U.S. Consumers spent $7.8 Trillion dollars in 2017, up $383B (+5.2%) from 2017. However, the pet industry had an even better year. Americans spent $77.13B, 0.99% of total expenditures, on our companion animals. Increases in the three largest industry segments drove overall Pet Spending up $9.84B (+14.6%) in 2017. U.S. Consumers are heavily driven by value and in 2017 they found it almost “across the board” in all industry segments. Even the Services segment, which had a small decrease, had an increase in purchase frequency. Pet Parents just paid less. We’ll continue to monitor the situation to see if this spending behavior continues or evolves.
In this report we will look at Pet Spending for undoubtedly today’s most “in demand” demographic measurement – by Generation. Baby Boomers have driven the industry. Are they starting to fade? Are Millennials stepping up? What about Generation X? Using data from the US BLS Consumer Expenditure Survey we will look for the answers.
We’ll start by defining the generations and looking at their share of U.S Consumer Units (CUs are basically Households)
- Millennials: Born 1981 to 1999
- In 2017, Age 18 to 36
- Gen X: Born 1965 to 1980
- In 2017, Age 37 to 52
- Baby Boomers: Born 1946 to 1964
- In 2017, Age 53 to 71
- Silent Generation: Born 1928 to 1945
- In 2017, Age 72 to 89
- Greatest Generation: Born before 1928
- In 2017, Age 90+
- Baby Boomers are still the largest number of CU’s at 44.7M and 34.4% of the total but they are starting to lose some ground. In fact, all 4 of the older generations have fewer CU’s than in 2016.
- The 2 Oldest Generations will continue to lose CUs primarily due to death or movement to permanent care facilities. However, it appears that the Gen Xers are reducing their CU count by coming together in their “middle age” years.
- Millennials have the largest number of individuals, but they rank only third in the number of CU’s. However, this number is rapidly growing as a significant number gained financial independence in 2017.
Now let’s look at some key CU Characteristics.
The most significant change is that Millennials are “coming of age” with increases in all areas. The oldest Americans are fading in all measurements but homeownership, which registered an increase from all groups but the Gen Xers.
- CU Size – CU’s with 2+ people account for 71.3% of all U.S. CU’s and 82.5% of pet spending (up from 80.5%). In 2017 Millennials exceeded the National Average for the first time. However, CU size, with all the related responsibilities, still peaks with the Gen Xers and then starts dropping. The Boomers are the last to average over 2 people per CU.
- # Children < 18 – 28.6% of U.S. CU’s have children and they generate 28.1% of Pet Spending. For the first time, CU’s with children aren’t earning their share. However, the story is more complex. In the past Single parents spent the least and the pet spending of married couples increased as their children got older, which often correlated with increased household income. In 2017, married couples with an oldest child under 6 fell to the bottom in Pet Spending. In 2017, there were 3 changes in the number of children per CU. The Silent Generation fell to essentially 0. The Gen Xers dropped from 1.2 to 1.1 and the Millennials increased from 0.8 to 0.9. This means that the drop in pet spending by households with the oldest child under 6 was likely driven by Millennial parents.
- # Earners – Pet spending is also tied to the number of earners in a CU. 2 Earner CUs annually spend 27.9% more on their pets than 1 Earner CUs. As the chart shows, the “earning” is being done in America by Gen Xers, Millennials and Boomers. In 2017, Gen Xers remained steady at 1.7, while Boomers fell 0.1 and Millennials increased by 0.1
- Homeownership – Owning and controlling your own space has always been a major factor in increased Pet Ownership and spending. Currently, homeownership is 62.9%, up from 62.4%, and accounts for 81.4% of Total Pet Spending, up from 79.8%. All groups but Gen Xers had an increase in homeownership and homeowners accounted for 92.5% of the total Pet Spending increase.
- Millennials are the most common renters in society, but their level of Homeownership increased from 33% to 35%. However, it is still only 55% of the national average and about 2/3 of the rate of Gen Xers and Boomers when they were the same age.
- Gen Xers remain near the national average and the rate of Homeownership continues to grow as we age.
Next, we’ll compare the Generations to the National Avg.:
In Income, Total CU Spending, Total Pet Spending and the Pet Share of Total CU Spending
- CU National Avg: Income – $73,573;
- Total CU Spending – $60,060;
- Total Pet Spending – $593.63;
- Pet Share of Total CU Spending – 0.99%
- Income – The 37>52 year old Gen Xers are the leaders and will soon occupy all the slots in the peak earning years – 45 to 54. The Boomers earn about 17% less and this difference will increase as they age. The income of the Silent Generation is about half of the Boomers as retirement becomes almost universal in this 72+ year old group. With an influx of new CU’s, Millennials’ income fell 6% and is now 22% less than the Boomers and only 65% of the Gen Xers.
