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2020 Total Pet Spending: Where Did $83.74B Come From?


According to John Gibbons, the Pet Business Professor and president of A GPS for Pet Businesses, total pet spending in the U.S. was $83.74 billion in 2020, a $5.31 billion (6.8 percent) increase from 2019. These figures and others in this report are calculated from data in the annual Consumer Expenditure Survey conducted by the U.S. Bureau of Labor Statistics. While 2020 was a strong year for the industry, when you look at each segment the pandemic caused considerable turmoil. Pet food spending spiked as specific groups binge bought early in the year. The high prices of supplies and the fact that many categories are discretionary, rather than necessary, caused their spending to continue falling. Services was hurt the most as many outlets were subject to pandemic related restrictions and closures. Veterinary services was deemed the other necessary pet expenditure by consumers so their spending surged.

The 2020 Pet Spending certainly deserves a closer look.

The first question is, “Who is spending most of the $83+ billion?” There are of course multiple answers. We will look at Total Pet Spending in terms of 10 demographic categories. In each category we will identify the group that is responsible for most of the overall spending. Our goal was to find demographic segments in each category that account for 60 percent or more of the total. To get the finalists, we started with the biggest spending segment then bundled related groups until we reached at or near 60 percent.

Knowing the specific group within each demographic category that was responsible for generating the bulk of total pet spending is the first step in our analysis. Next, we will drill even deeper to show the best and worst performing demographic segments/groups and finally, the segments that generated the biggest dollar gains or losses in 2020.

In the chart that follows, the demographic categories are ranked by Total Pet market share from highest to lowest. We also included their share of total CU’s (Financially Independent Consumer Units) and their performance rating. Performance is their share of market vs. their share of CU’s. This is an important number, not just for measuring the impact of a particular demographic group, but also in measuring the importance of the whole demographic category in Spending. All are large groups with a high market share. A performance score of 120+ percent means that this demographic is extremely important in generating increased Pet Spending. Gibbons has highlighted the five groups with 120+% performance.

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The only group change from 2019 is that Rural was added to Suburban as the bigger Suburbs lost ground in 2020. There were changes in the numbers and rankings and only five made the 120+ percent club, down from six in 2019. Higher Education and 35>64-year-olds dropped out while Everyone Works moved in. Married Couples made the biggest gain in share and performance while All Wage & Salary Earners had the biggest drops. In fact, their share fell below 60 percent and their performance was less than 100%. Higher Income remains the single most important factor in Total Pet Spending.

