Why it matters:
- Americans spent $123 billion on their pets in 2021, up 13% over the previous year.
- Over 114 million U.S. households own a dog or a cat.
- With 32% of millennials and 14% of Gen Z owning pets, spending on pets is expected to show continued growth for many years.
A growing number of Americans think of their dog or cat as a member of the family, and that is driving an explosion in new businesses designed to pamper and protect those pets.
Companies ranging from small startups to America’s largest pet retailers are capitalizing on the pet humanization trend to sell new products and services ranging from human-grade fresh meals to fitness trackers to medical diagnostic tools.
Pet spending soared during the pandemic, as 23 million U.S. households adopted new pets. Pet-related spending jumped from $90 billion in 2018 to $123 billion in 2021, according to data collected by the American Pet Products Association.
But even pre-pandemic, pet spending had been trending upward, as more pet owners began to think of themselves as “pet parents” and showed they were willing to pay more for food, medical care, and supplies for their household animals.
“There’s really been a huge shift,” said Dr. Audrey Ruple, Associate Professor at the Virginia-Maryland College of Veterinary Medicine at Virginia Tech. “We’ve moved from having animals be property to being truly a part of our household and part of our families,” she told CO—.
“People are much more inclined to go to greater lengths to keep their dogs healthy,” said Dr. Ruple, who has collaborated with pet insurance provider Fetch by The Dodo to create an online platform for dogs that helps predict possible health concerns.
From Chewy to Walmart: Angling to win the hearts — and wallets — of millennial and Gen Z ‘pet parents’
Chewy, the online pet retailer founded in 2011, and taken public in a successful IPO in 2019, leaned into the humanization trend, being careful to always refer to pet owners as “parents.” They also showed they understood the deep love of pet parents for their pets by sending customers painted portraits of their pets and by sending flowers and condolence cards when pets died.
The country’s largest pet retailers also have increased their efforts to win the hearts and wallets of pet parents.
Walmart this month announced a partnership with pet-focused media brand The Dodo to offer a “pet lovers’ box” of curated products selected by pet parents, for pet parents.
Petco CEO Ron Coughlin, in his company’s most recent earnings call, said he sees the pet humanization trend as a permanent shift that will continue to boost sales.
“Humanization has been a trend for the last decade,” Coughlin said, noting that the trend is particularly strong with the Gen Z and millennial demographics.
“As Gen Z and millennials become a greater proportion of pet parents, that creates upward pressure on premiumization” – spending more for better quality food and services, he said.
Here are five categories being disrupted by the pet humanization trend:
Food: An appetite for human-grade eats
The humanization trend has given birth to numerous brands promoting human-grade meals for dogs and cats. Some of those meals are designed to look like what the human members of the family are eating, with ingredients such as whole wheat macaroni, sweet potatoes, and squash.
JustFoodForDogs, which began preparing fresh meals for dogs in kitchens on the West Coast, is now opening kitchens in Petco stores, and has partnered with the retailer to create a line of frozen meals to be sold in freezer cases at Petco.
According to the American Pet Products Association, Americans spent $287 million on dog food and $254 million on cat food last year, making food the second-largest spending category behind veterinary care.
[Read: Pet Food Disruptor JustFoodForDogs Puts Fresh Ingredients on Menu]
Pet supplements: Wellness sells
Just as pet owners increasingly are taking nutritional supplements designed to do everything from promoting better sleep to boosting the immune system and relieving anxiety, they’re also turning to natural remedies to improve the lives of their pets.
Sales of pet supplements jumped 21% in 2020, and retail sales are expected to exceed $1 billion by 2025, according to industry reports.
Fast-growing online brand Native Pet, for one, raised $6 million in Series A funding this year and expanded its distribution to over 300 Target stores.
Co-founder Dan Schaefer told CO— he was inspired to start Native Pet in 2017 with his friend Pat Barron after adopting a Labrador retriever with health issues and seeing there wasn’t much available in terms of nutritional and wellness supplements for dogs.
Schaefer remembers telling Barron back in 2014, when he adopted his dog, that functional pet foods and supplements are “going to be a huge category. There’s nothing out there.”
“We felt very strongly that pet parents increasingly believe food is medicine, just like humans do,” he said.