- Total Spending – The Gen Xers make the most and spend the most but it’s not out of line with their income. Boomers also spend more than the average but currently their income can 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 income. The Millennials’ spending has become less in line with their income. They are not deficit spending yet, but their income fell 6% while spending increased by 5.5%
- Pet Spending – The Boomers are by far the Pet Spending leaders, but the Gen Xers also exceed the National average per CU. Millennials’ Pet Spending fell in relation to the national average, but they still moved into 3rd place overall.
- Pet Spending Share of Total Spending – In 2017 the Pet Spending share almost reached 1%. It was driven up by a substantial increase from the Boomers with help from the younger groups, who have shown consistent growth. At the same time, the 2 oldest generations continue their decline. Although, the Silent generation is still ahead of the Millennials. The Boomers remain the runaway leaders and the only group to exceed the 1% level for Pet Spending.
Now, let’s look at Total Pet Spending by Generation in terms of market share as well as the actual annual $ spent for 2014 through 2017. The 2017 numbers are boxed in red (decrease) or green (increase) to note the change from 2016.
- Boomers continue to dominate Pet Spending and their share is back up to 46.8% after falling to 44.0% in 2016.
- There is a definite age-related pattern which is readily apparent in the bar graph. Spending in the oldest groups is relatively low and falling. In contrast, the two youngest groups are showing consistent year after year growth. That leaves the Boomers in the middle. They have the biggest share and are also the most likely group to have a strong reaction to trends. With their tremendous buying power, this can cause major spending swings in the industry.
- In 2017, the Boomers led the way to a record spending year, but they got strong support from Gen Xers and Millennials. Combined they were up $10.5B, but each group was up over 10% with an increase in excess of $2B.
- Boomers – Ave CU spent $804.94 (+137.82);
- 2017 Total Pet spending = $36.09B, Up $6.48B (+20.7%)
- 2014>2017: Up $6.62B; In 2017, they had a big lift in all but the services segment.
- Gen X – Ave CU spent $616.37 (+$74.42);
- 2017 Total Pet Spending = $21.34B, Up $2.0B (+10.4%)
- 2014>2017: Up $3.58B; Their annual Pet spending growth since 2014 has been the most consistent of any group.
- Millennials – Ave CU spent $413.14 (+$36.54);
- 2017 Total Pet Spending = $13.49B, Up $2.05B (+17.9%)
- 2014>2017: Up $3.8B; The Millennials had a big lift in spending in 2014 but Spending grew only slightly in 2015. Since then, their total pet spending has grown by $3.76B. Plus, it has become much more evenly balanced across industry segments as they have become more conscious of all facets of pet parenting.
- Silent Gen. – Ave CU spent $368.80 (-$28.27);
- 2017 Total Pet Spending = $6.07B, Down $0.60B (-9.0%)
- 2014>2017: Down $0.8B; They still spend a relatively high amount on their pets, but age is becoming a factor.
- Greatest Gen.– Ave CU spent $102.91 (-$2.73);
- 2017 Total Pet Spending= $0.14B, Down $0.09B (-41.2%)
- 2014>2017: Down $0.39B; After a lifelong commitment to their pets, their Pet Parenting days are fading away.
The Boomers are back in a big way and they brought their younger spending partners to help!
- For Boomers and the younger groups, the up and down, trendy nature of Pet Food is readily apparent, but the swings in spending are more pronounced for the Boomers. In the older generations, pet ownership is fading.
- The Millennials’ may be the food trend pioneers so their performance in any given year may be a harbinger of the performance of Gen Xers and Boomers for the following year. If so, Food Spending should be up slightly in 2018.
- Boomers – Ave CU spent $348.92 (+$74.26);
- 2017 Pet Food spending = $11.92B, Up $3.79B (+31.8%)
- 2014>2017: Up $5.97B – Great prices pushed the food upgrade trend broadly across America.
- Gen X – Ave CU spent $224.52 (+33.17);
- 2017 Pet Food spending = $7.71B, Up $0.85B (+12.4%)
- 2014>2017: Up $0.72B Although they are the highest income group, they still recognize and act on value.