  1. Race/Ethnic – White, not Hispanic (87.3 percent) down from 87.6 percent. This is the second largest group and has the largest share of Pet Spending. Their performance was essentially stable at 127.6 percent but they fell from No. 2 to No. 3 in terms of importance in Pet Spending demographic characteristics. Although this demographic, along with age, are two areas in which the consumers have no control, spending disparities within the group are enhanced by differences in other areas like Income, CU Composition and homeownership. There are also apparently cultural differences which impact Pet Spending. Asian Americans are first in income, education and spending but last in Pet Spending as a percentage of total spending – 0.37 percent vs, a national average of 1.04 percent.
  2. Housing – Homeowners (83.3 percent) Controlling your “own space” has long been a key to larger pet families and more pet spending. 2020 was a bad year for renters (-$0.62 billion) but an even worse year for Homeowners w/Mortgages (-$2.1 billion). Homeowners spent $5.92 billion more but the group’s performance fell from 127.7 percent to 126.6 percent because of more home owning CUs. They dropped from third to fourth place in importance for increased pet spending. The homeownership rate is growing in the younger CUs but most of the pet spending lift in the group is coming from older people who are still working but have paid off their homes.
  3. Number in CU – two+ people (80.3 percent) up from 78.2 percent. Singles are now the only group with under 100% performance. In 2020 all CUs with 3 or less people spent less. The 2.1 percent gain in share and performance increase of two+ CUs from 112.2 percent to 114.4 percent was entirely driven by +$7.7 billion from four person CUs and +$2.7 billion from the five+ person group.
  4. Area – Suburban & Rural (71.6 percent) Homeownership is high and they have the “space” for pets. The larger suburbs had a bad year so Rural was added to get to 60+% share of pet spending. This pushed performance up to 113.6 percent from 95.1 percent. Center City had an increase of $0.68B but their performance is by far the worst at 76.8 percent.
  5. Number Earners – “Everyone Works” (70.7 percent) up from 68.4 percent. These are CUs of any size where all adults are employed. This group’s share ranking stayed in 5th place. However, their performance increased from 117.0 percent to 123.0 percent. They joined the 120+ percent club and are now the 5th most important category. CUs with 2 or more earners had a $5.0B increase. This further reinforces the tie between income and increased pet spending.
  6. CU Composition – Married Couples (64.7 percent) With or without children, two people, committed to each other, is an ideal situation for pet parenting. In 2020, they moved up from 10th to sixth in share of spending due entirely to CUs with an oldest child over 6 years of age. Those with a child over 18 had an especially good year, +$8.57 billion. The overall group’s performance skyrocketed from 124.3 percent to 133.4 percent, moving them up to second place in importance.
  7. Income – Over $70K (64.3 percent) They maintained their share but their performance rating fell to 147.9 percent from 155.0 percent. However, CU income is still by far the single most important factor in increased Pet Spending. Spending was on a true roller coaster – Under $50K: +$2.98B; $50>100K: -$4.57B; $100>150K: +$8.45B; $150K>:-$1.55B. The key dividing line was $100K. The over $100K group now has 28.5 percent of CUs but accounts for 51.6 percent of total pet spending.
  8. Age – 35>64 (63.2 percent) There was a clear divide within this group. The 35>54-year-olds spent $3.18B less while the 55>64-year-olds spent $6.36 billion more. They maintained share but their performance fell from 121.0 percent to 118.4 percent. They are now out of the 120+ percent club and they dropped from sixth to eighth in overall importance.
  9. Education – Associates Degree or Higher (61.3 percent) down from 68.4 percent. Higher Education level is usually tied to higher income and Pet spending. It can also be a key factor in recognizing the value in product improvements. 2020 largely threw this history out the window as those with less than a college degree led the way in spending in the necessary segments – Food and Veterinary. However, they did have a minor drop in services spending and the biggest drop in supplies spending. Overall spending for the Assoc & Higher group fell -$2.33 billion and their performance fell precipitously from 123.1 percent to 107.0 percent, removing them from the 120 percent+ club. In 2020, Higher Education fell to next to last in importance in pet spending.
  10. Occupation – All Wage & Salary Earners (59.2 percent) – Their share fell sharply from 65.0 percent to 59.2 percent. Their drop in performance from 106.5 percent to 96.3 percent was even more significant as they are the only big group with performance below 100 percent. Service workers had a small, $0.3 billion increase but the overall increase was driven by Self-Employed, +$8.84 billion and Managers/Professionals, +$3.41 billion. Every other occupation and Retirees spent less. Low level, white collar workers had the worst year, with a spending decrease of -$3.56 billion. In 2020, “The Bosses” ruled in pet spending!

Total Pet Spending is a sum of the spending in all four industry segments. The “big demographic spenders” listed above are determined by the total pet numbers. The share of spending and performance of these groups varies between segments and in a few cases falls below 60 percent. We also altered the groups in some segments to better reflect where most of the business is coming from. There is no doubt that the pandemic caused some turmoil in pet spending,

The group performance is a very important measure. Any group that exceeds 120 percent indicates an increased concentration of the business which makes it easier for marketing to target the big spenders. Income over $70,000 is again the clear winner, but there are other strong performers. High performance also indicates the presence of segments within these categories that are seriously underperforming. These can be identified and targeted for improvement. The low performance by the Wage/Salary earners came as a result of the strong performance of Self-Employed.

