. Then another change took place. The market had become much more competitive. Prices flattened out then began to fall in the 2nd half of 2013. Consumers began to look for value and they obviously found it as spending fell -$2.34B in the 2nd half, producing a net drop of -$1.22B for the year. 2013 was a game changer for this segment as it began an extended period of deflation which continued through 2018. Midway through 2018, Pet Food prices were still 2.3% lower than in 2013.

In the 2nd half of 2014 spending turned sharply up. This was the beginning of the movement to Super Premium which was initiated by the 25>34-year-old Millennials. In 2015 this trend took off, especially with the Boomers, as spending rose $5.4B. At the same time, the Pet Food spending of the 25>34 yr olds dropped. At first, we thought they had rolled back their upgrade. However, it turns out they were leading the way in another element of the trend to Super Premium – value shopping. For consumers, the Super Premium upgrade movement consisted of 3 stages:

  1. Trial – The consumer considers the benefits vs the high price and decides to try it out. Usually from a retail outlet.
  2. Commitment – After a period of time, the consumer is satisfied and is committed to the food.
  3. Value Shop – After commitment, the “driver” is to find a cheaper price! In today’s competitive market there are an increasing number of options. Some super premium brands are moving to the mass market. Retailers are developing super premium private label and of course, the internet has become a big player.

Now back to our timeline. After the big lift in 2015, those CU’s that upgraded went into “value shopping” mode and Pet Food spending fell -$2.99B in 2016, which was right on schedule with our timeline. However, the Super Premium cycle was not over yet. The benefits of the product along with the very price competitive market led to a much deeper demographic penetration of this trend and spending increased $4.61B in 2017. This huge lift immediately after a down year is very unusual. Usually the biggest lift occurs in 2nd year of the 3-year cycle. 2018 started off slowly with only a $0.25B increase. It most closely resembles the 1st half of 2012. If that pattern is true to form, then we can expect a $1+B increase in the 2nd half of 2018. Two patterns in our timeline graph support this expectation.

  1. Whether it is up or down, the 2nd half change is always greater than the change in the 1st
  2. In the last 3 years, the 2nd half trend has always mirrored the 1st There were no mid-year turnarounds.

Now we will take a closer look at the 2 most popular demographic measures – age and income. In the graphs that follow we will compare spending for the Mid-year 12 months ending 6/30/18 to the previous period. In our graphs we will also include the 2017 yearend $. This will also allow you to see the change in the 2nd half of 2017 and the 1st half of 2018.

The first graph is Income, which has been shown to be the single most important factor in increased Pet Spending. Here’s how you get the change for each half using the $150K+ group as an example:

Mid-yr Total Spending Change: $5.02B – $5.12B = Down -$0.1B (Note green outline = increase; red outline = decrease)

  • 2nd half of 2017: Subtract Mid-17 ($5.12B) from Total 2017 ($4.82B) = Spending was down -$0.3B in 2nd half of 2017.
  • 1st half of 2018: Subtract Total 2017 ($4.82B) from Mid-18 ($5.02) = Spending was up $0.2B in 1st half of 2018.

  • The over/under $70K groups have the same pattern – biggest lift in 2nd half of 2017; mini lift in 1st half of 2018
  • The increase is being driven by the $30>100K group, but primarily by the middle income, $50>100K segments. The biggest lift is still in the 2nd half of 2017. However, the $50>100K group was up $1.32B in the 1st half of 2018. This is significant considering the total market was only up $0.25B in that time period.
  • The change in the higher incomes is less pronounced. Both of these groups bought into Super Premium early. It looks like the $100>150K group is taking value shopping more seriously in 2018.
  • The big drop in the spending in the 1st half by the <$30K is significant but somewhat deceptive. In the first half of 2017 this group had a big lift due to the Pet Food upgrade. By 2018 they were value shopping, but they had also lost 1 million CU’s. However, it gets even more complex. 1.5 million of the members of the group making $15>30K moved out and probably up in income. They spent over 25% more on Pet Food than the <$15K segment so this was a big loss. They were partially replaced by 0.5 million CU’s making under $15K but spending 40% less on Pet Food. The $0.97B drop is spending is significant, but it also demonstrates the complexity of pet food spending analysis.

Now let’s look at Pet Food spending by Age Group.

  • The only 2 segments with an overall decrease are the 45>54 year olds and the under 25 group. These decreases are related to the spending drops that we saw in the highest and lowest income groups.
  • Quite frankly, the bulk of the 12-month lift was driven by the $3.3B spending increase by the 55>64 yr olds in the 2nd half of 2017. However, their spending flattened out in the 1st half of 2018.
  • Starting out the new year, the biggest increases are coming from the 25>34 and over 65 age groups, while the 45>54 yr olds continue their downward move.

That brings us to the obvious question, “What is happening in Pet Food spending at the start of 2018 across the whole range of demographic categories?” We will endeavor to answer that in our final chart. We will list the biggest $ moves, up and down by individual segments in 11 demographic categories.

Remember the total increase in the 1st half of 2018 vs the same period in 2017 was pretty bland – up $0.25B. However, I think that you will see that this bland result came from some rather tumultuous spending behavior…Always look deeper.

  • There are substantial differences between the winner and loser in all categories but Housing and Area. In Area the performers are those that you would expect. However, In Housing they are the opposite of the “norm”.
  • In Race/Ethnic, White not Hispanic spending was down slightly. The biggest positive move came from the Hispanics. Their upgrade lift began in the middle of 2017. African Americans have entered the value shopping stage, after 18 months of gradual increases.
  • The drop by Blue Collar workers and HS Grads with Some College comes after their upgrade commitment lift in 2017. Now, they are shopping for price and finding it.
  • The Retirees are growing in numbers and obviously increasing their commitment to quality pet food.
  • It just takes two. All Pet Spending increases sharply for married couples, especially when their only children are pets. The # of Earners also matters less in Food Spending, as long as you have 2 people.
  • In the remaining groups we see related segments with similar positive performance in the 1st half of 2018. They are:
    • 25>34-year olds. They’re all Millennials.
    • Married Couples only are obviously 2 people CU’s with no children.
    • The $50>69K income group within the 25>34 yr old segment are the most like to have no children.
    • You can see the connection – 25>34 yr old married couples with no children and an income of $50>69K.

Why is the first half performance of this younger group important? Consider this: The 25>34-year-old Millennials led the way in the super premium food upgrade in the 2nd half of 2014. After becoming committed to their new high quality, high priced pet food, they then turned to value shopping and their spending dropped. This behavior was repeated by 2 waves of other segments as super premium made an ever-deeper penetration into the market.

Could the spending lift by this group indicate a new Pet Food trend? There are several possibilities “on the table”, including clean label transparency, customization, sustainability or maybe a combination. It is unlikely to cause a huge lift like super premium but could drive up spending in the 2nd half of 2018. There is one more indicator – the lift in the Advanced College Degree segment. This is another group that “buys in” early to scientific, nutritional improvements.

The Pet Food segment has become incredibly complex. We’ll see what the 2nd half of 2018 brings.




U.S. Total Pet Spending – By Age AND Income Group: 2016>2017

Using data from the annual Consumer Expenditure Survey conducted by the US BLS, we have done an in-depth analysis of U.S. Pet Spending in over a dozen different individual demographic categories. This has given us a better understanding of “who” is behind the strength and continued growth of the Pet Industry.

We have seen that the key demographic factor behind increased pet spending is income. At the same time, the demographic that attracts the most broadscale interest and media attention is the spending by generation. Although we can’t  bundle these 2 together. The US BLS has again produced a report that combines the two most popular and impactful spending demographic measures – income and age group. To get the required sample size, they combined the data from 2016 and 2017. As you recall, Total Pet Spending averaged over $70B during this period . Unfortunately, due to the complexity of this report we only have the numbers for Total Pet, not for the individual industry segments.

Even this “simplified” report requires a rather complex analysis. We have endeavored to keep it as simple as possible to make it easier to visualize and comprehend. The data is segregated into the following groups:

Age Groups

  • 25 to 34 – All Millennials
  • 35 to 44 – 85% Gen Xers; 15% Millennials
  • 45 to 54 – 75% Gen Xers; 25% Boomers
  • 55 to 64 – All Boomers
  • 65 & Over – 6 yrs of Boomers + older groups

Income Groups

  • Under $30K
  • $30K to $49K
  • $50K to $69K
  • $70K to $99K
  • $100K & over

This produces 25 subgroups, accounting for 98% of Total Pet Spending. The under 25 group is not included due to a very low share of Pet Spending and an extremely small sample size in the highest income levels. It is still very complex, especially in building graphs. Therefore, we will again focus on the largest, most impactful groups. Our first chart shows the share of CU’s for the 10 largest age/income segments. There are highlights which apply to all 3 share/performance charts in the report and should help you in viewing and comparing the data.

  • Outlined in green = gained share
  • Outlined in red = lost share
  • Filled in green = new to Top 10

Each of the age/income groups has an assigned a bar color. Ex: 55>64 $100K+ is always red. 25>34 $100K+ is orange, etc.

In terms of age, all 25>34 Income groups are a shade of yellow; 35>44 is black (only 1); 45>54 are shades of blue; 55>64 are red/pink; Over 65 are shades of green. Now that you know the “rules”, let’s get started.

  • The first thing that you notice is that there is no “middle ground”. All of the 10 largest segments are either under $50K (6) or over $100K (4). Last year it was 7 to 3 but this year the high income 25>34 group replaced 35>44 <$30K.
  • The 2 largest segments are at the opposite ends of the income spectrum but both “held their ground”.
  • 3 of the 4 segments that gained share are $100K+. Every $100K age group from 25>64 is now in the top 10. The lift in the 65>, $30>49K group comes from Baby Boomers retiring. Average retirement income is $40K.
  • All 4 of the segments that lost share are <$50K. (3 are <$30K). Most of the “losing” CUs moved up a notch in income.
  • There are no big groups in the middle ground, $50>100K. Middle income America is very fractionalized by age group.

