The Pet Industry Is Great. And Getting Worse.

The pet industry is doing amazing in 2024 so far. According to Michigan State University, the pet industry will have a total contribution to the economy in 2023 of $303 billion, an increase of 16% from 2022. According to The Bolen Group, weekly sales of petcare products through February 2024 are growing three times faster than the rest of the fast-moving consumer goods category and the industry’s largest trade group expects industry revenue growth of nearly 3% by 2024.

According to the Human-Animal Bond Research Institute, 98% of pet owners say their pet is an important part of their family, 87% say they experience improvements in mental health from pet ownership and 76% say their personal health has improved because of their pet. . The trend of humanizing pets makes the growth of the industry evident and inevitable.

Almost no other industry has growth drivers as strong as these.

And yet. Several factors are cause for concern about the future of the pet business.

The Pandemic

The pandemic itself is incredible for the pet industry. The explosion in anxiety and depression exacerbated by the shutdown has caused a high demand for pet companionship. Many shelters simply run out of pets. According to Statista, 70% of US households had a pet in 2020, an all-time high. According to The Bolen Group, revenue in the pet industry will more than double from 2018 to 2024 (forecast).

But the end of the pandemic has not been good for the industry. Jeff Picken, CEO of Beaumont Products whose products prevent odor from kitty litter, says that when consumers are at home during lockdown, they want better pet products and more control to the smell But demand dropped when the lockdown ended and people spent less time with their pets at home. That has happened to many companies.

Paul Armstrong, CEO of pet grooming products company Earthbath, said the industry is “in a post-covid reset and there are still supply chain issues affecting manufacturing.”

It now appears that some of the growth during the pandemic was borrowed from the future and may have the effect of slowing growth today. After the pandemic, many pet owners gave up their pets. Statista says pet ownership will drop to 66% of households by 2023.

Cutting

It’s not just the reduction in the percentage of households that own pets that reduces demand, it’s what pet owners are trying to save.

Even as inflation rates ease, consumers judge prices by items they buy frequently such as gas, milk and other staples. Because those prices are high by historical standards, buyers are cutting back. Chuck Latham of H&C Animal Health, a pet health and wellness product, calls it “petflation,” and it’s a big driver of consumer concerns. Consumers are “cheating.”

According to an American Pet Products Association (APPA) survey of more than 10,000 pet owners, 19% of pet owners said they will spend less on their pets this year than last year. In 2020, that number is 9%.

Look at the food. APPA says premium cat food outsold basic from 2018 to 2020 but now basic outsold premium. In dog food, premium and natural are down and basic is up. Zel Crampton, CEO of high-end pet crate maker Diggs, says super premium customers aren’t moving to basic but are going to lower premium levels.

According to The Bolen Group, private label is almost the only pet category with rising unit sales right now. As they do with human products, consumers are looking for ways to spend less and that means more private label and fewer branded products.

Daniel Troiano of Nerfpet, a licensed pet toy business, talked about working smarter. “If pet ownership goes down, business will be harder but it will eliminate the soft companies and the innovators will win,” he said. Michael London, CEO of fast-growing pet products company Bow Wow Labs, says it’s not just about sales growth, “if it doesn’t support pet health, we don’t do it.”

Adjusting To Change

As the pet industry experiences less growth and consumers are spending, a good look at other consumer industries can explain the path the pet business will take today.

Like other industries, TikTok is the fastest growing source of information about new pet products and, according to APPA, “the most important source of new information” for Gen Z. To succeed on TikTok, you can’t the same content you want to post on Facebook can be used on Instagram, it just requires new skills.

The industry also needs to shift its focus away from premiumization and more towards affordability. Creating more economical ways to shop, bundled products and programs to facilitate lower costs on a consistent basis will be very attractive to a significant portion of pet owners. who feels strapped now.

As office workers return, the pet industry needs to support pet-friendly companies. Allowing more pets at work is a no-cost way for consumers to get more value from their pet spending. APPA says pet-friendly employers are 32% more likely to attract, engage and retain their employees.

New thinking about marketing strategies, better communication with pets and a focus on affordability will help the industry weather this new and challenging time. Without those changes, the fallout from consumers feeling stuck will be harder to bear.