- Millennials – Ave CU spent $154.40 (+$1.39);
- 2017 Pet Food Spending $5.05B, Up $0.25B (+5.2%)
- 2014>2017: Up $0.77B They are the only group with increases in both 2016 and 2017, but 80% of the 2017 increase came from an increase in the number of CU’s.
- Silent Generation – Ave CU spent $156.63 (-$10.38);
- 2017 Pet Food spending = $2.57B, Down $0.214B (-7.6%)
- 2014>2017: Down $0.31B; From 2014>2016, their pattern is very similar to that of the Gen Xers, but in 2017 it appears that they are starting to fade.
- Greatest Gen. – Ave CU spent $51.70 (-$9.56);
- 2017 Pet Food spending= $0.06B, Down $0.07B (-51.1%)
- 2014>2017: Down $0.12B; A 50% drop in spending was primarily due to a 42% drop in CU’s.
Pet Food Spending is driven by trends. Perhaps the young, connected Millennials are the first to react and “buy into” each new “advance” in Pet Food so their behavior may predict the future of the segment. Now, let’s look at Supplies Spending.
- Boomers still have the largest share, but the younger groups have their biggest “presence” in Supplies. It is the only segment in which Gen Xers and Millennials together account for over half of the spending – 51.9%.
- Baby Boomers – Ave CU spent $167.52 (+$26.17);
- 2017 Pet Supplies spending = $7.49B, Up $1.11B (+17.5%)
- 2014>2017: Up $0.82B; They started their supplies comeback in 2016 but it truly accelerated in 2017.
- Gen X – Ave CU spent $171.74 (+$24.10);
- 2017 Pet Supplies spending = $5.97B, Up $0.72B (+13.7%)
- 2014>2017: Up $0.49B; Gen Xers perform best in Supplies. Like the Boomers, they surpassed their 2014 record.
- Millennials – Ave CU spent $112.34 (+$17.67);
- 2017 Pet Supplies spending = $3.66B, Up $0.85B (+30.4%)
- 2014>2016: Up $0.63B; Supplies are again Millennials’ best performing segment. In 2016 they cut spending to help fund increases in Food and Veterinary. In 2017 they came back incredibly strong to set a new all time high.
- Silent Generation – Ave CU spent $86.92 (+6.57);
- 2017 Pet Supplies spending = $1.43B, Up $0.08B (+5.6%)
- 2014>2017: Down $0.27B; Pattern is similar to Boomers & Gen X, but not as pronounced and with lower results.
- Greatest Gen. – Ave CU spent $14.78 (-$5.13);
- 2017 Pet Supplies spending = $0.02B, Down $0.03B (-54.2%)
- 2014>2017: Down $0.10B; A big drop in CU’s and Supplies have a lower priority for these oldest Pet Parents.
Most groups cut back on Supplies spending in 2015 due to a combination of rising prices and an attempt to compensate for the cost of upgrading their pet food. Supplies started their comeback in 2016 when Consumers value shopped for food and spent some of their saved money on Supplies. Then Supply prices dropped in 2017 and basically everyone under 90 years old recognized the value and spent more on Supplies – $2.74B more!
Next, we’ll turn our attention to the Service Segments.
First, Non-Veterinary Pet Services
- Boomers have the biggest share, but again the combined Gen X/Millennial share is larger in a discretionary segment.
- Baby Boomers – Ave CU spent $65.52 (-$5.65);
- 2017 Pet Services spending = $2.93B, Down $0.28B (-8.7%)
- 2014>2017: Up $0.25B; Services are becoming more appealing with age but Boomers have learned to value shop.
- Gen X – Ave CU spent $54.68 (+$6.16);
- 2017 Pet Services spending = $1.90B, Up $0.176B (+10.2%)
- 2014>2017: Up $0.31B; Significantly increased the frequency but got Services at a good price.
- Millennials – Ave CU spent $36.75 (-$1.21);
- 2017 Pet Services spending = $1.20B, Up $0.07B (+6.4%)
- 2014>2017: Up $0.49B; Services are growing in importance. They are the only group with an increase every year.
- Silent Generation – Ave CU spent $44.58 (+$0.17);
- 2017 Pet Services spending = $0.73B, Down $0.015B (-2.0%)
- 2014>2017: Up $0.07B; They definitely have a growing need. The decrease came from a drop in number of CU’s.
- Greatest Gen. – Ave CU spent $3.64 (-$7.00);
- 2017 Pet Services spending = $0.005B, Down $0.015B (-78.9%)
- 2014>2017: Down $0.03B; A big drop in the number of CU’s and in pet parents.