Now, let’s drill deeper and look at 2020’s best and worst performing segments in each demographic category

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Most of the best and worst performers are just who we would expect and there are only 6 that are different from 2018. Changes from 2019 are “boxed.” We should note:

  • Income is important in pet spending, which is shown by the 194.3 percent performance by the $100K>149K group. There was also a clear dividing line. Over $100K: 181.2 percent; Under $100K: 67.7 percent.
  • Occupation – “I’m the Boss” (Self-Employed & Managers/Professionals) The only occupations with 100+% performance.
  • Age – The 54>64-year-olds are Boomers that have the highest income and biggest families in their generation.
  • Region – With a strong year from Rural areas, the Midwest replaced the Northeast at the top.
  • CU Composition/Number – The importance of children was maintained, especially older ones and the performance of Married, Couple Only fell again. The “magic” CU number also moved up from three to four.
  • Boomers moved back on top with their emotional binge food buying and Gen Z fell to the bottom – no surprise.

Most expected winners are still doing well. The “new” winners reflect the spending surge from the Boomers. In the next section we’ll look at the segments who literally made the biggest difference in spending in 2020.

We’ll “Show you the money!” This chart details the biggest spending changes in spending from 2019.

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Lots of turmoil. There are 24 winners and losers, six segments held their spot from 2019 while six switched from winner to loser or vice versa. Overall, 75 percent were different from 2019.

