How America’s love for its cats and dogs built the pet industrial complex

How America’s love for its cats and dogs built the pet industrial complex
Image: Basia Flores for Quartz
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In 1950, when cartoonist Charles Schultz created the comic strip Peanuts, Snoopy, the pet beagle of lead character Charlie Brown, lived in a dog house, was rarely seen indoors, and was fed bowl after bowl of unappetizing slop.

If Snoopy was around today, he’d more likely sleep in Charlie Brown’s bed, and dine on organic, cage-free duck stew, served with an herbal supplement to calm his nerves and anxieties.

Our relationship with our pets has changed dramatically since Snoopy’s days of fighting the Red Baron. Pets are in our homes and lives 24 hours a day, and 85% of dog owners consider their pets members of their family (it’s 76% for cat owners). In 22 US cities, the term “pet owner” has been replaced with “guardian” in municipal codes, and pet supply companies routinely use the term “pet parents” in their marketing. Today’s pets receive birthday presents, see pet shrinks, and take yoga.

As our animals have transformed from our property to our de facto children, a massive industry has developed to feed and care for them.

Americans spent nearly $100 billion on pets and pet care in 2020, according to estimates from the American Pet Products Association (APPA), a sum that has grown by about 4% to 5% a year since the great recession of 2008. That’s more than what they spend on smartphones or at the movies, combined, and greater than the GDP of Ethiopia.

Welcome to the pet industrial complex.

Globally, spending on pet food and supplies was $143 billion in 2020, up 34% since 2015, according to Euromonitor. The market research company uses a different methodology from APPA, which excludes veterinary care and services like grooming.

“Pets are largely considered members of the household, and as such people are willing to spend anything necessary to care for them,” said Steve King, president and CEO of the APPA. “It’s better food, better veterinary care, and more services.”

The vast majority of the spending is on dogs and cats, but there are increases across the board as families are also acquiring more fish, reptiles, birds, and small mammals, King said.

Coming along for the ride.
Coming along for the ride.
Image: Reuters/Issei Kato

It’s likely the coronavirus pandemic has just accelerated that shift as humans are spending even more time at home. While the US Humane Society recorded a surge of animal adoptions in the first months of the pandemic—temporary fostering was up 720% for one week in April—it likely subsided over the course of the year and may end up being down over all, said Lindsay Hamrick, director of shelter outreach and engagement.

We may never know whether adoptions climbed in 2020, because one of the enduring mysteries of the pet industry is no one actually knows how many pets exist in the US. It’s not tracked by any government agency, and so instead the industry relies on a pair of surveys, conducted by the APPA and the American Veterinary Medical Association, that put the number of pet dogs and cats in the US between 135 million and 184 million, with between 57% and 67% of US households owning a pet.

While the precise number of pets may be a mystery, there’s little doubt about the big, and growing, role they are playing in our lives and the economy.

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Table of contents

Big business steps in | Pet healthcare and insurance| A short history of pets| The future of pets

Image for article titled How America’s love for its cats and dogs built the pet industrial complex

Big business steps in

The size and steady growth of the pet industry has attracted the attention of private equity, resulting in a flurry of deals. One of the biggest was 2017’s $3.35 billion acquisition of online retailer Chewy by PetSmart, backed by BC Partners. Chewy was then spun off in an IPO two years later.

The giants of the packaged food industry are also heavily invested in pets. Nestlé owns Purina and Friskies, while Mars, the private held maker of M&M’s and Wrigley’s gum, owns brands like Pedigree and Whiskas, as well as the Banfield chain of animal hospitals. In 2018, General Mills paid $8 billion to buy Blue Buffalo, a maker of upscale pet food, and later that year J.M Smucker bought Ainsworth Pet Nutrition for $1.9 billion.

Pet care and pet food offers investors the size and stability of a mature industry, yet the changing nature of the relationship between humans and their animals means it has the characteristics of a new, fast-growing sector. While the first pet biscuit was first invented in 1860, in recent decades there’s been a rapid expansion in food marketed as natural or “human grade.”

“There’s a lot of innovation there,” King said. “There’s an absolute explosion of diets available for pets.”

