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What Helped Veterinary Services Spending Hit $32.67B in 2021?

Glenn Polyn//February 16, 2023//

What Helped Veterinary Services Spending Hit $32.67B in 2021?

Glenn Polyn //February 16, 2023//

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John Gibbons, the Pet Business Professor and president of A GPS for Pet Businesses, has been examining the different segments of the pet industry, with this report focusing on Veterinary Services. 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.

In 2017, low inflation spurred an unusual 7.2 percent increase in visit frequency and a $2.5 billion increase in spending. In 2018, inflation returned to more normal levels. Consumers spent $0.56 billion more (+2.7 percent), but inflation was 2.6 percent so virtually all of the lift was from increased prices. In 2019, the situation got worse. Consumers spent $0.58 billion (+2.7 percent) more but inflation was 4.14 percent. This means that there was an actual decrease in the amount of Veterinary Services purchased. In 2020 the pandemic hit, and Pet Parents focused on needs – Food and Veterinary. Veterinary spending grew $3.05 billion, (+14.0 percent). In 2021, this behavior grew even stronger and produced a record $7.82 billion (+31.5 percent) increase.

We’ll start our analysis with the groups who were responsible for the bulk of Veterinary spending in 2021 and the $7.82 billion 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). In terms of performance – six of 10 groups perform above 120 percent, the same as 2018>2020. This is equal to Supplies and more than Food (5) but less than Services (7). This means that these big spenders are performing well but it also signals that there is still a large disparity between the best and worst performing demographics in this “needed” segment. The groups are the same as those for Total Pet and categories are listed in the order that reflects their share of Total Pet Spending. As with all Industry Segments, High Income is the most important factor in Spending.

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  1. Race/Ethnic – White, not Hispanic (84.7 percent) down from 87.2 percent. This group accounts for the vast majority of spending in every segment, but they lost significant share in 2021. Their 126.0 percent performance is also down from 127.5 percent and they fell from third to fourth in importance in Veterinary Spending but it still reflects the disparity in spending. Minorities did narrow the gap in 2021 primarily due to a $1.5 billion, a 91 percent lift by Hispanics. However, all groups spent more.
  2. # in CU – 2+ people (79.7 percent) up from 77.9 percent. This group, which is 69.5 percent of U.S. CUs, gained share and their performance grew from 111.0 percent to 114.7 percent. Their rank in terms of importance in Veterinary Spending stayed at #8. All sizes spent more. The biggest percent lift, +$3.43 billion, came from two-person CUs. Four people had the biggest percentage gain at +75.8 percent.
  3. Housing – Homeowners (81.0 percent) down from 83.1 percent. Homeownership is a major factor in pet ownership and spending in all industry segments. In terms of importance to Veterinary spending, their 125.2 percentperformance rating is down from 126.3 percent, and they fell from to fourth to fifth place. All segments increased spending by over $2 billion. This is impressive. However, the percentage increase for Renters was +47.7 percent, while Homeowners’ spending grew only 28.2 percent. This difference is what drove the drop in share and performance. We should note that Homeownership is not nearly as important to Veterinary Spending as it once was. In 2015, their share was 88.4 percent with performance of 141.8 percent.
  4. Area – Suburban & Rural (73.0 percent) up from 67.1 percent. Suburban CU’s are the biggest spenders in every segment. All areas spent more but those <2500 had a great year, +53.9 percent. This drove the big increase in share and their performance grew substantially to 113.2 percent, from 106.4 percent.
  5. Income – Over $70K (71.7 percent) up from 63.4 percent. Their performance also grew significantly from 145.8 percent to 160.0%. Higher income became even more important in increased Veterinary spending. Only the $30>49K group spent less. The <$30K group had a slight lift, +$0.2 billion (+7.2 percent) but the other groups, over $50K all had 40+ percent increases. $150K> led the way with a $4.3 billion (+61.8 percent) spending increase.
  6. # Earners – “Everyone Works” (68.6 percent) down from 69.7 percent. However, their performance grew from 120.3 percent to 121.0 percent and they stayed at No. 6. In this group, all adults in the CU are employed. All segments spent more. Their share fell but performance increased because of a big $ lift from No Earners combined with a drop in the number of Earner CUs.
  7. Education – College Grads (65.4 percent) up from 61.3 percent. Income generally increases with education. It is also important in understanding the need for regular Veterinary care. Performance also grew from 131.2 percent to 138.1 percent and they stayed 2nd in importance. Once again, all segments in the category spent more. However, College Grads spent $6.13 billion more. That means that 47.4 percent of all CUs generated 78.4 percent of the increase. The BA/BS group led the way with +$3.8 billion. Associate Degrees also spent $0.8 billion more, emphasizing the importance of formal, after HS education.
  8. Occupation – All Wage & Salaried (66.4 percent) down from 68.1 percent but their performance increased from 110.7% to 111.9 percent due to 1.4 million fewer CUs. All segments spent more. They lost share but gained in performance because of fewer CUs and a strong year by Retirees and non wage/salaried workers. The top three lifts were certainly a mixed bag: Mgrs/Professionals, +$2.27 billion; Retirees, +$1.59B; Service Workers, +$1.55 billion.
  9. CU Composition – Married Couples (60.9 percent) up from 58.6 percent. Their performance also grew to 128.4% from 120.8% and they moved up to No. 3 from No. 6 in importance. After two years, Married Couples market share returned to 60+% while their No. of CUs fell by 1 percent. Only Single Parents spent less, -$0.1 billion. Married Couples with Children were +$2.57 billion but all Married Couple CUs with no children were +$2.75 billion. Singles and All Adult, Unmarried CUs were +$2.59 billion.
  10. Age – 35>64 (62.1 percent) up from 60.1 percent. Their performance also grew from 112.7 percent to 118.7 percent but they stayed in seventh place. For the eighth time, all groups spent more and all had double digit percentage increases. The 55>64-year-olds led the way, +$2.20 billion but 35>44 was a close second, +$2.08 billion. Both of these segments had increases of 40+ percent.