  • Area Type – The big suburbs still have the biggest share of pet spending (38.9 percent) but they flipped from first to last in 2020.
    • Winner – Rural – Pet Spending: $16.09 billion; Up $9.31 billion (+137.1 percent) – 2019: Suburbs 2500>
    • Loser – Suburbs 2500> – Pet Spending: $32.61 billion; Down -$3.54 billion (-9.8 percent) – 2019: Center City
    • Comment – Spending in The Rural segment literally exploded. Center City also spent $0.68 billion more – a big change from their recent pattern. The downside came from the usually reliable Suburbs.
  • Occupation – Tech, Sales, Clerical flipped from first to last.
    • Winner –– Self-Employed – Pet Spending: $15.87 billion; Up $8.84 billion (+125.9 percent ) – 2019: Tech, Sales, Clerical
    • Loser – Technical, Sales, Clerical – Pet Spending: $9.59 billion; Down -$3.56 billion (-27.1 percent) – 2019: Managers & Professionals
    • Comment – In 2020, the “Bosses” ruled as Self-Employed & Managers/Professionals together spent $12.25 billion more.
  • Region – The 2019 winner and loser flipped places.
    • Winner – Midwest – Pet Spending: $25.27 billion; Up $8.65 billion (+52.0 percent) – 2019: Northeast
    • Loser – Northeast – Pet Spending: $12.61 billion; Down -$2.38 billion (-15.9 percent) – 2019: Midwest
    • Comment – In 2019 the Northeast had the only increase in total pet spending. In 2020 they fell to the bottom. The Midwest made a huge comeback, but the West also spent more. They were the only regions to spend more.
  • CU Composition – Having children became more important as Married, Couple Only had another big spending decrease.
    • Winner –– Married, Oldest Child 18> – Pet Spending: $16.85 billion; Up $8.57 billion (+103.3 percent) – 2019: Singles
    • Loser – Married, Couple Only – Pet Spending: $21.20 billion; Down -$1.71 billion (-7.5 percent) – 2019: Married, Couple Only
    • Comment – Kids matter! Couples with an oldest child over 6 years old spent more but surprisingly, so did Single Parents.
  • Income – No repeats or flips here but the negative impact of the pandemic on the middle-income group is apparent.
    • Winner – $100 to $149K – Pet Spending: $23.37 billion; Up $8.45 billion (+56.6 percent) – 2019: $150 to $199K
    • Loser – $70 to $99K – Pet Spending: $10.64 billion; Down -$3.52 billion (-24.9 percent) – 2019: Under $30K
    • Comment – The $100-149K group had the biggest increase but spending flipped up or down by $50K income groups. <$50K Up; $50>100K Down; $100>150K Up; $150>200K Down; $200K> Up.
  • Housing – Homeowners w/o Mortgage kept their spot at the top.
    • Winner – Homeowner w/o Mortgage – Pet Spending: $28.81 billion; Up $8.02 billion (+38.6 percent) – 2019: Homeowner w/o Mortgage
    • Loser – Homeowner w/Mortgage – Pet Spending: $40.96 billion; Down -$2.10 billion (-4.9 percent) – 2019: Renter
    • Comment – Homeowners w/Mortgage, the biggest spenders, had the biggest drop, but Renters again spent less.
  • # in CU – two people CUs continued their decline and stayed at the bottom.
    • Winner – four people – Pet Spending: $17.88 billion; Up $7.74 billion (+76.3 percent) – 2019: one person
    • Loser – two people – Pet Spending: $28.43 billion; Down -$2.57 billion (-8.3 percent) – 2019: two people
    • Comment: Although two people CUs still spend the most, 34.0 percent of all pet spending, in 2020 the movement was to bigger CUs. Four people led the way but five+ person CUs had the only other increase. four+ people was the new magic number.
  • Age – A new winner and loser, with the Boomer surge coming to the forefront.
    • Winner – 55>64 yrs – Pet Spending: $24.15 billion; Up $6.36 billion (+35.8 percent) – 2019: 75+ yrs
    • Loser – 35>44 yrs – Pet Spending: $13.29 billion; Down $1.56 billion (-10.5 percent) – 2019: 45>54 yrs
    • Comment: There was another spending rollercoaster in 2020: <25: -$1.06 billion; 25>34: +$2.56 billion; 35>54: -$3.1 billion; 55>74: +$7.38 billion; 75+: -$0.48 billion.
  • Generation – The Generations flipped at the top and bottom of the total pet spending change ladder.
    • Winner – Baby Boomers – Pet Spending: $34.85 billion; Up $6.11 billion (+21.3 percent) – 2019: Gen X
    • Loser – Gen X – Pet Spending: $23.96 billion; Down -$1.79 billion (-7.0 percent) – 2019: Baby Boomers
    • Comment – Boomer spending spiked in Food and Veterinary while the Gen X growth ended largely due to a drop in Food Spending.
  • Education – BA/BS stayed at the bottom while those without a College degree took over the top spot.
    • Winner – Less than College Grads – Pet Spending: $39.68 billion; Up $6.02 billion (+17.9 percent) – 2019: Adv. College Degree
    • Loser – BA/BS Degree – Pet Spending: $22.56 billion; Down -$1.26 billion (-5.3 percent) – 2019: BA/BS Degree
    • Comment – Largely due to changes in Food spending patterns, Education’s importance declined sharply in 2020.
  • Race/Ethnic – White, Not Hispanics (87.3 percent of all pet spending) won again.
    • Winner – White, Not Hispanic – Pet Spending: $73.09 billion; Up $4.36 billion (+6.3 percent) – 2019: White, Not Hispanic
    • Loser – Asian American – Pet Spending: $1.59 billion; Up +$0.06 billion (+3.8 percent) – 2019: African American
    • Comment – While we had a usual winner, it’s important to note that all groups spent more on their pets in 2020.
  • # Earners – two earners have the biggest share of pet spending (45.1 percent) and kept their spot at the top.
    • Winner – two earners – Pet Spending: $37.75 billion; Up $3.80 billion (+11.2 percent) – 2019: Two Earners
    • Loser – No earner, Single – Pet Spending: $4.82 billion; Down -$1.10 billion (-18.5 percent) – 2019: One Earner, two+ CU
    • Comment – While two+ earner CUs had the biggest increases, only No Earner, Singles spent less in 2020.

