The APPA is tracking a rapidly-growing industry fueled by the nation’s love of pets.
Written by Bob Vetere, President of APPADuring the past decade America’s love of pets has grown exponentially. They have become more than just animals living with us, they’re considered family. With this increased status comes a commitment to care for them. Dirty tennis balls and old dog bones have taken a backseat to higher-quality products and services that enhance our pets’ quality of life. Our pets love us either way but pet owners now feel good knowing they can optimize the health and well-being of their favorite companion, a reward within itself.
A burgeoning industry
As pets play an increasingly important role in our lives, it comes as no surprise the care and love pet owners give them is reflected in the overall health of the pet industry. In the United States, if tracked as a single entity, the pet industry would be the eighth largest retail segment according to the US Census Bureau statistics, ranking ahead of toys, jewelry and even candy and alcohol.
Even more remarkable is the industry’s performance during the past year in light of a challenged economy. For most segments of the industry the first half of 2008 was very promising, driven largely by the humanization of pets, or the idea that pet products and services are an extension of what people purchase and use themselves. The marketplace showed moderate growth as this trend continued to have a positive impact on pet owners and their purchasing habits. By mid-year most industry segments were performing at or above projected spending levels.
Then the economy collapsed with the woes of Wall Street. However, the resulting impact on the pet industry reveals a promising resiliency even through the toughest of times. With the final spending figures for 2008 released and early indicators for 2009 interpreted, the pet industry has fared better than most. While no industry is truly recession-proof, the pet industry seems recession-resistant. One popular newspaper referred to the industry as “the antidote to the recession.”
Maintaining health
Each year, the American Pet Product Association (APPA) reports on the state of the pet industry, releasing total expenditures among various pet spending categories within the US, such as food, supplies/OTC medications, veterinary care and other general services. In 2008, total spending on pets topped $43 billion, an increase over 2007 by about 4.9 percent.
In 2008, the food segment grew to about $16.8 billion or almost 3.7 percent over 2007. Earlier that year, the increase was even greater as some consumers began to move to more expensive premium brands. However, the latter part of 2008 revealed a shift as a number of pet owners feeling the economic pinch changed their food choices to more value-priced selections. With 2009 continuing to feel these effects, a modest 3.6 percent growth is expected in the pet food segment.
The supplies/OTC medications segment felt the pinch the most, growing only about 2 percent over 2007 to $10 billion. As the second half of 2008 unfolded, people were still buying supplies for Spike and Rover but looked again for more value priced items than earlier in the year. APPA sees this trend continuing for all of 2009. Other retail areas feeling the pinch are boutique and high-end pet products, as people cut back on luxury non-essentials.
On the other hand, two areas that experienced greater-than-anticipated growth were routine veterinary services and general services such as pet sitting and boarding. Routine vet services have become more important as the pet population ages along with the rest of us. The APPA National Pet Owners Survey shows the average age of companion dogs has risen to almost seven years old. Owners are more interested in preventative measures to ensure good health, while potentially avoiding some of the higher-end procedures needed as pets age. Spending on routine vet services increased almost 10 percent over 2007 to $11.1 billion. This same level of growth is expected for 2009 as routine care is clearly a primary concern for pet owners.
Additional general pet services have also experienced growth, perhaps as a result of the number of families maintaining two incomes in order to meet their financial needs. Pets are left home alone for extended periods of time, resulting in the increased need for pet sitters, day cares, pet walkers and boarding services. With this increased need, we saw growth in 2008 for the general services sector at 6.7 percent or $3.2 billion. As 2009 struggles to regain its economic footing, APPA predicts this need for services continuing and is estimating a growth of about 6.2 percent.
Overall, the APPA data shows an increase in total pet spending in 2008 of more than 4.9 percent compared to 2007. While that percentage is somewhat less than in recent years, it’s a good growth number – the greatest amount in non-traditional sectors – when compared to many other industries. We are looking for another 4.9 percent growth in 2009 but again in some different ways than the recent past.
Committed to our pets
During these tough economic times, pet owners more than ever seem to be turning to their pets to bring comfort and joy to their daily lives. Many recently published opinion polls even reflect pet owners’ intentions to deprive themselves of some non-essential items before they cut back on pet spending.
Make no mistake: pet owners will continue to provide for their pets even during financial hardship. They may make short-term decisions to cut back on spending but they will still treat their pets as an extended member of the family. America’s love of pets will help this industry become one of the first to benefit as the economy slowly recovers. In the last year, the pet industry has remained strong during times of change, stress and setbacks. As pet ownership and pet quality of life continue to rise, so will the pet industry.