The Pet Industry Is Doing Great. And Getting Worse.
The pet industry is doing fantastic in 2024 so far. According to Michigan State University, the pet industry had an overall economic contribution 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 any other category of fast-moving consumer goods and the largest industry trade group expects indsutry revenue growth of almost 3% in 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 mental health improvements from pet ownership and 76% say their personal health has improved because of their pet. The trend of humanizing pets makes industry growth understandable and even inevitable.
Almost no other industry has growth drivers as strong as these.
And yet. A number of factors are cause for concern about the future of the pet business.
The Pandemic
The pandemic itself was fabulous for the pet industry. The explosion in anxiety and depression that was exacerbated by the shutdown drove high demand for pet companionship. Many shelters simply ran out of pets. According to Statista, 70% of U.S. households had a pet in 2020, an all-time high. According to The Bolen Group, pet industry revenue more than doubled from 2018 to 2024 (forecast).
But the end of the pandemic hasn’t been as good for the industry. Jeff Picken, CEO of Beaumont Products whose products prevent odor from kitty litter, says that when consumers were home during the shutdown, they wanted better pet products and more odor control. But demand dropped when the shutdown ended and people spent less time with their pets at home. That happened to a lot of companies.
Paul Armstrong, CEO of pet grooming products company Earthbath, says the industry is “in a post-covid reset and there are still supply chain issues affecting manufacturing.”
It now appears that some of the pandemic-era growth was borrowed from the future and may have the effect of slowing down growth now. Post-pandemic, many pet owners gave up their pets. Statista says pet ownership dropped to 66% of households in 2023.
Cutting Back
It’s not just the reduction in the percent of households owning pets that’s reducing demand, it’s that pet owners are trying to economize.
Even though inflation rates are subsiding, consumers judge prices by the things they buy most often like gas, milk and other staples. Because those prices are high by historical standards, consumers cut back. Chuck Latham of H&C Animal Health, a pet health and wellness product maker, calls it “petflation” and it’s a big driver of consumer concerns. Consumers are “going cheap.”
According to The American Pet Products Association (APPA) survey of over 10,000 pet owners, 19% of pet owners said they will spend less on their pets this year than last. In 2020, that number was 9%.
Look at food. APPA says premium cat food outsold basic from 2018 to 2020 but now basic outsells 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 they’re going to lower levels of premium.
According to The Bolen Group, private label is almost the only pet category with increasing unit sales right now. Just as they are doing with human products, consumers are looking for ways to spend less and that means more private label and less branded products.
Daniel Troiano of Nerfpet, a licensed pet toy business, talked about working smarter. “If pet ownership goes down, business will get harder but it will weed out softer companies and the innovators will win,” he said. Michael London, CEO of rapidly-growing pet products company Bow Wow Labs, said it’s not just about sales growth, “if it doesn’t support pet wellness, we don’t do it.”
Adjusting To Change
With the pet industry experiencing less growth and consumers spending less, a good look at other consumer industries may explain the path the pet business will take now.
Like other industries, TikTok is the fastest growing source of information about new products in pet and, according to APPA, “the most important source of new information” for Gen Z. To succeed on TikTok, you can’t use the same content you post on Facebook of Instagram, it requires new skills.
The industry also needs to move its focus away from premiumization and more on affordability. Creating more economical ways to shop, bundled products and programs to facilitate lower costs on a consistent basis would be very appealing to a significant segment of pet owners who feel strapped right now.The industry also needs to move its focus away from premiumization and more on affordability. Creating more economical ways to shop, bundled products and programs to facilitate lower costs on a consistent basis would be very appealing to a significant segment of pet owners who feel strapped right now.
With workers back in the office, 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 out of their pet spending. APPA says that employers who are pet friendly are 32% more likely to attract, engage and retain their employees.
New thinking about marketing strategies, better engagement with pets and a focus on affordability is going to help the industry weather this new and challenging time. Without those changes, the fallout from consumers who feel squeezed will be much harder to bear.
