Three Pet Industry Predictions
While it is impossible to know exactly what the coming year will bring for the pet trade, there are a few developments that the industry can expect to see in 2016.
Predictions on what the coming year will bring are as ubiquitous as mall Santas in December. The only difference is that when Santa doesn’t deliver, there are consequences. Predictions are forgotten before the champagne is uncorked on New Year’s Eve. So, if you are still reading, grab a cup of eggnog and a slice of fruitcake, and let’s see what 2016 has in store for the pet industry.
2016 will be another good year for the pet industry.
I’m not exactly climbing out on a limb with this prediction. Economic activity in the U.S. is expected to be strong, particularly in the second half of the year, so consumer confidence will be high. Pet product sales should reflect overall consumer spending strength. But the real news is that demographics strongly favor continued growth in pet spending.
The pet industry’s tremendous growth has been hitched to the massive Baby Boom generation, the oldest of whom are just entering their 70s. While consumer spending typically begins to decline at age 55, chief industry numbers cruncher John Gibbons (petbusinessprofessor.com), observes that “pet spending reaches its peak (at ages 55-64) as consumers focus on their ‘pet children.’” With that said, Boomers can be expected to continue to drive pet product sales for the next decade.
But the really good news for the industry is that the even more massive Millennial generation—born between 1985 and 2010, and numbering 100 million strong—is just now entering its prime spending years. These folks are the future of the pet industry, and they are embracing pets as enthusiastically as the Boomers. Keep providing them with products and services they need to have a rewarding experience as pet parents, and you’ll have a customer for the next 40 to 50 years.
Research will reveal even more reasons why pets are good for us.
The human-animal bond is a well-recognized area of study, with more than 25,000 resources now housed in the pet industry-funded Human Animal Bond Research Initiative Foundation (HABRI) archives. The U.S. Public Health Service states that “companion animals improve mental health and emotional well-being in humans” and that pet ownership contributes to obesity prevention and smoking cessation.
HABRI will commit another $200,000 in 2016 to fund original, peer-reviewed research into the benefits of pet ownership. From the benefits of service animals for veterans with post-traumatic stress, to increased positive social behaviors in children with autism when an animal is present, this groundbreaking research is helping the medical profession and the insurance industry understand the positive role pets play in improving human health. Preliminary results from a HABRI-supported economic study show an $11.7-billion savings to the U.S. healthcare system as a result of pet ownership.
The supply of pets will continue to be a concern.
Continued growth in our industry depends on a steady supply of healthy, affordable pets. But threats, both economic and legislative, are looming and could make it harder for consumers to become pet owners. Take dogs as an example of a seemingly inexhaustible supply chain that could slow to a trickle if current trends continue. There are some 87 million dogs residing in 44 percent of U.S. households. A recent study funded by the Pet Leadership Council revealed that more than one-third of those animals were obtained from friends and neighbors, and one-quarter were obtained from a shelter. Local breeders accounted for 22 percent.
Dogs have an average lifespan of 11 years. So, just to maintain the current status quo, 7.8 million dogs need to be replaced each year. But the number of U.S. households continues to grow and will approach 140 million by 2025. Where will the animals that will fill these homes come from?
Spay/neuter laws have had a major impact on the number of “oops pets,” and shelters in many parts of the country are importing dogs to satisfy demand for adoptable animals. Yet an increasing number of jurisdictions (more than 80 at last count) have banned the sale of puppies by pet stores, ostensibly to quell the market for “puppy mill” animals and to encourage adoption. While pet stores supply less than seven percent of the dogs acquired each year, removing this supply will only exacerbate the situation long term.
The pet supply concern is not limited to dogs, and the industry needs to address this issue sooner rather than later. Other pets common to the industry could be in short supply for a wide variety of reasons. Tropical fish collected for the aquarium hobby are impacted by climate change that is decimating coral reefs in many parts of the world. Caged-bird breeding has declined as long-time breeders retire and younger people aren’t following in their footsteps due to low margins and changing lifestyles.
The pet industry has the intellectual capital to solve these challenges. So let’s roll up our sleeves and get to work. Millions of pet owners and future pet parents are depending on us!
Steve King is a 30-year pet industry veteran who is president of the Pet Industry Distributors Association and executive director of the Pet Care Trust.