It’s not all about income and age. There are other factors that impact Pet Spending. Two of the biggest are homeownership and family size, especially the number of children in the household. The following graphs show the distribution of these two demographic measurements across income and age groups.

# of children under 18 – Larger households can create financial pressure which can impact spending on Pet “Children”. As expected, most children, at least the ones under 18, are in the 25>54 yr old group, peaking with the 35>44 yr olds. The number children tends to increase with income. However,  the 25>34 yr old Millennials are an exception. CU’s with incomes below $50K have the most children. There are also two dips in the number of children – $50>69K and over $100K. Let’s see if that impacts pet spending.

% Homeownership – About 81% of Total Pet Spending comes from Homeowners. Having more space that you control has always been a key to increased pet spending. Homeownership regularly increases by age and income. For every age group, higher income means a higher percentage of homeownership. This is also true by income group as increased age shows increased homeownership, with one slight variation. In CU’s making over $100K, the 55>64 yr olds edge out the over 65 group – 94 to 93 to claim the overall title. The national homeownership average is 63%. You can see that the younger the group, the higher the required income to meet the average.

Now let’s get to the $pending. The next chart groups Pet Spending by income group so we can see if age matters.

  • <$30K – This group represents almost 1/3 of all U.S. households and obviously has a financial struggle. The over 45 group has fewer children and is more likely to own a home, so they have more money and space for pets.
  • $30K>49K – This is the only income group to regularly increase spending with age which puts the 65+ group on top. The average retirees’ income is $40K. Once they reach this level, the financial pressure is reduced, and they can increase their focus and spending on their pets.
  • $50>69K – Every age group increases their Pet Spending but there is a big lift in the over 55 groups. Apparently, this is a significant income threshold for them in terms of Pet Spending. We also see an incredible lift in the spending by the 25 to 34-year-old Millennials. This could relate to that dip in the number of children that we noted earlier.
  • $70>99K – We have reached middle income. The over 55 groups show another big increase and in fact the spending of the 55 to 64-year olds reaches the “stratosphere”. Last year they were the overall #1 Pet Spending age/income group. This year they are very close. The 25 to 44 group is still feeling strong financial pressure. The spending increase by the 35>44 yr olds slows and spending by the 25>34 yr old Millennials dips slightly – more children?
  • $100K+ – $100K is a magic number. At this level Pet Spending explodes for all but the 55>64-year-old group. Their number dips to $1100 but is still equal to last year. Undoubtedly the most significant increases came from the 35>54 group. With some relief from financial pressure they focused more on their pets. Although 35>44 won the overall title with $1462, 45>54 was only $18 behind ($1.50 less per month). The only group under $1000 is the 25>34 yr olds. However, their average income is 20% below the others so $800+ spent on pets is still pretty darn good.

Now let’s look at the same data from the age group view.

  • Amazingly enough the oldest group is the most stable. As their income increases, they show strong, consistent growth in pet spending. If they have more money, they spend more on their pets. It’s as simple as that.
  • The 4 younger groups have different stories to tell but they have one thing in common. At some point they reach a significant threshold income and their Pet Spending explodes, sometimes doubling or more.
  • The 55 to 64-year-old Boomers and the 25 to 34-year-old Millennials are the only groups that have dips in spending, but they also have 2 significant lifts. For both, the initial big increase occurs at $50>69K. The Boomers immediately follow up with another substantial jump at $70>99K. The Millennials lose a little ground then jump 70+% at $100K.
  • The 35>54 group is about 80% Gen Xers. They have 2 slightly different paths but end up in almost the same place. For the 35>44 group, spending consistently grows but flattens out at $70>99K. When income reaches $100K, their spending almost triples and they finish in 1st For the older 45>54 group, spending growth is minimal until they reach $70K and it jumps +77%. However, it almost doubles at $100K putting them in 2nd place overall.
  • Even with a dip by the Boomers, this view certainly reinforces $100K income as a magic level in Total Pet Spending.

Now, we will truly “show you the money”. Here are the top 10 groups in share of Total Pet $pending.

  • These 10 age/income groups account for 50% of all U.S. CU’s and 68% of Total Pet Spending.
  • Money Matters Most as all 5 age groups making $100K+ are included along with 2 in the $70>99K range
  • Age is still a big factor as 6 of the 10 groups are 55+ yrs old, primarily due to the Boomers
  • The biggest gains are from the 35>54-year olds. They took over the top 2 spots and added a group.

Finally, let’s look at the top performers which we will define as having the highest Share of Pet $/Share of CU’s. It is the same group as last year and 8 are repeats from the chart above and have matching colors in the chart below.

  • Once again age matters as only the same two under 45, over $100K income groups made the list.
  • However, money matters even more in Pet Spending performance than in Pet Spending $. There are no groups making under $50K. The 2 under $50K, 65+ age groups were replaced by 2 65+ age groups making from $50 to $99K.
  • Only 9 groups are “earning their share” (100+%). The groups with lower performance are losing share to the 35>54 yr olds (80% Gen Xers). The biggest gains came from the 35>44-year olds as every CU over $30K improved.

The data in this report strongly reinforces the importance of income in Pet Spending. It also gives evidence that the younger groups, primarily the Gen Xers, are beginning to step up, especially in their higher income segments. The availability of disposable income results in increased Pet Spending for every age group. Pet Spending really explodes when any group’s income meets or exceeds $100K. For the lower income groups, the amount of available disposable income varies due to circumstances. The younger groups have more pressure due to family size and building a career. The 45>64 age groups have less family pressure. The over 65 folks just need to meet some low minimum income levels. One thing is certain for everyone. When disposable income increases, one of the first places that it gets spent is on pets.








According to the numbers from the American Pet Products Association (APPA), the total U.S. Pet Industry increased $3.05B (4.4%) in 2018 to $72.56B. This is slightly more than last year’s increase of 4.1% and very consistent with the 4+% annual growth rate since 2011. There was one notable exception to the “norm”. In 2016 the industry grew 10.7% due to an upward adjustment in Food $ which research had shown to be too conservative. However, the industry has gotten “back on track” in the last 2 years.

As you recall, 2017 brought considerable excitement with a record low inflation rate of 0.4%. This meant that 90.2% of the increase was a real increase in the amount of Pet products and services sold. In 2018, the pricing turned up by +1.25%, a more normal rate. Sales continued to grow but the amount of real growth fell to 70.6%, also a more normal number. However, these are “summary” numbers. Each segment has a different story to tell. In this report we’ll take a closer look at the performance of the total market and importantly, the individual segments. The report will cover 2018, but also put this year’s numbers into perspective for the period from 2009 to 2018.

Here are the specifics from 2018.

  • After record deflation of -1.1%, Pet Food segment pricing stayed low, maintaining the highly competitive market.
  • The drop in live pet sales occurred as projected. This critical industry segment continues a gradual decline.
  • Pet Supplies flipped from deflation to inflation, the highest rate since 2009. Sales surprisingly increased greater than anticipated, but 22% was due solely to price increases.
  • The inflation rate in the Service segment more than doubled. This means that the drop in the amount of Services was actually -3.2%, 4 times greater than the drop in retail dollars.
  • Veterinary pricing also moved up from a record low rate. This probably caused a slight reduction in frequency, so they didn’t meet the projection. 43% of the increase was due to inflation, which is actually low for this segment.
  • The Total Pet Market was up 4.39% as the Product segments beat their projected numbers while the Service segments missed. The upturn in prices definitely hurt both Services and Veterinary, probably through reduced frequency. The Food segment retained “the low ground” in prices and continued to expand upgrades. The Supplies segment quite remarkably avoided the usual negative impact that inflation has on sales.

The Chart below may make it easier to compare the situation in the individual Segments.

Now let’s take a look at the performance of the individual segments from 2009 through 2018 starting with Food.


  • The Pet Food World changed in 2014, having a huge impact in the overall numbers since 2009:
    • 6.26% Annual Growth Rate (Driven up from 4.64% by the 2016 adjustment in Food $).
    • Low average inflation – 0.51% (Pushed down to this low level by two -1+% pricing drops)
    • 5.72% CPI adjusted Growth Rate: Over 91% of the growth since 2009 has been “real” – Truly amazing!
  • In the 9 years since 2009…
    • 5 were deflationary (-0.6%) Average
    • 4 were inflationary (1.9%) Average

After 2013, deflation has been the norm in Pet Food. In a need category, this usually slows retail sales. You don’t buy more food because it is cheaper. However, this occurred at the same time as the introduction of super premium foods. This has produced the unusual situation of growing retail food sales despite extraordinarily strong deflation.

The Pet Food Market is the most competitive in history. Manufacturers, Retailers and whole Retail channels, including the internet are now actively engaged in a furious battle for the consumers’ pet food $. This price war is initially great for consumers and has allowed a much deeper demographic penetration of super premium. However, it is putting increased profit pressure on the supply and distribution channels. This could be bad for all, including the consumer, thru reduced choices. Prices may have “bottomed out” in 2018. A reasonable inflation rate, perhaps 1%, might be best for the future.

Here’s what 2009 to 2018 looks like on a graph:

Until the uptick in 2018 and excluding the 2016 adjustment, the annual retail growth rate has generally been slowing. At the same time, deflation has caused the “real” growth rate to increase since 2014. Deflation essentially stopped in 2018 and they “met” at +4.5%. What will happen in 2019? Through February the CPI is up 1.5% vs 2018. Last year it was deflating. We don’t know if this will continue or how it will impact spending. It’s time for yet another new, “must have” upgrade in Food to keep consumer spending moving up.

Let’s turn next to Pets & Supplies.


