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Pet Care Industry Analysis 2016 - Cost & Trends

Pet Care Industry Analysis 2016 - Cost & Trends

Pet Care Industry in 2016 at a Glance

Everybody’s Best Friend

The pet industry in the United States and many other countries is booming. Americans, for example, own more pets than ever before. Growth in the sector is derived both from increasing pet ownership as well as from increased spending per pet. Pet pampering is becoming the norm, as pet owner spending has moved far beyond simple food and grooming expenses to include innovative and specialized premium products. The bottom line: people increasingly view their pets as part of the family and are willing to spend even during difficult economic times.

According to the American Pet Product Association (APPA), Americans spent approximately $47.7 billion on pet products and services in 2010, an increase of 4.8% over 2009. Since 1988, pet ownership has expanded from 56% of households to 62%. That’s 71.4 million homes! Often one animal just isn’t enough: some 46% of all households own more than one pet. Cats slightly outnumber dogs, but one or the other can be found in at least one out of three homes.

In addition to dogs and cats, the most popular pets include birds, reptiles, small animals and fish, as outlined in the APPA table below:


Freshwater Fish41.7%
Other Animals3.9%
Saltwater Fish2.7%

More Monkeys, More Products
Part of the growth in the pet industry comes organically: more people are buying pets. This can be attributed to a number of factors, including increasing awareness of the benefits of pet ownership and increasing per capita disposable income.

Pet ownership has been shown to be healthy! As we increasingly view our health holistically, having a constant, affectionate companion helps reduce stress and lower blood pressure. The simple act of a daily walk provides fitness for us as well as our pet, and it is even hypothesized that the greater psychological balance brought by the companionship of a loving animal lowers risk of heart disease.

Demographically, several shifts are occurring which, in tandem with the benefits of companionship, have contributed to a rise in pet ownership. Our population is aging, with baby boomers continuing to reach retirement age. A large, well-heeled generation, baby-boomers are buying pets, especially as their children head off to college or move away to pursue their career. At the same time, there are more single-member households in the United States than ever before, as young people are getting married later and divorce rates remain high. All this adds up to a veritable pet-buying frenzy: new dog and cat ownership continues to expand at nearly 4% per year, even in the face of the recent recession.

More people are buying more pets than ever, but growth in spending on pet products and services has been spurred on most dramatically by an overall change in attitudes and sentiment toward animals, as the majority of the population now considers their pet to be a member of the family. Pet owners purchase holiday presents, designer outfits, and specialty shampoos for their pets. This increased personification of pets has resulted in a massive increase in the number of premium products available for pet care.

Personalized and designer products and even high-tech gadgets, such as automated food dispensers, have become the norm. Mouthwash and electric toothbrushes are routinely used in doggy beauty salons and birds can now receive a manicure complete with nail polish. In a recent survey, 68% of respondents said they treat their pets as well as they treat their children!

Down, Boy?
Absolutely not! The pet industry continues to prove itself nearly recession proof. Citing results from a recent survey on pet products and services, market research company WSL indicates that 81% of respondents are spending the same amount or more on their pets despite the tough economic times. Consumers may be cutting expenses in other areas of their household budgets, but they are still opening their wallets for their furry friends. Pet owners are still buying monogrammed sweaters, personalized food and water bowls, faux mink coats, and even Halloween costumes for their animals.

The recession did slow down the rate of growth of purchases, but revenue expansion remained strongly positive throughout the worst of the crisis. The stats reveal a CAGR (compound annual growth rate) of 6.7% from 1994 through 2010, including 4.8% in 2010!

A Golden Age for Pets and Pet Businesses 
An overall rise in the number of pets in the US and increased spending per pet are the main factors that will contribute to the pet’s industry growth in the years ahead. Even with the overall economic recovery taking longer than expected, annual revenue growth in pet products and services is anticipated to clock in at some 4.4% through 2016 (one of the few industries that can say so). As the recovery takes hold, household disposable income will rise even faster, and spending on pets will pick up even more.

Pet Industry Franchise Opportunities
In addition to the success of product-based pet businesses, franchises that offer grooming, dog training and pet daycare services are flourishing. Meanwhile, health insurance for pets and animal ID tags are becoming strong categories in their own right. In fact, caring for a pet’s health is the most powerful trend within the industry: store shelves are sporting weight management foods, energy treats, organic products, and various all-natural offerings; pet insurance, veterinary care and pharmaceuticals are also strong sellers. Training schools for controlling problem pet behavior are popular amongst consumers, who are desperate to reign in their unruly animals. Some franchises even put pets to work, using specially trained canine noses to detect contraband at client locations that might include schools, corporate offices and government facilities.

Here’s a quick overview of the most prominent product and services segments of the pet industry, as well as a discussion of the types of franchise opportunities that have cropped up to take advantage:

Day CareFrom dog walking to pet sitting to pet adventure camps, franchise opportunities exist to make sure consumers’ pets are cared for during work hours.
Dog TrainingFranchises exist for obedience, agility and show training
Boarding ServicesWhen you are out of town, these franchises look after your pets, with accommodations available for every price and comfort level.
Pet SuppliesFrom general product stores to designer name brands, a potential pet industry franchisee has a lot of business opportunities to choose from. Vending machines for pet supplies are even possible!
Dog Food / Pet FoodPet franchise opportunities exist in the form of delivery services, gourmet menus and organic pet food offerings.
GroomingA clean pet makes for a happy owner; franchises offer do-it-yourself pet grooming locations, all-inclusive spas, and even pet massage services.
Waste RemovalThese franchises schedule home visits to clean the yard, disinfect the porch, and sanitize dogs runs and kennels.

Pet franchises are expanding in your local area, including some that require as little as $30,000 to start. Click here to choose from 100s of franchise opportunities.

Matt Sena is a co-founder of FieldLens, a former portfolio manager, research analyst and trader. He holds the Chartered Financial Analyst designation and earned his MBA in Finance from Kellstadt Graduate School of Business while working at Goldman, Sachs & Co.

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