Pet Industry Distributors Association Analyzes Pet Industry Spending
Total pet spending in the U.S. is now at $63.38 billion.
The Pet Industry Distributors Association (PIDA) released a report that analyzed the four pet industry segments of the U.S. Bureau of Labor Statistics’ Consumer Expenditure Survey—food, services, supplies and veterinary—covering the period from July 1, 2014, to June 30, 2015. Total pet spending in the U.S. is now at $63.38 billion.
After strong growth in 2014, spending in the first half of 2015 was down, with retailer pricing likely being a factor. Compared to the previous half years, from July to December 2014, spending was up $3.52 billion; from January to June 2015, it fell by $0.94 billion.
From January to June of 2015, pet supply prices were up versus a year ago, and sales fell by $1 billion. Pet food prices were up slightly for the entire 12 months, which countered the recent deflation and contributed to the increase. Pet services saw their growth slow in the first half of 2015 as inflation reached 3.2 percent. Veterinary services had a precipitous, inflation-driven drop in virtually all age and income demographic groups. Only the over 65 and under 25 age groups and the under $30K income group showed increases. Note that the over 65 and under 25 age groups make up a big portion of the under $30K group.
Total pet spending increased $2.58 billion in the 12 months ending June 30, 2015, versus the same period a year earlier. High-income households led the charge, with those making more than $100K generating 137 percent of the total pet spending increase. The remaining 79 percent of U.S. households were down a total of $.95 billion. Households earning $50-$80K had a $0.4 billion increase in pet food, but spending fell in every other segment, including a $2.9 billion drop in veterinary.
The age 65 to 74 group, primarily made up of baby boomers, spent 1.29 percent of total household expenditures on their pets and had increased spending in every segment. The 45 to 54 age group, meanwhile, has the highest income, but its spending decreased slightly in every segment except pet services, which was up $0.2 billion.
Self-employed individuals are the winners in the occupation category, with a spending increase in every segment but pet supplies, which was down $0.2 billion. Most of the group’s increase was due to a $1.2 billion increase in veterinary spending. Managers and professionals spent the least. They increased spending in three segments, including a $1 billion increase in pet food, but this was not enough to overcome a $3.7 billion drop in veterinary spending.
The white (non Hispanic) group generated 192 percent of the industry’s total increase but had a $0.3 billion drop in spending on pet supplies. African-Americans had increased spending in pet supplies and services but decreases in pet food and especially veterinary spending. Hispanic and Asian groups also were down in total pet spending by $1 billion.
In the education category, the group with less than a college degree had the largest total spending increase, including a $0.1 billion increase in veterinary spending. The group’s spending on pet supplies was down $0.2 billion. The advanced degree group was the only education level with a decrease in total pet spending, and it was only a dip of $0.05 billion.
Households of two people were the big winner, with increases in everything but pet services. Every household size of two or more people had an increase in total pet spending. One-person household spending was driven down by decreases in pet supplies and veterinary.
Pet owners in the Midwest had a big increase in pet food and services expenditures; they were flat in veterinary spending and down $0.5 billion in pet supplies spending. Pet owners in the West had increases in three segments, but a $2.3 billion drop in veterinary spending made them the losers in this category.
Rural areas with a population of less than 2,500 and not within a metropolitan area showed the greatest growth in the “area type” category, with increases in every segment but pet supplies, which fell $0.2 billion. Spending for urban areas outside the central city is up $1 billion, despite a $1.1 billion decrease in veterinary spending. A decrease of $1.1 billion in veterinary spending made the central city category slightly negative.
Homeowners without a mortgage are down slightly in pet supplies and services spending—a total decrease of $0.06 billion. Pet food and veterinary spending increased by $3.6 billion. Homeowners with mortgages are the loser in this category—up $1.9 billion in pet food and services but down $0.1 billion in pet supplies and down $3.1 billion in veterinary. Renters were up $0.4 billion overall.
Without huge gains in the pet food category, this would be a completely different report, PIDA stated. Pet food was the positive driver across almost all demographic segments.
Some of the pet industry spending winners and losers were the “usual suspects.” The high income and white (non Hispanic) groups showed big gains. Central city and singles lost ground. Among the winners were the 65 to 74 age group, two-person households, married couple only and homeowners without a mortgage. These four groups reflect many demographic characteristics of older baby boomer households. The under 25 age group also had a good showing; people in this group are more likely to be in a two-person household. Unusual losers were homeowners with mortgages, and managers and professionals.
John Gibbons has worked in the consumer products industry for 40 years; for the last 27 years, he has worked in the pet industry. Gibbons has been the vice president of sales for TFH/Nylabone, director of sales for Aspen Pet Products (which now is part of Petmate), the pet division sales manager for Coastal Pet Products and the vice president of sales and marketing for North America for Paragon Pet Products. He now shares his expertise with the pet industry as a consultant and industry analyst. Visit his website at petbusinessprofessor.com.