The Pet Economy’s Pandemic Boost
The trend of valuing pets as family members was already well entrenched pre-COVID. Now, people stuck at home seeking companionship and comfort are boosting pet ownership and spending.
When the pandemic hit, Cara Ostomel’s first goal was to potty train her youngest son. After she achieved that, the next step seemed natural: why not get a puppy and “potty” train it, too?
The Ostomel family, who live in the Bay Area, had already been thinking about getting a German shorthaired pointer in the next year. But the prospect of working from home for the foreseeable future gave the family of four more flexibility for training a puppy. “It pushed us to make the move sooner rather than later,” Ostomel says.
The Ostomels aren’t alone in seeing the pandemic as a good time to add a pet to their household. A survey by the American Pet Products Association found that 6% of respondents said they have brought in a new pet due to the pandemic. According to market research firm Packaged Facts, pet ownership, currently at 54% of American households (some 68 million), is expected to grow 4% this year, to nearly 71 million households.
What’s also growing is the bond between humans and their animals: 59% of respondents in the American Pet Products Association said they felt closer to their pet due to COVID-19. What’s more, a survey by Zoetis Petcare found that 72% of pet owners said they wouldn’t have been able to get through the pandemic without their pets.
While the pandemic has caused some pet industry analysts to revise forecasts for total U.S. pet expenditures this year—which reached $95 billion in 2019—the industry has largely been recession-resistant during past downturns. “The trend of treating a pet like a member of the family rather than an animal that lives in the backyard started about a decade ago,” says Steven King, president and CEO of the American Pet Products Association. “Some pet owners might change some of their buying habits to find more value-oriented products for their pets. But often they’re reluctant to make major changes if their animal is thriving and feels good, unless there’s a significant economic hardship.”
With millennials being the largest cohort of pet owners, the trend of spending (and doting) on pets is likely to continue. Even before COVID-19 hit, pet industry offerings were expanding to include “clean” pet food, BPA-free toys, and calming remedies such as CBD oil and melatonin chews. And it’s not just furry, cuddly animals that are getting the love. According to King, there’s been a jump in sales of aquariums and reptiles throughout the pandemic. “I was talking to a major reptile and small animal wholesaler just recently and his biggest concern is not being able to satisfy the demand of his customers,” King says.
Before the age of the coronavirus, the Marcus family in Chappaqua, New York was a one-dog clan: Champ, a Middle Eastern Village dog, was their “third child.” But when Sonja Marcus’ daughter started raising awareness about the difficulty older dogs face in getting adopted, the family decided they should bring home a friend for Champ. Enter Serene, a six-year-old mutt who is “the sweetest little cuddle bug,” Marcus says. “I think we would’ve waited until the spring of next year to get another dog, but then we realized we were going to be home for a while.”
Serene isn’t the only pandemic pet addition for the Marcus family. Sonja’s husband, Robbie, decided to splurge on an aquarium, complete with dozens of fish, coral, and blue lights to create a home-office sanctuary. All in, the cost was “north of $4,000,” though Robbie declined to give a full dollar figure. Quips Sonja: “I don’t know if this is his mid-life crisis, but now I have a shark-size aquarium in my house.”
Of course, many pandemic pet owners have discovered that bringing home a pet during a time when they themselves are confined isn’t completely what they envisioned. Ostomel, in the Bay Area, paid approximately $900 to a breeder to fly their puppy, Lucy, from Kansas to California when it wasn’t going to be feasible for them to go get her. Then Lucy got sick with worms and didn’t respond to initial medication, causing multiple trips to the vet.
The Marcus family, too, had some extra unexpected costs: the day after they adopted Serene, they found out she had a tumor on her mammary glands, leading to a major surgery. And about a month later, the dog split her lip after jumping to chase a chipmunk. The costs for Serene have now amounted to more than $3,000 in her short five-month span with the family—making the fish investment not all that crazy, anymore.
PREMIUM FOOD, PREMIUM CARE
While about a quarter of pet owners view pet supplies as a discretionary expense, according to the American Pet Products Association, 70% of pet owners say their pet’s diet was very important to them and that they wouldn’t change it regardless of their financial situation. So as people have started to consider what they put in their bodies, they’ve extended that courtesy to their pets as well.
Several years ago, pet analysts began noting significant growth in pet foods that included superfoods, such as blueberries, cranberries, and sweet potatoes. According to a 2018 report from market research firm Nielsen, pet food with probiotics grew 139% year over year, and one survey of pet owners found that 35% of respondents, whom were cat and dog owners, expressed an interest in feeding their pets a vegan diet. On the opposite end of the spectrum, sales of raw pet food, such as diced chicken and beef liver, have also grown in popularity. According to Nielsen, U.S. sales of fresh pet food in groceries and pet stores jumped 70% to more than $546 million between 2015 and 2018.
Part of what’s made sales of premium food successful is the shift from brick-and-mortar pet shops to online food subscriptions, led by the likes of Amazon and Chewy.com. “Once you find a food your pet likes and seems to be thriving on, the ability for it to show up once a month at your door is very attractive,” King says.
The desire for convenient, premium food has gone hand in hand with the expansion of pet insurance. Last year, the pet insurance market in the U.S. grew 24%, to $1.56 billion as more pet owners look to offset the costs of being pet owners. Indeed, some human resources departments have added pet insurance to the list of benefits they offer employees, as a way to attract top talent.
Much of the pet insurance boom, of course, is because the cost of vet care has skyrocketed. The first-year costs of owning a dog or cat exceeds $1,000, according to the ASPCA. While some of these are one-time costs, annual pet expenses typically range from about $400 to $1,100 a year—and that’s only accounting for preventative medical costs. As such, average accident-illness pet insurance premiums for cats and dogs cost $349.93 a year and $585.40 a year, respectively, according to the North American Pet Health Insurance Association.
But even pet insurance can’t mitigate all expensive endeavors. After discovering that her 15-year-old black-and-white cat had hyperthyroidism, Carrie Lawson tried specialty foods and several medications to treat the disease—some of which was covered by her pet insurance. When that didn’t work, she resorted to radioactive iodine treatment, a $1,500 injection not covered by her pet insurance. “My husband and I argued over the cost,” she says. “He felt we shouldn’t be spending that kind of money on an older cat. I told him I’d know the cat longer than him so it wasn’t up for discussion.”
A MARKET FOR NOVELTY ITEMS
Much like the baby-product industry, the pet economy is also finding success in novelty products, including DNA testing, calming aids containing melatonin and CBD oil, pet artwork, and portable playpens.
After adopting Serene, the Marcus family decided to DNA test her the way they had Champ to find out what type of mutt she was. They paid about $100 and sent off a swab from the inside of Serene’s cheek. A few weeks later, they received an email with results: 26% boxer, 16% American foxhound, 14% Collie, 14% Chow Chow, 8% Rat Terrier and a handful of other breeds—including 2% American Eskimo.
For those pet lovers who want their furry friends to grace their walls, West and Willow, a pet portrait brand started last year in New York City, has entered the space to turn digital pet photos into modern works of art, starting at $40 a print. In less than a year, the company has made 100,000 portraits and expanded offerings to include phone cases and limited-edition designs.
And for a calming effect, melatonin chews and CBD-oil infused treats for cats and dogs have helped in situations from thunderstorms to dreaded trips to the groomer. While reviews of such products vary in terms of efficacy for making pets chill out or lessen their anxiety, some pet owners swear by these treats. As a buyer of melatonin soft cat chews put it, “I have two cats who love to run around and play fight like crazy in the middle of the night causing me to get zero sleep. I give them two of these before I go to bed and they’re out like a light!”