  • Deflation – Turning around?
    • Prices are 4.3% below 2009 (and about equal to what they were in June 2008)
    • 2018 had the highest inflation since 2009 but overall prices are still falling at an average annual rate of -0.49%
    • Prices have deflated 5 times in 9 years but in 3 of the last 4 years they have turned up.
  • Retail Sales – Supplies had been price sensitive with increased growth rate tied to deflation. That was not the case in 2018.
  • However, over the whole 9-year period, the Consumer bought more…and paid less!
    • Retail Sales annual growth rate is 4.08%
    • Price Adjusted annual growth rate is 4.59% – 12.5% higher than the retail rate – which is beyond Amazing!

After the Recession consumers became much more price driven. This had a huge impact on Supplies as most purchases are discretionary and many categories have become commoditized. The first deflationary year was 2010. The Consumer responded very positively with a 6% increase in “real” purchases. This trend continued through 2014 with “real” purchases showing an annual increase of 5.9%. Then prices leveled out in 2015 & 2016 and the increases in both full retail and price adjusted sales fell to the 2.5% range.

In 2017, deflation returned but was not as impactful as in the past. The increase in retail sales was the lowest since 2009 and “real” sales were up less than 3%. 2018 brought a change to the pattern. Inflation was stronger, +1% but so were retail sales, +4.7%, the biggest increase since 2012. Ideally, we probably need to get to about a +0.5% rate.

Here is the graph:

Now on to the Service Segments – First, Non-Vet Services.


  • Growth
    • Despite the unprecedented spending drop in 2018, the annual Retail Growth rate is 6.9%, highest in the industry
    • In 2018 the Inflation rate more than doubled the rate of 2017. It had been declining then fell precipitously in 2017. The annual average since 2009 stands at 2.27%, which is second to Veterinary and the gap is narrowing.
    • Years of inflation may have caught up to this segment as the spending increases in 2016 & 2017 were about half of the increase in 2015 and spending actually decreased in 2018.
    • 65.5% “real” growth since 2009. In 2017, this reached 84%. In 2018 the decrease in the amount of services was actually – -3.2%, undoubtedly due to a drop in frequency. 75+% real growth is probably a realistic goal.

In the past there have been no big negatives regarding this segment. It is largely driven by discretionary spending, so the consumers’ household income is a bigger factor in spending in this segment than any other. Years of relatively strong inflation did not retard growth. In 2017 increasing competition from a growing number of outlets offering pet services had an impact, as the inflation rate fell to 1.1% in 2017 – a near record low. In 2018 the inflation rate doubled to a more normal 2.4% but this time the consumer noticed. A drop in visit frequency produced the segment’s first decline in spending. It certainly demonstrates that even the Services segment is not immune to the consumers’ focus on price.

Here’s how the sales look on a graph:

2019 sales are projected to bounce back, increasing 3.3% to $6.1B. This is 47% below the growth rate since 2009 and except for 2018, the lowest ever. Prices through February of 2019 are 3.9% higher than the same period in 2018 so it appears that the inflation rate is growing. If this segment has developed more price sensitivity, this does not bode well for spending in 2019. However, if the many outlets offering services start to see a continued drop in visit frequency, this could cause another price war, but this time with increased spending.

Now, let’s take a closer look at the Veterinary Service Segment, which accounts for 25.0% of Pet Industry Sales.


  • Retail Growth
    • Sales are Up 50.4% since 2009
    • Annual growth rate 4.64%
  • Inflation is the problem
    • Annual avg CPI increase is 3.32% since 2009. 2017 had a record low, 2.2%. 2018 was up but still below average.
  • Adjusted Growth rate since 2009 is only 1.28%. However, it has been up sharply the last 2 years.
    • Price increases account for 72.5% of the total sales increase from 2009 to 2018.
  • “Real Sales”
    • Consumers actually bought less in the amount of Veterinary Services in 4 of the last 9 years. They just paid more.
    • Sales were basically stagnant from 2009 to 2016 – average annual growth rate 0.49%
    • Inflation fell to a record low in 2017 and stayed low in 2018. This produced a $2.1B increase, with 61% “real”.

Regular Veterinary visits are generally viewed as a “need” not a “want”. However, the high inflation rate over the years finally reached a point where Pet Parents, especially those with income pressure, started delaying or foregoing regular procedures entirely. They looked for substitutes in OTC medicines, supplements and treatments whenever possible. They also turned to “no appointment” clinic days offered by some non-pet retailers to get vaccinations and other procedures at radically discounted prices. Then the Veterinary Services inflation rate turned sharply downward in the 2nd quarter of 2016. It set a record low rate in 2017 and stayed low in 2018. Pet Parents responded. They increased the frequency of visits and sales in the Veterinary segment rose $2.1B over 2 years.

Here’s what it looks like:

Veterinary Sales are projected to increase 4.8% in 2019 to $18.98B. This percentage is down from the past 2 years. One key factor in the continued strong growth in this segment appears to be maintaining an inflation rate of 2.5% or less. Inflation turned up in the 4th quarter of 2018 to 2.8%. In 2019, the prices through February are 3.1% higher than the same period in 2018. This is definitely concerning, but the first quarter often has the highest inflation rate in this segment. We will just have to monitor the CPI and see what happens.

Now we’ll wrap it up with Total Pet.


  • Retail Sales in 2018 were ↑59.4% since 2009. Annual growth rate is 5.31%
  • Inflation: Only 12.4% since 2009; 1.31% annual CPI increase. 2018 returned to “normal” after a record low 0.4%
  • “Real” Sales are 74.5% of the Total increase since 2009 with an annual growth rate of 3.96%

Total Pet Retail numbers are a big reason why so many people are attracted to the industry. The retail numbers had been good across all segments, until 2018 when Services $ fell. As our analysis has shown, to get the “real” story you need to look a little deeper into “petflation” and the actual amount of goods and services being sold. In recent years the industry has been struggling with deflation in Food and Supplies and inflation in the Veterinary Segment. In 2018, Food prices were flat and the other segments turned up. As a result, the Total Pet inflation rate rose to a more “normal” level.

  • Supplies prices have deflated 5 times in 9 years. Commoditization and a lack of innovation have created extreme competitive pressure which deflates prices. 2018 brought strong inflation for this segment +1%. In the past, even a small increase in CPI slowed sales. In 2018 this was not the case.
  • After record -1.1% deflation, in 2018 Food prices essentially paused at that low level. Food has deflated 5 of the last 9 years. However, unlike Supplies, the Pet Food segment has been fueling growth with premium upgrades.
  • After years of strong inflation and flat “real” sales the Veterinary segment finally got the word. A record low 2.2% inflation rate in 2017 followed by 2.6% in 2018 produced $2.1B in increases and 61% was real. Keep it up!
  • Pet Services has had consistent growth and the number of outlets has radically increased. In 2017, due to this competitive pressure, the inflation rate fell to 1.1%. In 2018 inflation more than doubled and sales fell.

Here’s the graph of Total Pet Sales since 2009.

In 2019 Total Pet Sales are projected to increase 3.9% to $75.38B. Although 3.9% would be the lowest increase since 2009, it could be challenging to achieve. One of the key factors in achieving these numbers is reasonable inflation. Strong inflation began in all segments at the end of 2018 and continues into 2019. The CPI for Total Pet through February is 2.8% higher than the same period in 2018. That’s a tie for the highest rate since 2009. If this continues or grows, it could definitely depress sales.  A new premium food trend would be very welcome.

Remember: It’s up to industry participants to make it happen!








PETFLATION – 2018 Update; Prices turn up↑

Pricing – specifically the Consumer Price Index (CPI) is an important reflection of what is happing in the retail market. Manufacturers and retailers set prices but ultimately it is up to the consumer to determine if they are acceptable or not.

Since price is the primary factor in 75% of all consumer buying decisions, it definitely matters. However, it has a different impact on different industry segments.

After a record low inflation rate of 0.4% in 2017, Total Pet returned to a more “normal” 1.3% in 2018. As always, every segment contributed proportionally to the industry total. Here are the specifics:

  • Pet Food Prices were down slightly (-0.02%), virtually stable. This comes after the biggest drop ever in 2017 (-1.1%) and was the 5th annual decrease in the last 9 years.
  • Veterinary Prices went up 2.6%. This was a small uptick from 2.2% in 2017, which was the lowest in history.
  • Pet Services Prices increased 2.4%, more than double the 1.1% in 2017.
  • Pet Supplies prices increased a full 1%. This is by far the largest increase since 2009. The previous leader was +0.07% in 2016. Prices are still -4.3% below the 2009 peak.

Before we get drill down into the numbers, let’s look at the pricing history for the industry. The US BLS began measuring the CPI for all Pet Industry segments in 1997. Here is the cumulative Petflation through 2018.

Average Annual Inflation Rate

                  • Veterinary Services: +4.6%
                  • Non-Veterinary Services: +3.1%
                  • Total Pet: +2.6%
                  • Food and Treats: +2.0%
                  • Pets and Supplies: +0.6%

The first thing that you note is that the pricing behavior of the 2 Services segments is far removed from the Product segments, especially Supplies. There are some key waypoints:

  • 2010 – The Great Recession makes an impact on the industry. This is one year later than the overall market. Both Food and Supplies deflate. Services inflation hits a record low, but the Veterinary segment seems largely unaffected.
  • 2007 – The Melamine recall. Food Prices begin to radically increase as consumers demand made in the USA.
  • 2009 – Supplies prices reach their all-time high and begin a general decline.
  • 2013 – Food prices peak. The move to upgrade to Super Premium and the resulting price war begins in late 2014.
  • 2004>2005 – The likely start date for “humanization”. The movement to premium food begins and style becomes a factor in supplies, resulting in record inflation rates for this segment until the Great Recession hits.

The great recession was a traumatic event for consumer spending. In 2009 overall consumer spending fell for the first time since 1956. The impact on the Pet Industry was delayed until 2010 but it was significant. Pricing came to the forefront in 75% of all consumer buying decisions. Let’s take a closer look at the post-recession period.