Spending disparity grew in eight categories and higher income became even more important in Veterinary spending. The most notable change was that Married Couples again reached a 60 percent share and moved from sixth to third in importance. There was also a strong showing by 35>44 (Mostly young Gen Xers) and 55>64 (Mostly young Boomers).

Now, we’ll look at 2021’s best and worst performing Veterinary spending segments in each category.

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Almost all of the best and worst performers are those that we would expect and there are only five that are different from 2020. This is one more than Supplies but far fewer than the 10 in Services and the 15 in Food. This suggests considerably less spending turmoil. The changes from 2020 are boxed. We should note:

  • Income– The winner is up from $150>199K. Winner & Loser are not surprises but the gap is 40 percent more than 2020.
  • Earners – An expected repeat winner and loser. They have the highest and lowest incomes.
  • Occupation – Retirees replaced Blue Collar at the bottom but once again, it’s all about income
  • Age – The 55>64-year-olds edged out 35>44-year-olds and replaced the highest income group, 45>54-year-olds at the top. These three groups have the highest income and are the only segments performing above 100 percent in Veterinary Spending.
  • Race/Ethnic; Education; Housing– The expected winners and losers but the performance gap grew for all but Renters.
  • Area – Another set of repeats but the difference in performance (disparity) increased by over 35 percent from 2020.
  • Region –Northeast replaced West at the top and has now won for six of the past seven years. The South has finished last for six years in a row. The win/lose gap increased by 20 percent, but two regions performed at 100+ percent – the first time since 2019.
  • CU Composition – No change here but again the performance gap widened, by 20 percent.
  • # in CU – Four person CUs edged out two-person for the win but now two-, three- and four-person CU’s all perform above 100 percent.
  • Generation – No change again and the performance gap only widened by 4 percent.

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

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We saw little turmoil in performance. That’s also true here. There were eight repeats and three segments flipped from first to last or vice versa. Last year, they had four repeats and 10 flips. There were no surprise losers and one surprise winner – Millennials. In fact, in nine categories, all segments spent more, up from four in 2020. You should note that like 2020, the increases were significantly larger than the decreases. Plus, 94 percent of 96 demographic segments spent more. Here are the specifics:

  • Race/Ethnic – Both groups held their spots as White, non-Hispanics maintained their dominance in this segment.
    • Winner – White, Not Hispanic – Veterinary: $27.65B; Up $5.98B (+27.6%)                      2020: White, Not Hispanic
    • Loser – African American – Veterinary: $1.00B; Up $0.13B (+14.9%)                                  2020: African Americans
    • Comment– In 2019, only African Americans spent less. In 2020 and 2021, all spent more. This shows that pet parents commitment to the health and well-being of their pet children is widespread across all racial/ethnic groups.
  • Area Type – Center City, last year’s surprise winner flipped from first to last and big Suburbs returned to the top.
    • Winner – Suburbs 2500> – Veterinary Spending: $15.97B; Up $4.40B (+38.1%)               2020: Center City
    • Loser – Center City – Veterinary Spending: $8.83B; Up $0.66B (+8.1%)                               2020: Suburbs 2500>
    • Comment – All groups also spent more. The Suburbs 2500> went from a 3 percent increase in 2020 to a 38 percent, $4.4 billion increase in 2021. However, the areas <2500 had the biggest percentage increase, +56.1 percent, up $2.2 billion.
  • Education – BA/BS Degree replaced Advanced College Degree at the top while <High School Grads stayed on the bottom.
    • Winner – BA/BS Degree – Veterinary Spending: $11.62B; Up $3.79B (+48.4%)                2020: Adv. College Degree
    • Loser – <High School Grads – Veterinary Spending: $0.37B; Up $0.03B (+8.3%)            2020: <HS Grads
    • Comment – All Education levels spent more but the lift was very much skewed towards higher Education. College grads generated 78.4 percent of the lift but those with at least an Associate’s Degree were responsible for 88.9 percent.
  • Housing – Homeowners w/Mtges held their usual position at the top.
    • Winner – Homeowner w/Mtge – Veterinary: $17.56B; Up $3.49B (+24.8%)                2020: Homeowner w/Mtge
    • Loser – Renter – Veterinary: $6.19B; Up $2.00B (+47.7%)                                                   2020: Renter
    • Comment – Every segment spent more and had an increase of at least $2 billion. You know that it was a great year when the “loser” spent 47.7 percent more.
  • # in CU – 2 Person CUs held on to the top spot.
    • Winner – 2 People – Veterinary Spending: $13.16B; Up $3.43B (+35.2%)                       2020: 2 People
    • Loser – 3 People – Veterinary Spending: $5.02B; Up $0.22B (+4.7%)                               2020: 1 Person
    • Comment: For the second consecutive year all groups spent more. Four-Person CUs went from a $0.04 billion (+1.5 percent) increase in 2020 to up $2.22 billion (+75.8 percent) in 2021.
  • Region – The Northeast flipped from last to first. This is four consecutive years of flips for this Region.
    • Winner – Northeast – Veterinary Spending: $7.52B; Up $3.42B (+83.5%)                      2020: West
    • Loser – Midwest – Veterinary Spending: $6.45B; Up $1.19B (+22.5%)                              2020: Northeast
    • Comment – All Regions had double digit percentage increases of at least $1.19 billion. The Midwest replaced the Northeast at the bottom and the South fell to third place after four consecutive years at No. 2.
  • Generation – No flips and the winner and loser were both new.
    • Winner – Millennials – Veterinary: $9.23B; Up $3.18B (+52.5%)                                    2020: Baby Boomers
    • Loser – Born <1946 – Veterinary: $1.83B; Down $0.19B (-9.2%)                                     2020: Gen Z
    • Comments – In a bit of a surprise, Millennials replaced Boomers at the top. The oldest Generation had the only decrease as the Silent/Greatest replaced Gen Z at the bottom. In 2021, Millennials, younger Gen Xers and younger Boomers all had a strong year in Veterinary Spending.
  • # Earners – Both the winner and loser are new, but not surprising.
    • Winner – 2 Earners – Veterinary Spending: $13.19B; Up $3.17B (+31.6%)                     2020: 3+ Earners
    • Loser – 1 Earner, Single – Veterinary Spending: $4.22B; Up $0.19B (+4.7%)                2020: No Earner, Single
    • Comment – The winner and loser reflect their income levels. Income is of primary importance to increased Veterinary Spending and No. of Earners is tied to income. In 2021, all CUs, with or without earners, spent more. One Earner, Singles had the only single digit percent increase.
  • Income – Both the winner and loser are new.
    • Winner – $200K> – Veterinary Spending: $6.32B; Up $2.58B (+69.0%)                        2020: $100>149K
    • Loser – $30>39K – Veterinary Spending: $1.24B; Down $0.61B (-33.1%)                        2020: $70>99K
    • Comment – Only the $30>39K group spent less. We got off last year’s spending rollercoaster as the size of the increase in Veterinary spending generally grew with income, peaking at $200K> in both spending and percentage.
  • CU Composition – Married Couple Only held their spot at the top.
    • Winner – Married, Couple Only – Veterinary: $9.31B; Up $2.28B (+32.4%)                          2020: Married, Couple Only
    • Loser – Single Parents – Veterinary: $0.61B; Down $0.09B (-12.6%)                                         2020: Married, Oldest Child <6
    • Comment – After a 68 percent increase in 2020, Single Parents were the only group to spend less in 2021. Overall, Marriage became more important as 47.4 percent of CUs generated 60.9 percent of Veterinary Spending and 68 percent of the increase.
  • Occupation – The winner held on while the loser changed from White Collar to Blue Collar.
    • Winner – Mgrs & Professionals – Veterinary Spending: $12.14B; Up $2.27B (+23.0%)        2020: Mgrs & Profess.
    • Loser – Construction Workers – Veterinary Spending: $0.65B; Up $0.06B (+9.9%)              2020: Tech/Sales/Clerical
    • Comment – Retirees finished in second place, +$1.59 billion and not all Blue Collar workers had small increases. Service Workers were +$1.55 billion (+64.5 percent), the highest percentage increase of any segment.
  • Age – A new winner and loser.
    • Winner – 55>64 yrs – Veterinary Spending: $7.65B; Up $2.20B (+40.4%)                      2020: 25>34 yrs
    • Loser – <25 yrs – Veterinary Spending: $0.42B; Up $0.09B (+28.2%)                                2020: 35>44 yrs
    • Comment: Last year, two groups spent less. In 2021 all segments increased Veterinary spending. 55>64 replaced 25>34 at the top while <25 replaced 35>44 on the bottom. This seemed to indicate that the spending were skewing a little older. In fact, the 25>55 age group generated 56 percent of the spending increase while 55 and over accounted for 42 percent. The younger groups are still strongly growing.

