Pet Industry Sales Surge and Show No Sign of Stopping

2. Another Year of Stellar Sales…with More to Come • Two of the primary sources for pet industry data reported that 2015 was a very good year for the industry: American Pet Products Association (APPA), $60.28 billion, a 3.9% increase; and Packaged Facts, $77.07 billion, a 4.5% increase. • Packaged Facts categorizes industry revenues differently, resulting in a larger total: food, $30.16 billion, +2.7%; vet services, $23.84 billion, +6.0%; supplies, $15.18 billion, +4.7%; and non-medical supplies, $7.88 billion, +6.2%. • APPA’s estimated during March that 2016 industry revenues would be $62.75 billion, a 4.1% increase, while Package Facts has forecast the industry to reach revenues of almost $100 billion by 2020.

3. Much More Than a Wet Nose Ahead • Mars Petcare, at $17.2 billion, and Nestlé Purina Petcare, at $11.9 billion, the #1 and #2 US-based pet food companies, generated more than three times the combined 2015 revenues of the other 8 companies, which had a total of $8.9 billion. • Total combined 2015 revenues for PetSmart and Petco, the two largest US pet store chains, were almost $12 billion. The two chains’ pet food sales alone accounted for 20% of the 2015 total. Discount stores were first at 23% and grocery stores third at 19%. • As of mid-October 2016, PetSmart had added 23 new stores during the year, with another 60 planned by the end of the year, to reach its projected total of 80 new stores.

4. Millennials Are Pet Lovers, Too • According to 2016 Mintel research, 50% of Americans own a dog, 52% men and 49% women. Among the 18–44 age group, it’s men 71% and women 60%, and 75% of older Millennials (30–39) are dog owners. • According to data from Packaged Facts’ February 2016 National Pet Owner Survey, 36% of Millennials strongly agree that “having a pet is a good way to prepare for having a family,” compared to just 16% of adults 35+. • The same survey found that 27% of Millennials, compared to 12% of adults 35+, strongly agree that “pet product brands’ participation in pet welfare and rescue significantly influences the products they buy.”

5. Pet Food Fundamentals • Baby Boomers’ (55–64) spending on pet food doubled during 2015 to $10.02 billion, while pet food spending among adults 25 years of age and younger increased 99.2%, to $820 million. • According to Packaged Facts’ pet owner survey results, the vast majority of pet owners feed their pets dry pet food: dog owners, 93%, and cat owners, 88%. • A much larger percentage of dog owners than cat owners give their pets table scraps, at 44% and 25%, respectively, while just 16% of dog owners and 9% of cat owners make homemade meals for their pets.

6. Treating Them Right • The APPA reports that more than 50% of dog owners and 38% of cat owners buy their pets Christmas or Chanukah gifts. Millennials spend the most per gift, $23.50, while Generation X members spend $12.89. • According to 2016 Packaged Facts data, 12% of dog owners purchased joint mobility treats; 9%, heart health treats; 8%, brain health treats; 4%, senior treats; and 4% weight-specific treats. • Among cat owners the treat purchases were 9%, joint mobility treats; 6%, heart health treats; 11%, brain health treats; 11%, senior treats; and 4% weight-specific treats.

7. More Pet Product Sales Migrate to the Web • During 2015, 5.3% of total global pet food, care and product sales occurred through the online channel, compared to 4.4% during 2015. In the US, online sales accounted for 7% of pet food, care and product sales. • Chewy.com, with a 50.7% share, and Amazon.com, with a 34.7% share, dominate the top-10 list of US pet food Websites, according to Q1 2016 data. • Among pet food brands, Blue Buffalo, at 12.3%, had the largest share of online sales of pet food during Q1 2016; followed by Wellness, 9.0%; Hill’s, 7.5%; Purina, 7.2%; and Royal Canin, 6.8%.

8. Advertising Strategies • For the holidays, retailers can create and offer a selection of pet Christmas stockings in different sizes and filled with an assortment of gifts and treats for dogs and cats. They can be discounted with a qualifying purchase of pet food. • Promote a Pet Picture Day – Find a local photographer who specializes in pet photography and invite customers to bring their pets to be photographed. Offer the photos for free or at a substantial discount with a qualifying purchase. • Market a “Romp at the Run” promotion with a weekend morning of activities at the local dog run. Invite a pet trainer/behaviorist to teach short classes; create a Pooch Olympics, inviting dog owners to showcase their pets’ tricks, with medals and prizes; etc.

9. New Media Strategies • With pet product brands’ participation in pet welfare and rescue significantly influencing the products Millennials buy, pet retailers should extend that participation to the local community, using their Website and social media platforms to attract Millennials. • Retailers can ask a few of their young adult customers, especially men, to serve as “brand ambassadors,” promoting dog ownership by sharing stories and photos and videos on social media and explaining why their contemporaries will enjoy companionship of a dog. • Retailers can create polls and surveys to help them determine what pet food products local pet owners say their pets like and their attitudes about pet ownership similar to the table on page 2 of the Profiler.