This chart details the annual change in CPI since 2009 for the Total Industry and every industry segment.

In this more focused graph, it is readily apparent that the Great Recession significantly affected every segment, including Veterinary. We also see that every segment immediately bounced back. The 2 Service segments returned to inflation rates that were at or near pre-recession levels. Prices also increased in both of the product segments, but not nearly to pre-recession rates.

An interesting convergence occurred in 2012>2013. In 2012 inflation for both service segments moved sharply down while food prices increased. They ended up with virtually the same rate. They moved slightly apart in 2013 but this “agreement” between such divergent segments just doesn’t happen. During the same time frame, Supplies prices deflated very strongly.

That brings us to 2014>2016. Veterinary inflation increased and stabilized at about 3.6%. The Services CPI rate moved sharply up, then began to fade gradually. Pet Supplies deflation slowed in 2014 then turned to 2 consecutive years of inflation under 0.1%. In 2014 the movement to upgrade to Super Premium food began. In the resulting retail battle prices deflated for 2 years. There was a minor uptick in 2016, but not for long.

That brings us to 2017, which was a very significant year for the Pet Industry. Once again, all the segments moved in the same direction in terms of pricing – ↓Down. The service segments did not deflate but their inflation rate slowed significantly. Veterinary inflation set a new record low of 2.2%. The Services segment didn’t set a record, but they were close. Their rate of 1.1% was second only to the 0.9% in 2010 which came as a result of the great recession. After 2 years of minor inflation, Supplies prices deflated -0.4%. Not to be outdone by the Veterinary Segment, Pet Food prices fell – 1.1%, a new record decrease. These combined to produce a record low inflation rate for Total Pet of 0.4%. Perhaps it was just a coincidence, but the US BLS Expenditure reported a $9.8B (14.6%) increase in pet spending for the year.

In 2018 we also had an almost unified movement in pricing but this time it was ↑up. The Food segment CPI did not increase. It was essentially flat with a decrease of only -0.02%. The Veterinary inflation moved up to 2.6% from the record low 2.2%. This was still significantly below their recent average of 3.6%. The rate for Pet Services more than doubled from 1.1% to 2.4%. However, the biggest change came from Supplies. Their CPI increased by 1%. This may not seem like much, but prices have been generally deflating since the recession. They haven’t had an increase this large since 2009, in the pre-recession world. The tariffs imposed in 2018 are undoubtedly a factor. When you put all the segments together, Total Pet had a 1.3% increase. This seems like a reasonable post-recession inflation rate. How will spending be affected? We’ll have to wait and see. The biggest risk is for a reduction in purchase frequency, which could cost billions of $. If frequency stays at or near previous levels, then increased prices = increased $.

In this last section we will break the most recent years down even further, into quarters. In this chart, we will look at 2016 to 2018 and compare the CPI of each quarter to the same period in the previous year. The annual numbers tend to give the impression of a smooth flow. There is often considerable fluctuation.

We will follow the pricing journey over the most recent years by industry segment. First up is…

  • Veterinary – The annual rates show a significant slowing of inflation in 2017 but it regained about 1/3 of the lost ground in 2018. It turns out that the decline actually began in the second quarter of 2016, reaching the low point in the second quarter of 2017. The rate then turned up slightly but remained very stable for 15 months and finished with a significant lift in the final quarter of 2018.
  • Pet Services – Like Veterinary, the annual inflation rate in this segment fell in 2017 and bounced back in 2018. However, the changes were much more extreme with a 45% drop and a 120% rebound. The timing of the decline also began in the second quarter of 2016 and bottomed out in the second quarter of 2017. This low inflation rate essentially remained constant for 12 months then inflation “exploded” upward in the second quarter of 2018 with a 160% increase to 2.9%. It slowed in the third quarter but then increased to 3.9% in the fourth quarter. This segment hasn’t seen an inflation rate this high since 2011.
  • Pet Food – There was a minor pricing increase in 2016 which was driven totally by a big lift in the third quarter. Prices then turned down slightly, but the drop increased markedly in the second quarter of 2017 and maintained this deflation rate for 12 months. The lower price level was stable from April through September of 2018. A huge price increase in the fourth quarter essentially erased the deflation for the year and the 2018 prices remained near the level of 2017.
  • Pet Supplies – This segment had miniscule inflation in 2016. Prices turned down in 2017 but then had a huge lift (for Supplies) in 2018. The upturn in prices in 2016 was driven solely by a big lift in the fourth quarter, which is prime buying season. Prices turned slightly down in the first quarter of 2017 and maintained deflation through the first quarter of 2018. Prices then turned up in the second quarter of 2018 and inflation increased strongly, reaching a level of 2.3% by the fourth quarter. Tariffs were undoubtedly a factor in this rise.
  • Total Pet – Inflation was a relatively normal 1.4% in 2016 then began to slow in the 1st quarter of 2017. It stayed down through the 1st quarter of 2018, bottoming out at 0.0% in the 4th quarter of 2017. This produced a record low rate of 0.4% for 2017. Then, in the second quarter of 2018, driven primarily by big lifts in Supplies and Services, prices turned sharply up. There was another big lift in the fourth quarter (2.3%) as prices in all segments increased. The result was a 1.3% increase for the year, virtually identical to 2016.

The post-recession consumer is very price sensitive, but it is impossible to predict the impact of the pricing lift on 2018 $. Pet Food prices remained essentially unchanged. Veterinary increased but the big lifts came in Supplies and Services. These are the two most discretionary segments. We’ll see if consumers reduce their purchase frequency.

By the way, the inflation continues to grow. Here are numbers for Jan-Feb 2019 vs the first quarter of 2018.

  • Non-Veterinary Services: +3.93%
  • Pets and Supplies: +3.90%
  • Veterinary: +3.01%
  • Food and Treats: +1.42%
  • Total Pet: +2.72




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

The first six chapters of this Pet Spending Demographics report have been very detailed, data driven and intense. We looked at the industry as a whole and each of the individual Industry segments separately. In 2017 we saw movement toward more balanced spending in terms of Income and Higher Education and a definite spending migration to lower populated areas in both Rural and Suburban settings. There was another change in consumer behavior that we should note.  In 2015 and again in 2016, we saw how shifts in spending behavior in one major category, Pet Food, can negatively (2015) or positively (2016) impact the spending in others. Consumers, in effect, traded $. In 2017, this was not a major factor. Price deflation in Food and Supplies in conjunction with extraordinarily low inflation in the Services segments, made 2017 a year of “Consumer Value” in the Pet Industry. Remember, Value is the #1 driver in Consumer spending behavior. Consumers recognized the opportunity and took advantage of it by spending $9.84B (14.6%) more on their Pet Children. It was a year for the record books.

In the individual sections of the report 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 chapter we are going to put the segments side by side to make the parallels and differences 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 eleven 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 chapters 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 2017 share of spending for each segment and the evolution over the past 25 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 – +377%; annual growth rate of 6.45%. This will help put our comparisons into better perspective.

Food: 40.3%; Up from 39.4%

Supplies: 24.1%; Up from 23.5%

Veterinary: 26.8%; Down from 26.9%

Services: 8.8%; Down from 10.2%

The Food segment reached the 40% level again. In 2015 it was 43.5%, the highest level since 1998. Supplies also gained ground while both Services segments lost share. The Veterinary segment didn’t keep pace with the Products increase. The 10.2% share for Services in 2016 was the highest since 2006, but 2017 brought some turmoil and a drop in share.

As we look at the migration, both Services segments have maintained a relatively stable share. The big change was in products. 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 recent move to more premium foods has allowed the Food Segment to regain a little ground.

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 the Service 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 4 situations, to a low of 55%. All these relate to Food, which is yet more evidence that pet parenting is demographically widespread. Even the low point is within 8% of our target and 92% 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 84+% market share in every Segment. Minority groups account for 31.5% of CUs but only 10 to 16% of spending in any category. Factors: Lower incomes for Hispanics and African Americans and lower Pet ownership in Asians and African Americans. This group loss share in Veterinary and Supplies, with Supplies replacing Food at the bottom. Food and Services gained share and increased performance.
  • 2+ People in CU – 2 is the magic number in pet ownership. The performance is remarkably even across all segments. Last year share and performance peaked with Food, then moved down through Supplies and Services. Veterinary took over the top spot in Share and Performance. All performances but Services increased because Singles had a bad year. This group is still under 120% because spending tends to go down in larger CU’s, especially 5+.
  • Homeowners – Homeownership is very important in Pet Ownership and subsequently in all Pet Spending. It also increases with age. Supplies had a big increase in share and performance due to a spending lift by older Americans. Food also gained slightly for the same reason. The Services segments were basically unchanged.
  • Over $50K Income INCOME MATTERS MOST IN PET SPENDING! Pet Food still has the “lowest” high performance. Pet Ownership remains very common across lower incomes. The importance of income just increases as spending in industry segments becomes more discretionary – like Supplies and Services, or higher priced – like Veterinary Services. This group had gains in share and performance in all segments but Supplies. However, the gains, especially in Food, were largely fueled by middle and even lower middle-income groups.
  • All Wage & Salary Earners – This group had the lowest performance of any group because Income varies widely and Self-employed and Retirees are significant contributors to Pet Spending. The group made gains in all but the Supplies Segment, which were driven by increases from lower income workers and a spending drop from the Self-employed.

