Pet Industry Outperforms Estimates in First Half of 2021

 The industry saw overall sales growth of 6.7% over 2019, bringing total sales of products and services to $103.6 billion. APPA projected continued strong sales in 2021, estimating that growth would approach 6%, bringing total industry sales to $109.6 billion by year-end. 

APPA's midyear update to the U.S. Pet Industry Expenditure Report reveals that two categories have outperformed the estimates during the first half of 2021. Pet ownership showed continued growth during this period, and pet owners continuing to spend at unprecedented rates. 

Pet Food & Treats shows an estimated 13.5% increase over 2020 for the first half of 2021. This increase was driven by gains in all channels, with e-com, Farm & Fleet, and Direct to Consumer continuing to gain share. 

Supplies, Live Animals & OTC Medicine show an estimated 20% increase over 2020 actuals for the first half of 2021. This gain represents record performance as discretionary purchases accelerated due to various factors, including stimulus payments, new pets in the home, and new pet owners who show a propensity to spend more on their pets than others in their cohort. Inflationary pressure attributes to some of these gains as rising production and transportation costs are passed along to consumers. 

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While not predictive of full-year results, these first-half numbers point to strong growth in all categories, including non-veterinary services (boarding, grooming, day care) that were severely impacted by lockdowns during the height of the pandemic last year. 

Challenges remain for manufacturers and importers dealing with the breakdown of the logistics infrastructure as they struggle to meet consumer demands. According to Chad Moutray, chief economist at the National Association of Manufacturers, 'There was significant upward pressure on wages [in September], with manufacturers continuing to cite difficulties in finding workers.

The average hourly earnings of production and nonsupervisory workers in manufacturing rose 0.6% from $24.04 in August to $24.18 in September, with a 5.1% increase over the past year, up from $23.01 in September 2020. That matches the year-over-year gain in August, which was the fastest wage growth since September 1982.'

It is safe to say, however, that the industry is likely to breach the $110 billion sales mark this year, only one year after exceeding the $100 billion threshold for the first time in 2020. The gains in pet ownership combined with increased spending from younger generational cohorts should continue to drive strong growth for the immediate future. 

by Steve King -CEO at American Pet Products Association (APPA)