Native Pet aims to differentiate itself from the pack of supplement startups by creating unique, made-in-the-U.S. products that feel more like food than the soft chews used by other brands. The company’s sales have been more than doubling year over year.
Companies ranging from small startups to America’s largest pet retailers are capitalizing on the pet humanization trend to sell new products and services ranging from human-grade fresh meals to fitness trackers to medical diagnostic tools.
Insurance: Next-generation strategies reflect new attitudes
Pet insurance is another category that has seen a spike in demand, as more pet owners seek coverage for surgeries and medical procedures.
At least a half a dozen pet insurance companies have launched since the beginning of the pandemic, and 10 have launched in the past three years.
The large retailers also are tapping into the demand for insurance. Petco offers its own insurance plan, Chewy has a partnership with pet insurer Trupanion, and Walmart recently announced it was adding pet insurance to its Walmart Insurance Services through a partnership with pet insurer Fetch by The Dodo.
Fetch by The Dodo originally was called Petplan. It had been selling pet insurance policies for more than a decade when pet-focused social media brand The Dodo acquired a minority stake, and the company was rebranded as Fetch by The Dodo.
The company set out to capture next-generation pet owners as customers by modernizing its technology and by responding to the new attitudes towards pets.
“Over the course of the last couple of years, we’ve spent millions of dollars to transform ourselves from insurance to insure-tech,” Fetch by The Dodo CEO Paul Guyardo told CO—.
“Everything that used to require an inbound phone call to talk to an agent can now be done in the palm of your hand, on [an] app, on your laptop, through chatbots or live chat,” he said. “Because that is the way millennials want to do business.”
The pet humanization trend has made pet owners increasingly willing to do everything they can to protect and extend the life of their pets, he said.
“In my parents’ generation, if a pet would get ill, you would just respectfully put it down. For today’s pet parents, pets are part of the family, and you want to treat your pet with the same love, and care, and attention that you would for any human member of the family,” Guyardo said.
Millennial and Gen Z owners also want information and advice on how to keep their pets healthy, he said. Fetch by The Dodo is preparing to launch a predictive health platform for dog owners that will provide a free health report listing health concerns for a particular dog based on their breed, and preventive measures to take in advance.
Vet care: Mimicking trends in human medicine
The pets-as-humans trend has led to new ways of delivering vet care that mimic some of the trends in human medicine.
Walk-in clinics, similar to the urgent care model for humans; boutique chains that charge a membership fee and promise round-the-clock access to medical advice; and telehealth options have all launched in recent years to meet the demand of younger pet owners for next-generation vet care.
Bond Vet, an East Coast-based chain that models itself as a CityMD urgent-care-type clinic for dogs, is rapidly expanding and expects to grow from 11 locations to more than 30 by December.
Modern Animal, a chain that uses a membership model, has raised $164 million to fund its expansion and has five clinics in Los Angeles and San Francisco, with six more planned to open on the West Coast this year and in 2023.
Earlier this year, online pet medications company PetMed Express (previously known as 1800PetMeds) formed a partnership with two-year-old telehealth startup Vetster in order to offer telehealth vet consultations to PetMed customers.
Pet tech: Connected collars, dog DNA testing, and more
The past decade has seen an explosion in pet tech startups, as some of the advancements invented for humans are being extended to pets.
More than half a dozen startups have launched that offer GPS tracking and digital ID tags for dogs and cats, as well as connected collars that let owners monitor their pet’s activity from a smartphone.
There has also been a rush to create new medical tests and devices for dogs and cats.
Since 2015, Embark Veterinary has sold over 1 million DNA testing kits for dogs. The company, which is backed by investors that include a co-founder of human-DNA-testing company 23andMe, saw its revenues double between 2020 and 2021.
Animal Biome, founded in 2016, has tested over 30,000 stool samples of cats and dogs to give pet owners information about their pets’ digestion and gut health.
Butterfly Network, Inc., a Connecticut-based digital health company that makes handheld ultrasound devices, has created a specialized device for animals, the Butterfly iQ + Vet.
This May, Petco announced that it would be using the device at its 200 veterinary hospitals located at Petco stores.
Adding that tech, Petco CEO Ron Coughlin said recently, not only “allows us to provide pet parents peace of mind,” but will help Petco attract top vet talent to its hospitals. He called the device “one of the most sought-after technologies veterinary professionals asked for before choosing which hospital to join.”
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