  • 35 to 64 yrs – Includes the 3 highest income segments. In 2016, share and performance were almost even across all segments. A big lift in Food and Supplies spending by the 55>64 yr olds drove up those segments and performance exceeded 120% for the first time. The 45>54 yr olds pushed an increase in Veterinary. However, a big lift in Services spending by the 65+ group combined with a decrease from 45>64 yr olds dropped performance below 120%.
  • Associates Degree or Higher – Higher education often correlates with higher income. We see spending performance very similar to Income but even more pronounced. In 2017 the importance of Education was dialed back a little in the Services segments but remained stable in Supplies. The big change was in Food where the advantage almost vanished. This came as a result of a big spending lift from one segment – HS Grads w/some College.
  • Married Couples – Being married makes a huge difference in spending in all segments. A minimum performance of 126% says it all. In 2017 their high performance became virtually even across all segments as they dialed back on Services but gained over 4 share points in Supplies.
  • Everyone Works – Income is important, but the # of Earners became markedly less important in 2017 with a big drop in share and performance across the board. This was driven by a big year from 1 Earner, 2+ CUs and Retirees.
  • All Suburban – Most Pet $ are spent here but the share and performance of this group has become more volatile. In 2016 they loss ground due to a big across the board spending lift by Central City. In 2017, they held their place in Supplies and Veterinary but lost share to Rural Areas in Food and Services. Food Performance fell below 100%.

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 2016. We will divide the categories into related groups. First, those related to Income.

  • Income – Highest Income = Highest Performance. Lowest Income = Lowest performance. Income matters and it matters most in the nonfood segments. The performance and disparity are astronomical in the service segments. In most cases the winning performance is dropping, but so is the losing one. Gains are being made in the mid-range.
  • # Earners – More earners = more income. Once again, income is even more important to the nonfood segments. However, 1 Earner, 2+ CUs had a great year. They won and even improved on the winning performance in 2016.
  • Occupation – Mgrs & Professionals moved to the top in income and performance in 2 segments and Total Pet. Blue-Collar was the unexpected winner in Food, which is becoming more balanced. The Blue-Collar group also improved their performance in other segments, even in a losing cause.

Next are demographics of which we have no control – Age 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 the lowest percentage of pet ownership of any group.
  • Age – The 55>64 group led in Food & Total. The highest income group, 45>54 won Supplies and took over Veterinary from the 55>64 group. The 65>74 yr olds don’t have a high income but do have an increasing need for Services.

  • Education – Winning and losing has been closely tied to more and less Education, except for 2017, in Pet Food.
  • CU Composition – It was the year for Married Couples Only who turned their focus to their Pet Children. Although you can’t see it here directly, Single parents had a good year and got off the bottom in 2 segments and Total Pet.
  • CU Size– It was absolutely the year of “2”. However, the woes of “1” continued.

  • Housing – Homeowners w/Mortgage and Renters are the perennial winner and loser.
  • Area– The winners are all areas <2500 population. Rural had a huge year in Food. The Services segment also had a surprise winner. Services Spending usually skews more urban. Central City dialed spending back after a great 2016.
  • Region – The West as usual has the most wins. Spending in the South “headed South”.

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. Additionally, while the difference between winners and losers in Total Pet is virtually unchanged from 2016, it grew larger in the Products segments and shrank in the Services segments. This is somewhat unexpected.

  • Food – The high performance by some unexpected winners significantly drove up performance while the losing numbers were stable, so the disparity grew.
  • Supplies – In Supplies the lift was more universal so the relative performance remained stable. A slight lift (<5%) by the winners combined with a slight decline by the losers produced a larger difference.
  • Veterinary – No big changes but the winners and losers moved a little closer together.
  • Services – The turmoil in the market shows. The big users saved money and the small users were attracted to spend. The net result was they moved a little closer. However, the difference is still huge.

This chart shows the number of new winners/losers.

Total Pet had few changes, especially in winners. Total Pet is a sum of the segments. This can mitigate or even cancel out extreme differences in segments. Always look below the surface.

  • Pet Food had a major lift driven by unusual sources. It shows in their number of new winners.
  • Pet Supplies had an almost universal increase. This produces very little change in top or bottom performance.
  • The Veterinary spending increase also came from many of the usual groups.
  • The Services segment was in a negative turmoil which resulted in a lot of changes, especially at the top.

Now, let’s look at the Demographic Segments with the Biggest Changes in $. We’ll truly see some differences between the Industry Segments. Only 9 of 110 segments are repeats. We have color highlighted differences from Total Pet and…

  • Boxed w/green = Winner/Loser same as 2016
  • ↕ = Flipped from 1st/Last in 2016 or vice versa

First, the Income related categories.

  • IncomeWinners: Looks like $100K+ was a key. The $40>69K win reflects the “blue-collar wave” in Food Spending.
    • Losers: <$40K lost 4 of 5. Income matters. The $150>199K loss is may be tied to the big drop by Self-employed.
  • # Earners – Winners – 1 Earner, 2+ CUs. In 2017 the number of Earners became much less important.
    • Losers: From No Earner to 3+ Earners – a mixed bag. Of note, 3 losing CUs were singles.
  • Occupation – The Blue-collar wave also increased spending enough in other segments to win Total Pet. We see the result of the decrease in CUs and spending by Self-employed. Mgrs & Professionals moved to the top in 3 segments.

Now the Age and Racial/Ethnic Categories

  • Racial Ethnic – The biggest, most impactful spending group, White, non-Hispanics made a strong comeback. African Americans, due to a combination of low pet ownership and low income are often the losers. This year, the high income (also low pet ownership) Asians didn’t lose any segment but apparently were consistent low spenders.
  • Age – The 55>64-yr old Boomers came back in a big way. They cut back (or got a better price) on Services but finished 1st or second in every other segment. The 75+ group won Services but lost Veterinary. The <25 group lost 2 segments and total but in 2 of 3 cases, including Total Pet Spending, they actually had a spending increase.

Now, here are more Demographic Categories in which the consumers can make choices.

  • Education – College mattered less in Food but not other segments. Also, the HS Grads w/some College spent $1.17B more in other segments. This parallels the Blue-Collar pattern. Assoc. Degree flipped after a big year in 2016.
  • CU Comp. – In 2017, it was Married Couples only or at least Adults Only. Not a good year for younger families.
  • CU Size – It’s Simple: 2 was the number in 2017. Overall 1 came in last but still spent more in Total Pet than last year.

  • Housing – Homeowners are back on top, although most winners have paid off their mortgage. This reflects the fact that much of the increase was driven by older CUs. Renters were strong in 2016 due to urbanization. Not in 2017.
  • Area – Central City ruled in 2016 but in 2017 we saw a spending movement to areas <2500 pop., Rural or Urban. The larger Suburbs are also back on top in both Supplies and Veterinary. Only Services saw a decrease in any area.
  • Region – The Midwest either won or lost. Also, it was a good year for the Northeast. The West or South are the usual winners, but not in 2017. However, like the Area category, every region spent more in all but Services.

I hope that this Visual Comparison helped you to get a “satellite view” of Pet Industry Spending in 2017. Please refer back to the earlier chapters to get more details.

There is another situation that we should address. 2017 was a spectacular year for the Pet Industry, with big spending increases in every segment but Services. There were so many contributors that in each individual chapter we recognized 6 segments that didn’t win but still performed so well that they deserved Honorable Mention. I reviewed that list again and came up with segments that won Honorable Mention in more than one segment. Here are the “SUPER HMs”.

  • Retirees – Honorable Mention (HM) in 3 segments and Total – Need we say more?
  • $40>69K – They had Honorable Mention in 2 segments and Total, but in Pet Food, they won for biggest increase.
  • Single Parents – With financial challenges, they are usually at or near the bottom. Not in 2017 – 3 HM awards.
  • A/O 2+ Adult Only CUs – 2 HMs, including Total so they performed well in more than just Food.
  • 5+ People CUs – Even with large CUs and multiple children, Consumers still spend Pet $. 2 HMs, including Total Pet.
  • HS Grad w/some College – They won the Food Segment and Total Pet plus had 2 segment HMs – quite a year!

Although there are numerous individual changes, I saw these trends of note:

  1. Value – There was great value in every segment and consumers responded. The 2017 increase was actually greater than Total Pet Spending in 1984. Because of the value, consumers essentially stopped trading $ between segments.
  2. Boomers Bounce Back – The lift was driven by older age groups, especially the 55>64 yr olds.
  3. Premium Penetration – Pet Parents want what’s best for their pet children. Premium Food became more accessible.
  4. Pet Parenting Increase – A likely increase in Pet Parents in the same low/middle income CUs that upgraded in Food.
  5. More balanced spending – in Income, Occupation, # of earners and Education. The groups in the middle and even some lower groups stepped up across numerous segments. Income still matters but the “bar” got a little lower.
  6. De-urbanization – 2016 was the year of Pet spending Urbanization. In 2017 the situation switched around. The best performance and biggest lifts came from low population areas- <2500. More space. More room for Pets and More $pending!

And Finally…..
















2017 Pet Services Spending was $6.77B- Where did it come from…?

Now we will look at the last and smallest segment – Pet Services, the only Segment with a spending decrease in 2017. Spending totaled  $6.77B which was down, -$0.07B (-1.0%). The drop was slight but a big change for a segment that has grown consistently since 2011. Services Spending is the most discretionary of any segment so higher income is definitely the dominant factor in consumer spending.

We have categorized 2017 as a year of Value. This was true for Services too. The number of outlets offering services increased radically. This competitive market produced a lot of deals as retailers vied for the Consumers’ $. While the CPI didn’t deflate in 2017, Services had the lowest inflation rate since 2010.  Consumers in all income ranges seek value. They bought a little more often but paid a little less. As expected, this caused some turmoil. Let’s look a little deeper.

Let’s start by identifying the groups most responsible for the bulk of Services spending in 2017 and the $0.07B decrease. 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 four categories – income, education, age and occupation. The performance level should also be noted as 7 of 10 groups have a performance level above 120%. This compares to 7 for Veterinary, 6 for Supplies and only 5 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 6 matching groups.

