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With immigration and declining birth rates, the make-up of the average American household is fast changing. In 1988, a little over half of households in the United States had a pet, but by 2020, 70% of American households had a pet. Pets have, in a sense, become a staple part of the American family. With birthrates declining and many millennials delaying parenthood, becoming a “pet parent” has been a source of joy and companionship to many. In fact, according to a survey of American pet owners, respondents almost 98% unanimously agreed that their pet was an important part of the family.
The pandemic, which brought with its prolonged lockdowns and social isolation as many people worked from home, has contributed to this phenomenon ─ as people spend an increasing amount of time with their pets. According to a 2021 survey by the
Human Animal Bond Research Institute, 83% of pet owners said that they spent a big part of their day with their pets compared to a little over 5% who said that same in 2016. In fact, 64% of pet owners said that they expected to spend more time with their pets after the pandemic then before. As the bonds between pets and owner strengthen, pets are becoming more “humanized” and their owners more inclined to splurge on looking after the
health, nutrition, and overall wellbeing of their pets. According to a survey by
Morgan Stanley, 54% of respondents aged 18-34 said that they treat their pet like their child, while 43% said that they would go as far as to take on debt to pay for their pet’s medical expenses.
Millennial Pet Owner Shift Sales Channels Online
The millennial generation have grown to become the single largest age cohort of pet owners. Despite comprising only 21.8% of the U.S. population, millennials comprise 32% of all pet owners. Therefore, understanding millennial consumption habits are the key to unlocking the future of the pet industry. Millennial propensity for online shopping solutions means that e-commerce and subscription models have grown to become a significant share of retail transactions for pet products, including food, treats, and toys.
According to a 2021 study by Packaged Facts, the brick-and-mortar share of pet food sales is projected to fall from 63% in 2021 to 45% in 2025. The growth of online pet food sales provides significant Direct-to-Consumer opportunities for specialty brands and niche products catered toward pet owners. Further, subscription models provided by online vendors offer convenience for repeat customers while helping brands convert and retain customers.
Health and Nutrition Fads Apply to Pets Too
Concerns over environmental sustainability in addition to health and nutritional trends are not exclusive for products made for human consumption alone. Increasingly, with the humanization of pets, pet owners have transferred these values to their purchasing habits for pet products. This means that growing share of consumers wish to feed their pets natural and nutritious diets with minimal impact on the environment.
According to a survey on pet food purchasing criteria, 51% of pet owners said that health and nutritional standards were the most important factor in choosing a pet food brand, while 39% cited the importance of pet food being free of unwanted ingredients (e.g., grains, fillers, artificial flavors etc.). Similarly, Amazon search history data reveal that searches for low calorie pet food on Amazon grew by 113%, while searches for diabetic support pet food and organic pet food grew by 85% and 35% respectively between 2020 and 2021. These indicate a surge of interest in premium, nutritious pet foods over generic commercial brands.
Growing Diversification
All signs point to significant growth potential, as well as increasing product diversification and service specialization within the pet space. Growing adoption of and spend on pets provide positive tailwinds for a range of vendors including not just pet food manufacturers and distributors but also veterinary service providers, grooming services, training services, toys and accessories, and more.
As household pet ownership expands, investors in this space will have to keep an eye on how the evolving bonds between pet-owners and their pets affect purchasing criteria. Similarly, investors will have to keep an eye on an evolving competitive landscape as newer firms with niche and premium products disrupt entrenched commercial players.
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