Inflation is strong in the pet market says John Gibbons. The Consumer Price Index has shown four straight months of double-digit, year-over-year monthly percentage increases. These are the first increases of more than 10 percent since 1981.
We’re sharing quotes from two sources that present economic trends in the animal health industry. Inflation historically affects pet spending in OTC, retail and veterinary. High fuel, grocery and weather-related energy costs hit pocketbooks hard.
Source: Pet Age, July 18, 2022. Link.
Excerpt from A GPS for Pet Businesses data:
John Gibbons lends this perspective. The 7.1 percent June YTD increase in Total Pet is far below the 8.9 percent record set in 2009 but four-plus times larger than the 1.5 percent average since then. Although pet spending continues to move to higher income groups, the impact of inflation varies by segment.
Supplies is the most affected category as many others are price sensitive. Super premium food has become widespread because the perceived value has grown. Higher prices just push people to value shop. Veterinary prices have strongly inflated for years, resulting in a reduction in visit frequency.
Source: VetWatch™, July 13, 2022. Link.
Excerpt from VetWatch™ report:
For the week ending July 9, 2022, aggregate YTD practice revenues are at +4.6 percent net growth versus YTD 2021 for the ~3,000 reporting practices. Period performance growth in unique patients (pets) remains at (-1.8 percent). Unique client and invoice growth posted (-1.8 percent) and (-2.6 percent) growth respectively vs PYTD results.
INSIGHTS: For the veterinary clinic, these data suggest a need for a stronger focus on client retention and value communication, plus continued advocacy for core vaccines and parasiticides. Monitoring margin and COGS by individual SKU is also warranted to avoid being upside down against replenishment purchases.