  1. Race/Ethnic – White, not Hispanic (87.9%) up from 86.8%.This big group accounts for the vast majority of spending in every segment, especially Services. Their performance improved from 124.3% to 128.3% and they moved up to #6 in terms of importance in Services Spending. Minorities are 31.5% of CUs but only generate 12.1% of Services $.
  2. Housing – Homeowners (86.4%) up from 85.7%. Homeownership is a major factor in pet ownership and spending in all industry segments. The Homeowners’ share of Pet Services spending is 86.4% which is the highest of any industry segment. However, even with 137.4% performance, homeownership is only in 4th place in terms of importance for increased Pet Services spending. Their slight share gain came only from an increase in homeowning CUs.
  3. # in CU – 2+ people (79.8%) up from 79.0% The share of market for 2+ CU’s is very close for all segments but lowest in Services. Their performance of 111.9% is down from 112.4% and tied for last. Essentially, they were flat for the year. 2/3-person CUs spent more, but 4+ CUs cancelled the gain. The overall share gain came from a drop by singles.
  4. Occupation – “I’m the Boss” (72.2%) up from 69.2% – The “ I’m the Boss” group consists of Mgrs & Professionals, Self-employed and retired CU’s. This “bossy” group has a large and growing market share and a performance rating that increased from 138% to 141.3%. This ranks them 3rd in terms of importance. These increases were driven by a strong year from the Mgrs & Professionals segment.
  5. Income – Over $70K (71.2%) up from 66.7% The gain in share primarily came from a big increase from the $100>149K group along with a big drop from $30>69K. These indicate big changes in usage. The over $150K CUs also spent 6% less but they probably just got a better price. Services doesn’t break the 100% performance barrier until Income exceeds $100K and then it skyrockets up. This group’s performance rating is 185.2%, up from 180.2% and absolutely shows that CU income is the single most important factor in increased Pet Services Spending.
  6. Education – College Grads (68.8%) down from 69.8% Income generally increases with education. Services spending moves up strongly with each increasing level of education. This is why we shifted the group up to College Grads. Performance of 161.9% was down from 171.7% but a college education is still the 2nd most important factor.
  7. # Earners – “Everyone Works” (64.9%) down from (67.4%) In this group, all adults in the CU are employed. Income is important so a relatively high market share is expected. However, their performance fell to 113.3% from 120.1% and they dropped out of the 120% club. The drops were a due to a strong year by 1 Earner, 2+ CUs and retirees.
  8. CU Composition – Married Couples (64.5%) down from 66.0%. Married couples are a big share of $ and have 120+% performance in all segments. Their performance fell to 130.3% from 135.8% but they stayed in 5th place in terms of importance to Services spending. The decreases were primarily due to a big lift from Unmarried 2+ Adult CUs along with drop in spending by the Married, Oldest Child <6 group.
  9. Age – 45>74 (64.0%) down from 69.0%. Their performance also dropped significantly from 133.7% to 124.5% and their ranking fell from 6th to 7th. The decreases were primarily due to the 45>64 age range spending significantly less, but in 2 ways. The entire group spent 13% less $ for every service. However, the 45>54 yr olds increased their frequency by 5% while the 55>64 yr olds decreased theirs by 2%. Much of this drop for the whole age range was due to value shopping. Another factor was increased spending at both ends. The <25 and 75+ groups both spent more.
  10. Area – Suburban (62.2%) up from 58.7% in share, while performance increased from 107.0% to 111.9%. The lift was due to a big spending increase by small Suburban areas, under 2500, along with a decrease by Central Cities. We should also note that Rural spending was up 28%, mirroring their performance in other segments.

We changed 4 of the spending groups for Services to better target the biggest spenders. Higher income is even more important to Services spending than it is to Veterinary, where we changed 3 groups. Both Services and Veterinary have 7 groups with performance over 120%. However, the performance levels in Services spending in categories related to income are markedly higher. This reinforces an even  bigger spending disparity between the segments in Services.

Now, we’ll look at 2017’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 2016, the most of any segment. 5 of them are in the best category. The only surprise is the 65>74 group. All the other winners have high incomes. As we drill deeper into the data, we will see some similarities with other Industry segments, but each Segment is unique. Changes from 2016 are “boxed”. We should note:

  • Income is even more important to Pet Services. While the 398.8% Performance by the $200K> group is less than last year’s 426%, it is 39% higher than Veterinary and 123% higher than Food.
  • # Earners – 2 Earners – Last year it was 3+ Earners. Both are high income and the only segments in the category with 100+% performance. The winner reflects the outstanding year by 2-person CUs, especially Married Couple Only.
  • Age – 65>74 – This group certainly has an increasing need for Pet Services. However, their income is low. Most are now Baby Boomers, who traditionally spend more on their pets. This group spends 1.1% of their total CU expenditures on their pets. This is second only to the 55>64-yr old group. Only age groups between 45 and 74 have 100+% performance in Services spending.
  • Occupation – Mgrs & Professionals– They took the Income top spot from Self-employed so this switch makes sense.
  • CU Composition Married Couple Only replaced last year’s surprise winner, Married Couples with an oldest child under 6. In 2017 the only 100+% performing CUs with kids are Married, with the oldest child over 6.
  • Area Suburbs <2500 – This area spends a lot of money on their pets, but they truly had a great year in 2017. Amazingly enough, their 148% performance in Pet Services was the lowest score that they had in any segment.
  • Race/Ethnic – It’s not only about income. Asian Americans have the highest income of any Racial/Ethnic group, but they finished last in Services spending performance. This is because they have a low percentage of pet ownership.

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

Pet Services Spending was down $0.07B. This was the first decrease since 2010. However, that drop came as a reaction to the great recession. In 2017, it was a different story. The growing popularity of Pet Services has resulted in a big increase in the number of outlets where they are available. This competitive environment caused turbulence as Retailers vied for the Consumers’ $. The turbulence is very evident in this section. There were no repeat winners or losers from 2016 and 11 of 22 segments actually switched their position from first to last or vice versa. Food came in second, with 9 switches but the other service segment – Veterinary, only had 4. Quite a contrast. Here are the specifics:

  • Education – In 2017, last year’s winner and loser switched positions
    • Winner – BA/BS Degree – Services: $2.47B; Up $0.43B (+21.2%)
      • 2016: Adv. College Degree
    • Loser – Adv. College Degree – Services: $2.18B; Down $0.55B (-20.0%)
      • 2016: BA/BS Degree
    • Comment – College Grads spent the most $ so it is not surprising that they have the biggest changes. What is interesting is that < College Grads led by HS Grads w/some College spent more, while College grads spent less.
  • Occupation – Mgrs & Professionals, the highest income group, had the only significant increase.
    • Winner – Mgrs & Professionals – Services: $2.83B; Up $0.43B (+18.1%)
      • 2016: Retired
    • Loser – Self-employed – Services: $0.65B; Down $0.30B (-31.8%)
      • 2016: Mgrs & Professionals
    • Comment – The white-collar Tech, Sales, Clerical group and Retirees spent a bit more while Blue-Collar workers and Self-employed spent less.
  • Region – Once again the winner and loser flipped from last year.
    • Winner – Midwest – Services: $1.50B; Up $0.41B (+38.4%)
      • 2016: West
    • Loser – West – Services: $1.94B; Down $0.43B (-18.0%)
      • 2016: Midwest
    • Comment – The Northeast also had a small increase.
  • Income – 2017 was a year of mixed messages and tumult.
    • Winner – $100 to $149K – Services: $1.50B; Up $0.37B (+32.3%)
      • 2016: $30 to $49
    • Loser – $30 to $39K – Services: $0.35B; Down $0.16B (-31.4%)
      • 2016: $70 to $99K
    • Comment – Try to follow this: Under $30K was up, +0.5%. $30>50K was down a lot, -33%. The $50>70K group was down a little, -4%. Then the $70>99K group turned it around, +6%. The $100>149K segment took off, up 32%. Time for a final turnaround. The highest income, over $150K group spent 6% less. Value shopping, cutbacks and increased frequency. 2017 had it all.
  • Area Type – Suburbs <2500 led the way but Rural areas also spent more.
    • Winner – Suburbs <2500 – Services: $1.01B; Up $0.28B (+37.9%)
      • 2016: Central City
    • Loser – Central City – Services: $2.20B; Down $0.34B (-13.5%)
      • 2016: Suburbs 2500>
    • Comment – After 2 winning years, Central City flipped to last. Suburbs 2500> has had 2 consecutive down years.
  • Housing – After 2 years, Homeowners w/Mtge, the largest segment, returned to the top spot.
    • Winner – Homeowner w/Mtge – Services: $2.25B; Up $0.27B (+7.4%)
      • 2016: Homeowner w/o Mtge
    • Loser – Homeowner w/o Mtge – Services: $0.98B; Down $0.28B (-12.4%)
      • 2016: Renter
    • Comment – Homeowners w/o Mtge flipped from 1st to last. Central Cities also spent less.
  • Age – In a big surprise, the 75+ group had the biggest $ increase.
    • Winner – 75+ yrs – Services: $0.39B; Up $0.15B (+63.5%)
      • 2016: 55>64yrs
    • Loser – 55>64 yrs – Services: $1.61B; Down $0.28B (-14.8%)
      • 2016: 35>44 yrs
    • Comment: The 55>64-year olds flipped from 1st to last. Their drop, combined with a decrease of -0.17B by the 45>54-year olds created a situation that couldn’t be overcome by the other age groups. In addition to the 75+ year olds, the 65>74, 35>44 and <25 age groups all posted spending increases.
  • # in CU – As we have noted, it was a great year for 2 Person CUs, with a big increase in every segment.
    • Winner – 2 People – Services: $2.94B; Up $0.14B (+5.2%)
      • 2016: 4 Person
    • Loser – 4 People – Services: $0.85B; Down $0.19B (-18.2%)
      • 2016: 1 Person
    • Comment: In 2017, 4 People CUs flipped from 1st to last. 1, 4 and 5+ person CUs spent less on Services. Only 2 or 3 people CUs spent more.
  • CU Composition – An Unusual winner – Unmarried, 2+ Adult CUs. Singles were down so you definitely needed 2.
    • Winner – Unmarried, 2+ Adults – Services: $0.87B; Up $0.14B (+18.6%)
      • 2016: Married Couple Only
    • Loser – Married, Oldest Child <6 – Services: $0.24B; Down $0.19B (-44.4%)
      • 2016: Single
    • Comment – Married Couples Only had the second largest increase. In terms of CUs with Children, all married couples with an oldest child over 6 and even Single Parents spent slightly more on Services.
  • # Earners – 1 Earner, 2+ CUs was the clear winner.
    • Winner – 1 Earner, 2+ CU – Services: $1.33B; Up $0.12B (+10.1%)
      • 2016: 2 Earners
    • Loser – 3 Earners – Services: $0.60B; Down $0.22B (-26.5%)
      • 2016: 1 Earner, Single
    • Comment – 2 was the magic number. All CUs with 2 or more people and 2 or less earners spent more.
  • Race/Ethnic – African Americans had a big percentage increase, but they only have 4.5% of total $.
    • Winner – African American – Services: $0.30B; Up $0.07B (+29.2%)
      • 2016: White, Not Hispanic
    • Loser – Hispanic – Services: $0.42B; Down $0.08B (-16.6%)
      • 2016: African American
    • Comment – White, Non-Hispanics also spent more, but only 0.3%. Asians spent $0.07B less (-44%).