This segment has always found a way to grow every year – until 2017. The small drop in spending was caused by a combination of factors. An extremely competitive environment created deals so even with increased frequency, consumers paid less. Another factor is age. Services are often of greatest benefit to older pet parents. In 2017 the number of “over 53” CU’s fell by 1.7M. Small increases by the Millennials and Gen Xers couldn’t make up the difference.
Now, Veterinary Services
- Boomers continue to dominate this industry segment – their share is 73% more than the #2, Gen Xers.
- Of particular interest is the consistently growing commitment of the younger groups to this Pet Parenting responsibility. The combined veterinary spending of Millennials and Gen Xers has increased $4B (+74%) since 2014.
- Boomers – Ave CU spent $222.98 (+43.04);
- 2017 Veterinary spending= $9.97B, Up $1.853B (+22.8%)
- 2014>2017: Down $0.41B; Although not yet back to their 2014 level, they staged a major comeback in 2017.
- Gen X – Ave CU spent $165.43 (+$10.99);
- 2017 Veterinary spending= $5.75B, Up $0.26B (+4.7%)
- 2014>2017: Up $2.05B; Since 2016, their Veterinary spending has exceeded the CU Average. They are a solid #2.
- Millennials – Ave CU spent $109.65 (+$18.69);
- 2017 Veterinary Spending $3.58B, Up $0.88B (+32.5%)
- 2014>2017: Up $1.91B; Their CU spending is up 74% since 2014. Veterinary has become a much bigger priority.
- Silent Generation – Ave CU spent $80.67 (-$24.63);
- 2017 Veterinary spending $1.33B, Down $0.45B (-25.2%)
- 2014>2017: Down $0.30B; Money is always a factor. Their Veterinary spending decline continues.
- Greatest Generation– Ave CU spent $32.79 (+$18.96);
- 2017 Veterinary spending= $0.05B, Up $0.015B (+46.4%)
- 2014>2017: Down $0.15B; Food and Veterinary are still the biggest priorities of these oldest pet parents.
Gen Xers and Millennials have consistently increased their commitment to Veterinary Services. In 2014, their share of Veterinary Spending was 30%. It is now 45.1% – a 50% increase. This is a big, fundamental change in spending behavior.
One last chart to compare the share of spending to the share of total CU’s for the 4 largest generations.
- Silent Generation Performance – Total: 62.1%;
- Food: 65.2%; Supplies: 60.8%; Services: 85.6%; Veterinary: 50.7%
- This group ranges in age from 72 to 89. Pet Parenting is more challenging after age 75. (note: They perform best in Services) The desire and the commitment to their pets is still there. This is evident in the fact that 0.83% of their total CU spending is on pets, which is higher than Millennials. They don’t earn their share but they’re trying.
- Baby Boomers Performance–Total: 136.1%;
- Food: 146.9%; Supplies: 117.2 %; Services 125.9%; Veterinary: 140.2%
- Boomers led the way in building the industry and are still the “top dogs”. They earn their share and in fact, are the spending leader in every segment. At some point, this will begin to fade with age. However, that is still years off. After a dip in 2016, due to value shopping for food, they came “Booming Back” – +$6.5B in 2017.
- Gen X Performance – Total: 103.4%;
- Food: 92.6%; Supplies: 120.2%; Services: 105.0%; Veterinary: 104.0%
- The Gen Xers are next in line to Boomers in age and performance. In 2017, they “earned their share” as their Total Pet Spending performance again exceeded 100%. They have increased their Total Pet Spending every year since 2014. During this time, their spending has become more diverse and their performance has improved. They now earn their share in every area, but Food and it is close at 92.6%. They range in age from 37 to 52 so they are just entering the peak earning years. Expect their commitment and their pet spending to continue to grow.
- Millennials Performance – Total: 69.7%;
- Food: 64.7%; Supplies: 78.6%; Services: 70.6%; Veterinary: 69.0%
- Like the Gen Xers, Millennials have increased their pet spending every year since 2014. However, their future as the Pet Parenting spending leaders is still a long way off. They need increased income and a more settled family and home environment. Right now, their spending is becoming more evenly spread across segments and their performance just passed the Silent Generation but is still 30% below Gen X and about half that of the Boomers. They are educated and well connected. Indications are that they may lead the way in adopting new trends, especially in food. Their progress is good news, but in reality, their leadership is still more than a decade away.
Gen Xers and Millennials are ultimately the future of the industry, so everything should be done to encourage them and to make their Pet Parenting experience easier and better. However, by any spending measurement, the “here and now” of the Pet Industry is still the Baby Boomers.