Changes and growth in the US pet industry

A booming market both online and offline could take sales to over the $100 billion (€88 billion) mark by 2021.

Increasing 5% per year

The US pet industry continues along a healthy growth trajectory, with product and service sales rising about 5% annually in dollar sales. Online is booming and strong numbers in veterinary services as well as pet food and treats contribute to the advancement of the total market, which Packaged Facts estimates at $90 billion (€79 billion) in 2018 for veterinary and non-medical pet services along with food and non-food supplies.

A four channel race

Four retail channels account for double-digit shares of pet product sales. In the lead are pet speciality chains (including PetSmart and Petco) with a 23% share of sales. Next in line are discount stores or supercentres (including Walmart) at 21%, and supermarkets and the internet have 14% each.

The US pet industry has long been rich with opportunity, but the market is now reconfiguring at a dizzying pace. E-commerce sales are challenging most market norms, and more widespread use of internet search and mobile apps is compounding this effect. Despite the long-established and wide- ranging presence of both general merchandise and speciality stores selling pet products, the internet (led by Amazon and Chewy) has emerged as the second-largest channel for non-food pet supplies. By 2019 it will have surpassed supermarkets to become the third-ranking for pet supplies overall.

More shoppers going online

The internet is disproportionately responsible for helping to keep the US pet industry on an upward track, that is, not just stealing share from brick-and- mortar stores, but also expanding the market.

A wider and more premium array of pet products is available to a growing base of online shoppers. During 2017, nearly $6.8 billion (€6 billion) worth were sold online, estimates Packaged Facts. That figure is expected to easily double by 2022.

Natural becomes the standard

Two overlapping trends – both in force for nearly two decades, and both primarily marketing-driven – continue to propel the infusion of new products and services into the US pet market: humanisation and premiumisation. Potent as these market drivers may be, they are now widely dispersed, so marketers increasingly need to think outside the box.

Natural pet food has been the brightest star in the food category. Although that star still shines brightly, its orbit is shifting. In Packaged Facts’ Q1 2018 Pet Owner Survey, half of the owners agree that natural or organic brand pet products are often better than standard national brand products, and 23% strongly agree – a percentage that has risen since 2016.

‘Natural’ is therefore increasingly ‘standard’. For the first time in years, mass channels in the US market are surpassing the pet speciality channel in pet food sales growth. This phenomenon is directly attributable to ‘mass premiumisation’ – the increasing diffusion of ‘superpremium’ brands into mass-market retailers such as supercentres and supermarkets, rather than them being largely restricted to the pet speciality sector.

Partly as a competitive consequence, Packaged Facts expects to see the progressive edge of ‘superpremium’ pet food shift from the ingredient label to broader, more holistic concerns such as the preservation of natural nutrition (largely through fresh pet foods) and the increasingly proactive involvement of prestige marketers and retailers in economic system, sustainability and animal welfare initiatives.

Medical and non-medical expanding

Also seeing a great deal of activity is the veterinary category, including ongoing consolidation and the increasing involvement of major marketers (Mars buys VCA) and big box stores (Petco launching Thrive complete veterinary services; PetIQ opening veterinary clinics in Walmart). Non-medical pet services also continue to expand, benefiting from the increased involvement of pet speciality big box stores looking to compete with online, and from the rapid advancement of Uber-like pet sitting services.

Looking ahead, Packaged Facts expects US pet industry sales to post a compound annual growth rate (CAGR) of approximately 4% over the next few years, bringing the market to $101 billion (€88.5 billion) by 2021


David Sprinkle

Research Director, Packaged Facts