Pet services like grooming and daycare are also growing rapidly, and there’s a thriving market for products that would have been unthinkable for Charles Schulz and Snoopy. Those include Bark, a subscription service that supplies dogs with new toys and treats every month, with items designed to please dog owners as much as their pets.

Populum, a small company in Tempe, Arizona, makes cannabidiol (CBD) products designed to improve humans’ skin and relieve stress and joint pain. The company was founded in 2016 and added pet products a year later. They now make up 20% to 25% of its annual revenue. Dog and cat owners are giving their animals CBD tinctures in their food, or feeding them CBD-infused treats.

A pet dog sniffs an organic dog food in Tokyo.
A pet dog sniffs an organic dog food in Tokyo.
Image: Reuters/Kim Kyung-Hoon

In his niche market, Gunhee Park, Populam’s founder, sees the same generational trends that have reshaped all of the pet supply industry.

“Our parents didn’t care,” Park said.  “If their dogs ate, they ate, and they didn’t care about nutrition.”

Now, the distinction between what’s good for humans and what’s good for pets has been blurred, he said.

“If I’m going to eat well, my dog should eat well, and if I take supplements, my dog should take supplements,” Park said  “Some of our customers spend more on pets than on themselves.”

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Pet healthcare and pet insurance

A similar change has happened in pet healthcare, too, making veterinary care and medicine a $30 billion industry in the US.

That’s in part because pet owners are now willing to pay for procedures for their pets that either didn’t exist, or were regarded as prohibitively expensive. Chemotherapy can cost from $5,000 to $11,000, while hip replacement surgery, an increasingly common procedure for large dogs, can cost $6,000 or more.

The more that we view pets as part of our family, the more we are willing to spend, said David Grimm, a science journalist and author of Citizen Canine: Our Evolving Relationship with Cats and Dogs. He said he was prompted to begin the research for his book after spending $3,000 on the emergency kidney care for a kitten he had adopted.

Pet owners routinely spend far more than the replacement cost of their animals, an indication that the bonds they form transcend simple economic considerations. “You wouldn’t spend $2,000 to fix a $50 toaster, but you’re happy to spend that on a pet,” Grimm said.

Banfield Pet Hospital, a chain of more than 1,000 veterinary clinics across the US and Mexico, has experienced double digit growth since 2015, when it was acquired by Mars. The company saw about 3 million animal-patients in 2020, up about 17% from the year before, according to Brian Garish, Banfield’s president.

A pet receives a drive-thru Catholic blessing on World Animal Day in the Philippines in October.
A pet receives a drive-thru Catholic blessing on World Animal Day in the Philippines in October.
Image: Reuters/Eloisa Lopez

Banfield specializes in preventive care, like checkups and rabies shots, and is developing tools and products to appeal to younger pet owners. One concept is the “wellness plan,” essentially a subscription model that allows unlimited office visits for a set monthly fee. “The future of the veterinary industry is about personalization, meeting people and their pets where they are, whenever and however they need care,” Garish said in an email.

The rising cost of pet care has created another fast-growing industry: pet insurance. Now a $1.6 billion segment of the US insurance market, pet insurance is growing at about 17% a year, according to a report from IBISWorld.

A big chunk of pet insurance plans are sold through companies that make it available as a benefit to their employees, with about half the companies in the Fortune 500 now offering it, said Heidi Sirota, who heads pet insurance for Nationwide. Nationwide, the oldest and biggest provider in the US, has policies on more than 880,000 animals (the first pet the company insured was Lassie, the TV star, in 1982).

It costs companies little to offer it, and surveys indicate employees both appreciate the benefit and think better of their employers when they make it available, Sirota said.

Despite its rapid growth, only about 2.5 million US pets are insured (about 80% of those are dogs), less than 3% of all total, according to the North American Pet Health Insurance Association. Given that 30% of pets in Sweden and 23% in the UK are insured, the industry is optimistic about its potential for growth.

And while vets and insurance take care of pets’ physical health, the burgeoning industry of pet behavior counselors, or “pet shrinks“, is ready to attend to their mental wellbeing.

