Industry Insight

What Are The Trends for '06

By Bob Vetere
Managing Director & COO, APPMA

Bob Vetere

Now that I have finally caught on to writing 2005 on the date line for everything, welcome to 2006!! While 2005 in the wake of record gas prices and seemingly endless hurricanes and storms was a good year for the pet industry, 2006 looks even better. The Christmas season enjoyed a resurgence in the retail area and the prognosis is that will carry over to the New Year. The caveat is that things over the past year are starting to play out a little differently than in the past. What were once the lynchpins of growth are taking back seats to some new, exciting trends.

The humanization of pets helped fuel the boom over the past year and should continue to be a force moving forward. This mindset is the driving force behind the current demand for a wider variety of products including high-end products, and products and services that mirror what we want for ourselves. Consumer demand for pet products and services is expanding into almost every corner of what has typically been reserved for human consumption which, in turn, provides many opportunities for savvy pet business owners and managers.

A quick look at the demographics of some of the “new players” in the pet marketplace is very revealing. Older people (us Baby Boomers!) are increasingly seeking pets as companions. Add to this the fact that people are marrying later in life, having fewer children, if any, and are maintaining busy lives and you begin to understand the changing role of a pet to a significant segment of the market.

The trends to watch for in 2006 will in large part focus on supplying these groups with their needs. Among the trends we feel will be leading the pack in 2006:

New Pet Services: the younger crowd is looking for everything from doggy day care and pet sitting to in-home mobile grooming. The boomers are looking for pet friendly destinations as well as pet behaviorists, pet travel agents and the like.
Medical Advancements in Pet Care: A growing number of veterinarians are being trained to provide highly specialized medical services. Canine dialysis, brain surgery, hip replacements, cancer treatments, teeth correction with braces and cataract surgery along with canine prescription lenses are becoming more readily available. APPMA’s 2005-2006 National Pet Owners Survey notes increasing numbers of pets are given medications and/or drugs led by dogs, cats and saltwater fish.
Animal Assisted Therapy: While most pet owners recognize that pets make them feel better, science is catching up with dozens of studies showing pets can help with learning and education, stress reduction, lowering blood pressure and reducing the risk of heart attacks. In short, animal assisted therapy is just one example of the new and imaginative ways of bringing pets and people together for mutual benefit.
Licensed Pet Products: Not only has the licensing of popular American icons crossed over into the world of pets, it is taking over. Popular characters are popping up on everything from pet clothes to treats.
Private Labeling: This growing segment is not just for big box retailers any more. Independent retailers are also finding innovative ways to introduce their own brands. Store brands now account for 11 percent of cat food, 12 percent of dog food, 13 percent of pet supplies and 21 percent of cat litter according to the Private Label Manufacturers Association. As the pet industry matures, retailers are relying more on their own brands to differentiate from their competition through either value-priced or premium-priced product strategies.
Mergers and Acquisitions: With all this growth and innovation, it’s no wonder the industry is starting to see more mergers and acquisitions. Currently, companies acquiring pet product manufacturing companies are paying higher valuations than they were just one year ago. This trend demonstrates the industry is maturing while an influx of smaller start-up companies also indicates healthy growth – certainly good news for the industry no matter how you look at it.

With innovative new pet products and services being introduced and bought at an increasingly rapid pace, it appears Americans’ love affair with their pets will continue into the New Year and beyond. Good luck in determining how you can take advantage of that romance and even improve upon it in 2006