We’ve seen the best overall performers and the “winners” and “losers” in terms of increase/decrease in Total Pet Spending for 12 demographic categories. Now, here are some segments that didn’t win an award, but they deserve….

HONORABLE MENTION

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Five of the six are new to the list. Let’s start with Single Parents. They are the group with the most financial pressure. Their spending increase of $0.74 billion (+48.1 percent) is quite an accomplishment. Next in line is five+ person CU’s. 2020 was a year for bigger CUs. They finished second to four person CUs. 2020 was largely focused on the importance of higher incomes but there were some exceptions. The low income $30>39K group also had a significant increase in spending, +$1.29 billion (+25.5 percent). We have already noted that all Racial/Ethnic groups increased spending but African Americans had the only double digit percentage increase at +21.9 percent. Millennials are the only repeat on the list as their spending increase was second only to the big surge by Boomers. While Self-Employed clearly won the occupational battle, Managers & Professionals finished a strong second and inspired the creation of the “I’m the Boss” grouping.

Summary

To properly review 2020, we must put it into context with recent history. Total Pet Spending reached $78.60 billion in 2018, a $14.28 billion, 22.2 percent increase from 2014. However, it was not a steady rise, Total spending actually fell in 2016 and each segment had at least one down year. There were a number of factors driving both the growth and tumult within the industry. Two big positives were the movement to super premium pet foods and the rapid expansion of the number of outlets offering pet services. On the downside were value shopping, trading spending between segments and outside influences like the FDA dog food warning and tariffs. Pricing, inflation/deflation was also a negative/positive factor in some cases.

In 2019, the industry had another small decrease, -$0.16B (-0.2 percent) which was largely driven by a huge drop in spending in Supplies caused by Tarifflation. This affected virtually every demographic segment and caused supplies spending to fall below 2014. Services spending also fell slightly as consumers value shopped. The good news was Pet Food bounced back from the impact of the 2018 FDA warning to reach a new record high. Veterinary spending also increased 2.7 percent. Unfortunately, this was entirely due to a 4.1 percent increase in prices. The amount of Vet Services actually decreased.

That brings us to 2020 and the pandemic. This caused a lot of turmoil. The effect was positive for food and veterinary, especially food. Out of fear of possible shortages, many pet parents binge bought pet food. Spending also increased considerably in veterinary, as consumers focused on their pets’ needs. The more discretionary segments suffered. With continued high prices, Supplies continued their widespread decline. Services had by far the biggest negative impact from the pandemic as many outlets were subject to closures and restrictions.

In the best/worst performing segments, Boomers took back the top spot, but spending moved towards larger four person CU’s and a more rural environment in the Midwest. It was another “booming” year for Boomers.

The biggest spending changes saw more turmoil than in 2019, six segments held their position, compared to nine in 2019, while six switched from first  to last or vice versa, compared to four in 2019. Many winners were the “usual suspects” but there were some surprise winners with huge increases: < College Grads, Self-Employed, Rural, four person CUs, Married, w/Child 18>. The 55>64-year-old Boomers are not a surprise winner. However, a closer examination shows that many surprises have close ties to this group. To better understand this, let’s look closer at the Rural Segment – average age 56 – 45 percent Homeowner w/o Mortgage. Farms are in Rural areas and up to 25 percent of all Self-Employed businesses are non-corp. farms. Farmers average age is 57. The median income for commercial family farms is $164K. Rural residents are also 50 percent less likely to be a college grad. Areas with low population have bigger CUs and more pets, but also have less access to retail stores, so they are more likely to fear product shortages. This example illustrates how the surprises can be connected to each other and to more normal winners like the 55>64-year-old Boomers. We will continue our analysis of 2020 pet spending by drilling down into the individual segments.

Before we go… the Ultimate Total Pet Spending CU in 2020 consists of four people – a married couple with a child over 18. They are in the 55 to 64 age range. They are White, but not Hispanic. At least one graduated from college. They both work in their own business and earn $100>149K. They paid off the mortgage on their house located in the rural Midwest

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