We’ve now seen the winners and losers in terms of increase and decrease in Services Spending $ for 11 Demographic Categories. 2017 was a tumultuous year. The winning increase in each category averaged +$0.25B (+26%) while the biggest decreases averaged -$0.27B (-23%).  That certainly shows a “mixed bag”. We didn’t see any major trends. Income became a little less important, at least in term of the number of Earners. The oldest groups had a strong year. 2 Person CUs, married or unmarried, performed well. We also saw a spending move towards less populated areas, like other segments. The $0.07B decrease was the first since 2010, but even in a decline there are some segments that performed well but didn’t win an award. They deserve….

Honorable Mention

In 2017, Pet Services spending fell for the first time in 7 years. The drop was only 1% and it wasn’t pervasive across the marketplace. 55 of 99 segments did spend less, but 44 spent more so there was some good news. The segments in the graph reflect some minor movement towards more equalized spending in some categories – education, age and even income. Services also mirrored a trend we saw in other industry segments. Spending tended to migrate towards less populated areas, both Rural and Urban.


The Services segment has usually been “above” changes in other segments. Since 2010 prices have steadily increased but so has Spending. 2017 saw a change. 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.

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 4 categories specifically to accommodate this difference in behavior and to better target where most of the $ are coming from. Just how important is income? 38.4% of CU’s have an income over $70K and account for 71.2% of Services Spending. This is a performance rating of 185.2% – the highest rating earned by any big group in any category in any industry segment.

Performance is an important measurement. Let’s drill deeper into the performance of the big spenders in Pet Services. We identified 5 demographic categories with high performing large groups. (There were 5 for Veterinary and 3 for Food)



Higher Education


CU Composition

The biggest producers in these groups are all prime candidates to produce increased Services $ and all are categories in which the consumer can exercise some degree of control. The Racial/Ethnic and Age Categories also have high performance numbers but the consumer has no control over their inclusion in these groups. All 5 of these groups have a performance above 130% and are at their highest level in the Service Segment. This indicates a huge disparity between the best and worst performing segments in the category. This disparity is greater in Services than in any other Industry segment. This does make it easier for industry participants to more effectively target their best customers and identify those demographic segments most in need of improvement. However, some of these may need a lot of help.

The drop in spending caused definite turmoil in this income driven segment. There were 8 changes in the best and worst performing individual segments, but the biggest changes showed up in $. All winners and losers in spending $ were different from 2016, but 7 winners became losers, while 4 losers became winners. There were some surprising winners – 1 Earner- 2+CUs, 2+ Unmarried Adults, African Americans and 75+ year olds. There were no major trends, but we saw:

  1. A spending gain by middle income
  2. # Earners became less important
  3. < College Grads spent more
  4. Spending increase in low population areas

At Last – The “Ultimate” Pet Services Spending Consumer Unit consists of 2 people – a married couple, living alone. They are White, but not of Hispanic origin. At least one of them has an advanced College Degree. They just turned 65 but both of them continue to work, in managerial positions. They’re doing well with an income over $200K. They live in a smaller suburb, near a big city in the Western U.S. and are still paying off the mortgage on their home.

Some Final Services Data: # of CUs – ↑ 0.3%; Spending Frequency – ↑ 0.3%; $ Spent – ↓ 1.6%; Net = Total $ ↓1.0%



2017 Veterinary Spending was $20.67B- Where did it come from…?

Now we will move to the Service Segments – first up is Veterinary Services. We’ll see 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.

We have noted that 2017 was different. It was a year of Value. This was also true in the Veterinary segment. While prices did not deflate, inflation hit an all time record low rate. Consumers reacted by spending $2.56B (+14.1%) more on Veterinary Services. The best news was that half of the increase came from an increase in frequency of visits, +7.2%.

Let’s see which groups were most responsible for the bulk of Veterinary spending in 2017 and the $2.56B 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). The differences from the product segments are immediately apparent. In order to better target the bulk of the spending we have altered the groups in three categories – income, occupation & age. Another big difference is the performance – 7 of 10 groups perform above 120%. This down from 8 in 2016 but is more than Supplies – 6 and Food – 5. This means that these big spenders are truly performing well but it also signals that there is a far larger 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 7 matching categories.

  1. Race/Ethnic – White, not Hispanic (90.0%) down from (92.0%) This group accounts for the vast majority of spending in every segment., but a 90% share is extraordinary. The 131.4% performance rating ranks #3 in terms of importance in Veterinary Spending demographics and reflects the spending disparity. Hispanics, African Americans and Asians account for 31.5% of U.S. CU’s, but they only spend 10% of Vet $. Asians and African Americans have significantly a lower percentage of pet ownership and African Americans have the lowest average CU income.
  2. # in CU – 2+ people (84.1%) up from (79.4%) They had a big gain in share and their performance increased from 112.9% to 118.0%. The performance increase moved them up in importance from last to 8th. The gain in share was driven by increased spending by 2 and 3-person CUs while the performance increase came from a spending drop by Singles. This widened the disparity between segments.
  3. Housing – Homeowners (82.5%) up from (81.7%) Homeownership is a major factor in pet ownership and spending in all industry segments. In terms of importance to increased Veterinary spending, the 131.2% performance rating keeps homeownership in 4th place. Both the share of market and performance increased slightly in 2017. This was driven by a big increase in spending by Homeowners without a Motgage. 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 or Higher (73.8) down from (74.1%) Income generally increases with education. It is also important in understanding the need for regular Veterinary care. Market share was down slightly as was performance, which dropped from 143.2% to 137.4%. However, it is still the 2nd most important factor in Vet spending. The drops were primarily due to a 27.6% increase from HS Grads w/some College – largest in the category.
  5. Age – 45>74 (66.7%) up from (63.3%) Although the younger groups have made Veterinary Spending more of a priority, in 2017 a slight drop by the 35>44 yr olds combined with a lift from the 65>74 group resulted in a change in age range for the big group. This along with a big spending lift from the 45>64 age range generated the increase in share. The performance had an even bigger increase, going from 121.0% to 129.8%. This moved the importance of Age in increased Veterinary Spending up from 7th place to 5th.
  6. Occupation – I’m the Boss (65.9%) up from (64.4%) –“I’m the Boss” includes Mgrs & Professionals, Self-employed and Retirees and has a bigger market share than all wage and salary earners. In 2017, all of the “regular” workers spent more but Mgrs/Professional and Retirees drove the increase. The share gain was minimal due to a spending drop from Self-employed. Even with 129.0% performance. They fell from 5th to 6th in importance.
  7. # Earners – “Everyone Works” (65.9%) down from (69.2%) In this group, all adults in the CU are employed. Even with a loss, the market share of Veterinary $ is the largest share for this group in any segment. Performance fell to 115.0% from 120.1%, which dropped them out of the 120% club. The drop came as a result of a huge increase from 1 Earner, 2+ CUs, with some help from No Earner, 2+ CUs.
  8. Income – Over $70K (65.0%) up from (63.0%) 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. Although the $50>69K had a 27.3% increase, the Over $70K produced 79% of the increase ($2B). The 169.1% performance clearly shows that higher income is THE most important factor in increased Vet spending.
  9. CU Composition – Married Couples (63.8%) up from (61.3%) Married couples have a big market share and 120+% performance in all segments. They gained share due to a big increase from Couples only and a drop from singles. Other categories did better so a performance of 128.9% caused them to fall from 6th to 7th place in importance.
  10. Area – Suburban (62.9%) up from (62.3%) Suburban CU’s are the biggest spenders in every segment. They gained in share– taken from Central Cities, but fell a little in performance to 113.1%. due to a 41% increase from Rural Areas.

We changed 3 of the spending groups for Veterinary to better target the biggest spenders. 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 the # of Earners became less important and spending skewed a little older.

