Pets and the Economy: Petflation, Contending with Inflation and Supply Issues
It’s been the mantra now since the 2008 recession that the pet industry is recession proof. While the U.S. is not currently experiencing an official recession, here’s the latest. as reported in Packaged Facts’ just-released U.S. Pet Market Focus: Pet Stores & Pet Specialty Retailing. Sales of pet specialty retailers and e-retailers topped $31 billion, with an 18 percent growth rate surpassing that of the pet and vet industry overall.
It’s not all smooth sailing, according to the Packaged Facts’ report. Inflation remains a primary concern across consumer goods markets, with a range of factors combining into the perfect storm of economic pressures and this issue includes pet products, including pet food.
With a record number of pets adopted in 2020, it’s no surprise that the pet specialty market saw a flurry of activity between 2020 and 2022, with Chewy approaching $10 billion in annual sales, as one example. Online sales at Amazon and in-store and pick-up sales at major chains also experienced success, but mostly before inflation took hold.
The Pet Business Professor calls it “petflation.” As of September 2022, prices increased to +11.0 percent above 2021. Breaking it down, pet food increased 14.6 percent, and veterinary care leads the way with an 18.5 percent hike in costs. Are people going to relinquish their animals solely because of costs associated with care, or hang tight? Time will tell but some shelters do report that some who give up their animals are doing so solely because they can no longer afford their care.
What’s more some pet products – and in particular pet foods – are hard to come by due to supply issues. Whether pet parents can afford a hike in cost isn’t an issue, if the products or food, often various prescription diets, can’t be purchased in the first place due to a lack of availability.
Pet product marketers must contend with demand for ingredients that are increasingly difficult to come by. And sometimes, there’s competition for the same ingredients – not only from others who make pet food but for the first time competition from those producing human foods.
U.S. pet owners are literally paying a price. According to Packaged Facts’ 2021 Survey of Pet Owners, 59 percent report spending more on pet products than they used to, up from 45 percent in 2021, and 45 percent are spending more on pet products and attributing it directly to COVID-19, up from 34 percent in 2021.