We’ve now seen the winners and losers in terms of increase/decrease in Veterinary Spending for 12 demographic categories. The 2020 pandemic brought strong  growth in Veterinary spending which grew even stronger in 2021. However, the lift came with little turmoil as most segments held their spots in performance and there were no significant surprises in spending changes. The surprise was in just how widespread the spending lift was. In 2020, four categories, had no segments that spent less and 85 percent of all demographic segments spent more. In 2021, these increased to nine categories and 94 percent. This means that there were even more “hidden” segments that didn’t win but made a significant contribution to the $7.82 billion increase. These groups don’t win an award, but they certainly deserve….

Honorable Mention

Racial/Ethnic spending became a little more balanced thanks to a 91 percent increase by Hispanics. Veterinary spending is driven by income but the lowest income group, No Earner, Singles had the biggest percentage increase. Low income Service Workers also had a huge, 64.5 percent lift. Although they are the second highest income segment, they are rarely the winner. In 2020 their increase in Veterinary spending was only 1 percent. In 2021, they exploded with a $1.72 billion (53.5%) lift, but this was only good enough for third place in the income category. The 35>44-year-olds had a great year, finishing frst a number of times in other industry segments. In Veterinary they had to settle for second place behind the 55>64-year-olds. They are a perennial second place finisher. In 2021, even a $2.1 billion increase was not enough to move them up. It was also a strong year for all Homeowners.

The years 2016 and 2017 produced a combined increase of $3.6 billion in Veterinary Spending as inflation moved to record low levels. In 2018 and 2019, a Baby Boomer Spending “Bust” impacted Food and Veterinary. Fortunately, Gen X and Millennials stepped up to produce a 2.7 percent increase in both years. In 2020, the pandemic focused Pet Parents on the needed segments. This drove a $3 billion increase in Veterinary Spending. Boomers and Millennials led the way, but the lift was widespread as 85 percent of demographic segments spent more. In 2021 the lift grew to a record $7.82 billion with 94 percent of all segments spending more.

There was also less turmoil in the segment, but spending became a little less balanced in most demographic categories. The size of the increases far exceeded the size of the decreases. However, in 9 categories all segments increased spending. Income and Education remain of primary importance in terms of increased spending.

Income: Performance generally increases with income and reaches its highest level, 225+ percent at over $200,000. The “halfway” point (50 percent) in spending fell below $100,000 for the first time in 2020. It turned up sharply in 2021 to $113,000. Spending is less  balanced in most categories in 2021 due to income.

Higher Education: Performance increases with Education but now reaches 100 percent when you have an Associates degree. Those with a BA/BS or higher perform at 138 percent. The performance of those with no “formal” College Degree is 57 percent. The disparity is not quite as bad as Income but still big. Equality in both categories is a long way off.

The performance of other big spending groups is also very important in the Veterinary segment. We again identified six demographic categories with high performing large groups. There were six for Supplies, seven for Services but only five for Food.  Consumers have no control over Race/Ethnicity but in addition to Income and Education, Homeownership, No. of Earners and Marriage are also important factors in Veterinary spending. All groups but Marriage are tied to income and their high performance demonstrates that there are still big spending disparities among segments within these categories.

There was really only 1 change of note. Marriage returned to prominence moving up from sixth to third in importance.

In 2019 Veterinary spending increased +2.7 percent while prices rose 4.14 percent – a net decrease in the amount of Services. In 2020 spending grew +14.0 percent while inflation was 3.7 percent. That’s over 10 percent in real growth, a very positive situation. In 2021 inflation rose to 4.9 percent but spending skyrocketed, +31.5 percent. That means 26.6 percent in “real” growth, 84 percent of the total record increase – truly spectacular. Although t,he lift was demographically widespread, Veterinary spending became a little less balanced. We’ll see if pet parents continue to spend heavily on Veterinary Services with the high inflation rates in 2022.

Finally – The “Ultimate” Veterinary Services Spending Consumer Unit consists of four people – a married couple with an oldest child over 18. They are 55>56-year-olds. They are White, but not of Hispanic origin. At least one of them has an Adv. College Degree and works as a Mgr/Professional. Their oldest child also works. Their total income is $200K>. They live in a small suburb, adjacent to a big city in the Northeast U.S. and are still paying off the mortgage on their home.