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A short history of pets

Humans have lived with dogs and cats since the last Ice Age. For most of that history those pets were working animals. Dogs were used for hunting and to stand guard, while cats served to control vermin.

There is evidence of tight bonds between humans and pets from the ancient world, and some Romans were buried with their dogs. The real shift, however, came during the industrial revolution that began about 300 years ago, said Andrea Laurent-Simpson, a sociologist at Southern Methodist University in Dallas, and author of the forthcoming book Just Like Family: How Companion Animals Joined the Household.

With advances in health and economic productivity, families grew smaller and had more time for recreation. Pets became objects of amusement and entertainment, and children were encouraged to look after them to develop responsibility.

Perhaps the biggest single development in human-pet relations came with the invention of a seemingly innocuous product in the 1880s: flea and tick shampoo. As Grimm explains, prior to its sale, dogs and cats lived outside, in large part to protect their owners from the pests that lived in their fur. Once dogs came indoors—cats had to wait until 1947 and the invention of kitty litter—they became part of the household.

A dog sits on a sun chair at a beach for dogs on the Tiber river in Rome.
With family structures changing, it has become easier to consider pets as part of the family.
Image: Reuters/Chris Helgren

In the 1970s, there began another shift, as the nuclear family began to diversify into non-traditional structures. Families with single parents, families with no children, and same-sex partners became more common, according to Laurent-Simpson. At the same time, the pursuit of personal happiness and fulfillment became more socially accepted.

As the family changed, it became easier to consider pets as part of the family. And as humans considered their own happiness, they “started looking inward to their pets and recognizing them as sentient beings with wants and desires,” she said.

Now, pets are increasingly serving as surrogate children, for millennials who can’t afford to start families, or for single people who forgo having children. “In the interviews I have done, no one says ‘I think of my cat or dog as a human child,’ but their behavior says otherwise,” said Laurent-Simpson, who has written about how pets have taken the place of children among families.

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The future of pets

For the pet industry, this is a welcome development—to a point. The more pet owners treat pets like people, the more they are willing to spend on food, services, and healthcare. But when society starts to regard dogs and cats as humans, with human and civil rights, it would mean profound and destabilizing shifts for the industry.

The pet industry is based on the premise that pets are property, like livestock, and thus can be bought, sold, and euthanized. “Personhood,” as it’s called, could upend that dynamic.

“I avoid using the term ‘pet parent,’ because that would imply a relationship different than pet ownership,” said King of the pet products association.

The veterinary industry is particularly sensitive to that shift, since endowing pets with personhood could lead to malpractice suits and end euthanization, said Grimm. In cases where a pet dies due to malpractice, most states limit damages in suits to the replacement cost of the animal.

While some judges have begun to consider the needs of dogs and cats in custody battles, there’s a long way to go before pets are considered human in the eyes of the law. Thus far, efforts by animal rights activists to have elephants and  chimpanzees recognized as legally human have failed.

“I think we’ve maxed out how we can feel about these animals on an emotional level, but we’re just tipping our toes into legal waters about how we want to treat them,” Grimm said.

But animal rights activists have created some headaches for the pet industry by successfully campaigning to restrict the retail sale of dogs and cats from pet stores in about 200 cities. The goal is shut down the avenues for animals bred in so-called puppy mills—large-scale and unsanitary breeding operations—but King of the APPA says the laws punish reputable breeders as well.

In part because of those laws, and because of the effectiveness of spay and neuter policies, the supply of new dogs available for sale and adoption is flat or declining. According to a 2016 study conducted by Mississippi State University and funded by the pet industry, there aren’t enough shelter and rescue animals available for all the families that want one, and even adding dogs sold by breeders, there’s still a shortage of about 2.3 million dogs a year. One solution is the importation of dogs, a practice which raises concerns about the spread of disease.

For the pet industry, a growing demand for dogs is a good problem to have, and there’s little reason to think the industry won’t continue to grow. The specter of personhood, and the idea that pet ownership may one day be banned, is a very distant threat, said Grimm.

“These animals have been in our lives for 10,000 to 15,000 years,” he said. “I don’t think they are going anywhere.”