Now, we’ll look at 2017’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 5 that are different from 2016. This is more than Supplies (3) but less than Food (7). However, 4 of the 5 changes were in just two categories. This indicates a greater stability in the overall market spending performance. The changes from 2016 are “boxed”. We should note:

  • Income – The 286.0% Performance by the $200K> group is down from last year’s 325.3% but is still very high. The low inflation rate may be closing the disparity gap a little, at least in the middle-income groups.
  • Occupation – Mgrs & Professionals took over as the highest income occupation from the Self-employed. It makes sense that they would become the best performers in Veterinary Spending. Blue-Collar workers, with the lowest income of any working group, remain at the bottom with their performance staying in the 60+% range.
  • Age – The 45>54-year olds, the group with the highest income, are back on top. They just edged out the 54>64-year olds for the win. The worst performing spot switched from the youngest Americans, <25, to the oldest, 75+.
  • CU Composition – It was a strong year for Married Couples Only in all segments, but they had their biggest % increase in Veterinary, +30.6%. Singles had the opposite kind of year and replaced Single Parents on the bottom.
  • # in CU –In 2017, the performance of 2 Person CU’s increased from 130.5% to 139.4%. The gap between them and Singles increased from 61% to 80%. Only 2 and 3 Person CUs perform above 100%.
  • Region – Northeast won again – 3 straight years and passed 120%. The West is the only other region to exceed 100%

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

2017’s increase of $2.6B built on the $1B lift in 2016. While 16 winners and losers changed, this was much less than in any other segment. 4 segments flipped from 1st to last or vice versa, once again an industry low. With the exception of Self-employed, there were no real surprises. In 4 categories, all segments spent more. Last year there were none. This appears to be a sign of more stable growth. Here are the specifics:

  • # in CU – 2 and 3 Person CUs drove the spending lift.
    • Winner – 2 People – Veterinary: $9.85B; Up $2.04B (+26.1%)
      • 2016: 4 People
    • Loser – Single – Veterinary: $3.29B; Down $0.45B (-11.9%)
      • 2016: 3 People
    • Comment: 4 Person CUs also spent more. Only 5+ CUs and Singles spent less.
  • Race/Ethnic – With a 90% share of total Veterinary $, any % increase by White, non-Hispanics means big $.
    • Winner – White, Not Hispanic – Veterinary: $18.60B; Up $1.93B (+11.6%)
      • 2016: White, Not Hispanic
    • Loser – African American – Veterinary: $0.52B; Up $0.16B (+44.5%)
      • 2016: African Americans
    • Comment – All groups in this category spent more on Veterinary Services. While White, non-Hispanics drove the $, the minority groups drove the percentage increase. Combined they spent 43.1% more.
  • CU Composition – Married Couples Only had a big year in spending, including Veterinary.
    • Winner – Married, Couple Only – Veterinary: $7.34B; Up $1.72B (+30.6%)
      • 2016: Married, Oldest Child 6>17
    • Loser – Single – Veterinary: $3.29B; Down $0.45B (-11.9%)
      • 2016: Single
    • Comment – It was definitely a mixed spending bag in this category. In addition to Singles, Married Couples with an oldest child over 18 or under 6 spent less. Those with an oldest child between 6 and 17 spent more along with single parents. However, you can make a case that 2017 was a year focused on “Adults only”. CU’s with 2+ Adults, married and unmarried spent $2.75B more on Veterinary Services.
  • Occupation – Mgrs. & Professionals continue to lead the way.
    • Winner – Mgrs. & Professionals– Veterinary: $7.98B; Up $1.38B (+20.8%)
      • 2016: Mgrs & Professionals
    • Loser – Self-Employed – Veterinary: $1.47B; Down $0.44B (-31.8%)
      • 2016: Retired
    • Comment – Only Self-Employed spent less and about one third of their decrease came as a result of fewer CUs. Retirees spent $1B more and even Blue-Collar workers had a 10% increase.
  • Area Type – All Areas spent more but the larger Suburbs, over 2500 pop., were the $ leader.
    • Winner – Suburbs >2500 – Veterinary: $9.84B; Up $1.24B (+14.4%)
      • 2016: Central City
    • Loser – Central City – Veterinary: $5.69B; Up $0.27B (+4.9%)
      • 2016: Rural
    • Comment – Rural CUs spent 41% more. In fact, areas under 2500 pop. had a combined increase of $1B.
  • Housing – All Segments had increased spending, but Homeowners w/o a Mtge won the race.
    • Winner – Homeowner w/o Mtge – Veterinary: $6.29B; Up $1.24B (+24.5%)
      • 2016: Renter
    • Loser – Renter – Veterinary: $3.62B; Up $0.31B (+9.3%)
      • 2016: Homeowner w/Mtge
    • Comment – The big lift in spending by Retirees was a major factor in the increase by Homeowners w/o Mtge. Homeowners w/Mtge had a $1B increase after a -$0.9B drop in 2016. Renters flipped to last but still spent more.
  • Education – Those with a BA/BS Degree led the way and are up $1.58B since 2015.
    • Winner – BA/BS Degree – Veterinary: $7.15B; Up $1.22B (+20.6%)
      • 2016: Associates Degree
    • Loser – Associates Degree – Veterinary: $2.21B; Down $0.08B (-3.4%)
      • 2016: Adv. College Degree
    • Comment – Associates Degree flipped from first to last but the drop was minor. Only one other segment had a decrease, < HS Grads. HS Grads w/some College had the biggest percentage increase, up 27.6%.
  • # Earners – 2 Earner CUs narrowly edged out 1 Earner, 2+ CUs for the win.
    • Winner – 2 Earners – Veterinary: $8.79B; Up $1.18B (+24.1%)
      • 2016: 2 Earners
    • Loser – 1 Earner, Single – Veterinary: $2.02B; Down $0.39B (-16.2%)
      • 2016: 1 Earner, 2+ CU
    • Comment – The 1 Earners, 2+ CU group finished second but had a great year, up $1.13B (+42.9%). The No Earner, 2+ CUs were also up an impressive 24.1%. It wasn’t a good year for singles. Single CUs with 1 earner or No earner were the only segments with decreased spending. This data shows why the number of Earners in a CU mattered less in 2017 and why the “Everyone Works” group fell out of the 120% performance club for Veterinary spending.
  • Age – In 2017, the highest income group, 45 to 54 yr. olds had the biggest increase.
    • Winner – 45>54 yrs – Veterinary: $5.23B; Up $1.15B (+28.3%)
      • 2016: 35>44 yrs
    • Loser – 75+ yrs – Veterinary: $0.80B;Down $0.15B (-15.7%)
      • 2016: 75+ yrs
    • Comment: The Veterinary spending increase was widespread as the 35>44 group had the only other minor decrease, -3%. The Under 35 age range had a second consecutive increase. However, overall Veterinary spending “spun” a little older as the 45>74-year olds were up $2.17B, 84.9% of the overall increase.
  • Income – In 2017, $100 to $149K was the winner. This victory usually belongs to an even higher income group.
    • Winner – $100 to $149K – Veterinary: $4.32B; Up $0.93B (+27.4%)
      • 2016: $200K>
    • Loser – $30 to $39K – Veterinary: $1.30B; Down $0.24B (-15.4%)
      • 2016: $40 to $49K
    • Comment – The only other group to spend less was $200K+, a bit of a surprise, to say the least.
  • Region – The Northeast flipped from last to first and all groups had an increase.
    • Winner – Northeast – Veterinary: $4.66B; Up $0.87B (+22.9%)
      • 2016: West
    • Loser – Midwest – Veterinary: $4.20B; Up $0.37B (+9.7%)
      • 2016: Northeast
    • Comment – The South was a close second, up $0.85B.

We’ve now seen the winners and losers in terms of increase/decrease in Veterinary Spending $ for 11 Demographic Categories. 2017 had strong growth in Veterinary spending, with fewer surprises than we saw in the products segments. Most of the winners were expected. However, while doing our analysis we saw indications that the growth was becoming somewhat more widespread. First and foremost of these, was the fact that 4 categories had no segments that spent less. However, there were also “hidden” segments that didn’t win but made a significant contribution to a successful 2017. These groups don’t win an award, but they certainly deserve….


These segments all earned recognition. It is especially great to see the big increase from Single Parents. The other segments all testify to a deeper penetration of the $2.56B lift in Veterinary spending in many categories. In fact, only 18 of 99 segments spent less on Veterinary Services. That means that 82% spent more. We also have suggested that 1 Earner, 2+ CUs, HS Grads w/some College and the $40>69K income group were likely candidates to have increased Pet Ownership. An Increase in Veterinary spending supports that idea.


In 2015 and 2016 we saw a flip flop in Veterinary Spending – down the first year then up the next, as consumers traded $ with the Pet Food segment. In 2017 we had a unique situation in the industry. It was a year of value in all segments and the consumers took advantage of the situation. In the Veterinary segment we saw record low inflation. Consumers increased both the $ spent and visit frequency. This produced a $2.56B (14.1%) increase.

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 – 41.0%

$30>50K – 62.5%

$50>70K – 80.9%

$70>99K – 111.7%

$100>149K – 164.5%

$150>199K – 218.3%

$200K> – 286.0%

The “break even” point (100%) occurs at $70K+. CU’s over $70K (38.4%) account for 65% of Veterinary $. In 2017 this group grew in numbers and gained share. Performance fell minimally from 170% to 169% due to a strong performance by the $40>69K group but there were no big changes like we saw in Food.

The performance of other big spending groups is also very important in the Veterinary segment. We identified seven demographic categories with high performing large groups. (There were only 6 for Supplies and 5 for Food) .  Consumers have no control over Race/Ethnicity or Age but in addition to Income, Education, Homeownership, Occupation 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.

We saw very little change in these groups. There were 3 changes of note. The “Everyone Works” group lost market share and dropped out of the 120% club due to a strong year from 1 Earner – 2+ CUs and Retirees. The 2+ CU group had increased performance and disparity due to a strong year for 2 & 3 person CU’s and bad performance by singles. Veterinary spending also skewed older in 2017 so the big group changed from 35>64 to 45>74.

2017 was a strong year for the Veterinary segment and relatively balanced. 82% of all segments increased spending and in 4 categories all segments spent more. However, the biggest increases came from expected sources – 2 Person CUs, Married Couple Only, Mgrs & Professionals, White, Non-Hispanics, Homeowners w/Mtge. There were some good performances from groups that showed that gains were also being made in the middle ground. 1 Earner- 2+CUs, HS Grads w/some College, $40>69K and less populated areas (<2500) spent more on Veterinary Services. Our analysis of Food and Supplies suggested increased pet ownership in these groups. The Veterinary data supports that premise.

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 an advanced College Degree. Both of them work in Managerial positions 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.