This is the first of a two-part series covering Packaged Facts’ recent “US Pet Market Outlook 2024” webinar on March 13. Find the second part of this series here.

KANSAS CITY, MO. — Pre-pandemic, the 21st century pet industry was marked by a revolutionary level of humanization and premiumization that drove rapid growth and expansion for pet food, products and care brands. While humanization and premiumization continue to drive new innovations today, the main driver of growth for this industry post-pandemic has been inflation.

This sentiment was a large part of the story told by three pet industry experts — Shannon Landry Brown, pet brand manager at Packaged Facts, David Sprinkle, former publisher and research director of Packaged Facts, and David Lummis, president of Marigny Research Group — in a webinar hosted by Packaged Facts on March 13.

Throughout the webinar, Landry Brown, Sprinkle and Lummis covered top-level takeaways from Packaged Facts’ recent pet industry market research, including historical and projected industry sales. The trio also discussed four key challenges and opportunities affecting the sector: the impact of inflation on pet spending, economic challenges specific to Millennial pet owners, shifts toward lower-cost products and services, and fluctuations in the pet population.

“The pet market has been on a bit of a roller-coaster ride over the past several years, facing the uncertainty stemming from the pandemic and then further upheaval in the form of sky-high inflation and rising interest rates,” said Landry Brown. “…By 2023, you’ll see growth was still impressive, but driven primarily by inflation at that point, and heightened prices.”

Overall, Packaged Facts clocked US pet market retail sales at $145.12 billion in 2023, up 8.1% from $134.24 billion in 2022. This measurement includes pet food and treats, non-food pet supplies, veterinary services and product sales, and non-medical services. Retail sales of pet food and treats — the “least discretionary” segment of the industry, according to Landry Brown — totaled $65.35 billion in 2023, up 11.8% from 2022 and growing at a five-year CAGR of 10.5% since 2018.

“Pet food posted double-digit growth [for] three years running from 2020 to 2022,” Landry Brown said. “…During 2022 and 2023, however, much of the dollar advancements stem from inflation.”

Channel preferences continue to shift among pet owners in the United States, as evidenced by market share gains for e-commerce and losses for brick-and-mortar channels observed between 2018 and 2023.

Packaged Facts estimated e-commerce to hold a 37% share of US pet market retail sales in 2023, up from 20% in 2018. This comes at the expense of the brick-and-mortar channel, which was estimated to hold 63% of the market share in 2023, down from 80% in 2018. The market research firm expects these trends to continue through 2028, projecting e-commerce to increase its market share to 44% by 2018, leaving brick-and-mortar channels with 56% of the market.

“…[The] mass market is relatively holding onto some share, more so than pet specialty,” Sprinkle added.

Important to note, this market share data by distribution channel includes both pure-play online retailers, like Amazon and Chewy, and omnichannel retailers, like Walmart, PetSmart, and others, Sprinkle explained. This indicates consumers are increasingly shopping online for pet products through various outlets, providing a potential opportunity for big box and pet specialty retailers to ramp up their omnichannel efforts to meet these consumers digitally.

For 2024, Packaged Facts is projecting US pet market retail sales of $152.28 billion, which would represent an increase of 4.9% from 2023. For 2028, the market research firm is expecting sales to reach $192.35 billion, which would represent a five-year CAGR of 6%.

“With all these various factors currently impacting the market, it’s hard to say exactly where things are going to go from here, although from our perspective we’re taking a cautiously optimistic approach,” Landry Brown said.

Regarding the industry’s projected growth through 2028, she added, “…This growth could be a little lower, should younger demographics remain slower to assume pet ownership, and should the economic situation remain in flux.”


The impacts of inflation

Inflation for non-discretionary categories, like pet food and veterinary services, ran rampant in 2023, with the consumer price index up 10.5% for pet food products and up 9.1% for veterinary services. At the same time, volume growth, particularly in the pet product categories, has remained flat, according to Lummis.

“...Inflation has really pumped up and accounted for a lot of the dollar growth, which is very different from the real growth,” said David Sprinkle, Packaged Facts.

“During the pandemic years and since… inflation has really pumped up and accounted for a lot of the dollar growth, which is very different from the real growth,” Sprinkle said. “…We’re past a boom period for the pet industry driven… in large part by a rising dog population. That has passed, and now we’re moving toward a normalization [period] of inflation.”

The impact of this inflation has been seen widely across consumer goods categories, not just in pet. According to a survey of pet owners conducted by Packaged Facts in January 2024, nearly one-third (31%) said their ability to buy non-essentials and/or pay monthly bills have been impacted by the current economic environment, Lummis shared. In the pet industry specifically, Sprinkle added simultaneous premiumization and pet product inflation has created a perfect storm for affordability.

While market research has shown both affluent and lower-income households have both been affected by inflation, Lummis ventured to say this third of the market is “probably concentrated mainly in the lower household income cohorts.”

“Those are the households that the pet market has had some trouble attracting anyway, just because of the high cost of pet ownership,” he added. “…A good long-term strategy for the market is probably not to continue to simply rely on affluent households’ willingness and ability to spend more, but to also draw in some of those lower-income households.”


Opportunities for private label brands

In the same January 2024 survey, Packaged Facts asked pet owners about their shopping sentiments when it came to pet products. Overall, 73% of these shoppers said they are seeking out lower-priced or discounted pet products, compared to 70% in February 2023 and 66% in January 2022, and 30% said they are “spending less on pet products because of the economy,” up from 27% in February 2023 and 18% in January 2022.

Additionally, 67% of pet owners said they believe pet products are becoming too expensive, and 63% noted they are spending more on pet products than they had in the past. Premiumization will continue to be a harbinger for market growth, Lummis and Sprinkle agreed, but it will remain crucial for brands to provide both value and benefit to pet owners and their four-legged companions going forward.

“One of the obvious beneficiaries of that trend would be private labels, and we are seeing growth in private-label spending,” Lummis shared. “We’re also seeing a lot more emphasis on private labels by retailers.”

According to the survey, more than one-third (37%) of pet owners agreed with the statement, “Private label (store brand) pet foods provide the same or better quality compared to national brand pet foods,” to some extent.

“That’s a nice, big share, but it shows there’s definitely still opportunity here,” Landry Brown said. “If you look at the flip side, 23% of pet owners disagree with this sentiment. So, a focus on quality, paired with value, in the private label space makes a lot of sense.”

Sprinkle added that consumer attitudes toward private label versus national brands may also continue to shift as younger pet owners become more comfortable with store brands and focus more on key product claims, sustainability angles and overall quality.

This is the first of a two-part series covering Packaged Facts’ recent “US Pet Market Outlook 2024” webinar on March 13. Find the second part of this series here.

Keep up with the latest pet food trends on our Trends page.