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US Pet Care and the Future of Premiumisation

9/6/2022
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The US is by far the most valuable market for pet care, eclipsing sales in other countries, and with activity here a harbinger for global trends. As with many other national markets, the pandemic and resultant home seclusion actually supported growth. Consumers took comfort in pet companionship, with increasing pet ownership and driving demand for premium pet care, as an anthropomorphic expression of affection and fidelity. But the looming threat is macroeconomic – rapid increases in inflation and prices are obviously going to cause very real problems for trends that are dependent on comparatively secure levels of consumer affluence and discretionary spending.

US Pet Care Market in Context: The Top 5 Global Markets for Pet Care 2022Source: Euromonitor International Passport Database

After the pandemic: Radical changes to daily life boost pet ownership

Societal changes following the pandemic have tended to benefit demand for pet care in the US. Perhaps most significant is the ongoing practice of regularly working from home, giving consumers confidence they have time and availaibility to look after a pet. This has been key to driving pet ownership and increases in the dog and cat populations, to the direct benefit of demand for pet care products and pet food. Another obvious legacy is the acceleration of e-commerce, particularly important in pet care, and where the momentum and retailing shift generated by online players such as Chewy is unlikely to abate, but rather to cast an ongoing influence over other retailers, and consolidating the essential need for an online presence.

Are cracks starting to show in the premiumisation trend?

For years, the pet care industry in developed markets has been boosted by the constantly-evolving trend to premiusation – pet food which boasts healthy or exotic ingredients, and which persuades owners they are giving their pets the products they deserve. This is particularly true in the US, on the back of high standards of living, and highly developed retail infrastructure and consumption habits. A parallel trend in premiumisation can be seen in the growth of higher-priced, value-driven products – perhaps exemplified by considerations of sustainability, with a growing number of consumers prepared to pay a premium for products that promise minimal environmental impact.

Supply chain disruption and rising costs of raw materials seen at the start of 2022 herald a threat to this longstanding trend. Costs have increased for common pet food ingredients such as chicken, for example, prompting many companies and retailers to externalise these costs through higher end prices. Supply chain disruptions have also led companies to struggle to keep products in stock.

At present, premium brands are still expected to grow faster than economy and mid-priced brands, but the brands in lower-price tiers are clearly being boosted, as more consumers are forced to trade down amidst drastic price increases. Further into 2022, this pressure is likely to intensify – the result could be a more back to basics approach across pet food, pet products and pet healthcare for many. Given the global scale of this issue, and its immediate and direct impact on discretionary income, this is also likely to be an emergent pattern across many other high value markets, such as the UK.

Full analysis and industry data are available in Euromonitor’s latest report on Pet Care in the US. For further insight and data covering all major pet care markets across 52 research countries, click here

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