U.S. Pet Spending to Hit $100 Billion by 2030?

Pet spending in the U.S. increased 4.7 percent from $50.96 billion in 2011 to $53.33 billion in 2012, according to the American Pet Products Association. The APPA forecast growth of 4.1 percent to $55.5 billion in 2013.

At that rate, U.S. pet spending would surpass $100 billion a year in 2026.

“We are noticing several trends contributing to the growth of the industry,” says Bob Vetere, president and CEO of the APPA. “These trends include the positive impact of pet ownership on human health, which we expect to continue to fuel pet industry sales for years to come. And, as the pet industry proves to be recession resistant, we’re confident that this upward trend in spending will endure.”

What's driving the continued growth? For one thing, the pet population appears to be growing. With its just completed 2013-2014 National Pet Owners Survey, the APPA estimates a record 68 percent of U.S. households now own pets, up significantly from 62 percent in 2010.

While pet population figures reflect gains in the adoption of dogs and cats, it also reflects increased purchases of various hobby pets: fish, birds, reptiles and small animals. The APPA reported live animal sales grew 3.3 percent from $2.14 billion in 2011 to $2.21 billion in 2012 and forecast sales growth would accelerate to 5.9 percent in 2013 to $2.31 billion.

While live animal sales are a relative sliver in the overall pet spending pie, they do spur spending in the supplies and OTC medications category, which was the fastest growing of the three major categories (pet food and veterinary services are the others). Supplies and OTC medications grew 7.4 percent in 2012 to $12.65 billion and is forecast to grow 4.4 percent to $13.21 billion in 2013.

The supplies and OTC medications category also benefited significantly from a rise in the use of OTC medications as an alternative to professional veterinary care, the APPA reported. Indeed, veterinary spending grew a comparatively slow 1.9 percent in 2012 to $13.67 billion. That growth rate is forecast to increase to 3.9 percent in 2013. These figures correlate with comments made by Bob Antin, president and CEO of VCA Antech, the largest operator of veterinary hospitals in the U.S., in a quarterly conference call earlier this month.

“The bigger one [factor affecting growth] over the last few years has been the economy,” Antin said. “Some of it is counter intuitive. Our most intensive hospitals, the larger specialty hospitals, the ones that have the capability that you need when your pet is sick, those have had a higher growth rate and a higher revenue per invoice than general practices. So, you would think it would be the other way around that people would be hesitant to spend the money on sick pets. In turn, what they're really hesitant is they're hesitant to spend the money on well pets.”

Pet food remains the largest single category of pet spending, accounting for nearly 40 percent of the overall market. It grew 3.9 percent in 2012 to $20.64 billion and is forecast to grow 2.9 percent in 2013 to $21.26 billion. The pet food market obviously grows with the overall pet population, but also benefits from continued long-range trends such as the humanization of pets  (and subsequent pampering) and trends toward more natural and premium foods (which are perceived as healthier by consumers and may be seen as an alternative to veterinary care).

Indeed, pampering drove the fastest-growing category of U.S. pet spending in 2012: Pet Services (grooming, boarding, day care, training, and other non-veterinary services). That category grew 9.7 percent in 2012 to $4.16 billion and is forecast to grow another 9.1 percent to $4.54 billion in 2013.