In his 2025 Pet Summit keynote address, Dave Bolen highlighted the widespread premiumization that exists in the markets for US pet products and services.1 As a business strategy, premiumization has been successful in leading much of the pet industry growth in recent years. However, it is not clear that the same strategy will bring similar continued growth into the future.
Premiumization refers to the strategy of developing an intentional focus on the more expensive, premium segment of a particular market. For pet products and services, key features of premiumization include recent trends in markets for pet food, boarding and grooming, treats, toys and accessories, and Veterinary services. Rooted in the growing strength of the human/animal bond, expenditures by pet owners have been consistently growing at a rate that exceeds inflation, with a large degree of innovation in new products and services at the upper end of the markets.
But the increasing expenditures haven’t all been about the human/animal bond. As the U.S. economy has grown in recent years, so have personal incomes, and accordingly the availability of discretionary dollars to consumer households. Combined with the changing roles of pets in our culture, this growth in income by itself would have been capable of fueling a certain amount of growth in pet spending. However, the rest of the premiumization story lies in the nature and distribution of the income growth.
As it turns out, income and wealth inequality in the US – i.e., the differences in income and wealth between the lower and upper ends of their respective distributions – have been on the rise for decades. Gaps between the upper and lower ends of the income and wealth distributions were substantially widened by both the Great Recession and the COVID-19 pandemic, and the differences are now substantially larger than in almost any other developed nation.2
For example, data from the US Census Bureau indicate that between 2013 and 2023, the mean annual income of the lowest 20% of U.S. households increased from $14,760 to $17,650, or a total of $2,890 (all in 2023$). Over the same period, the annual income of the highest 20% increased from $246,200 to $297,300, or a total of $51,100 (also in 2023$). Although the proportionate income gain was similar for the two groups, the higher income households actually gained over $48,000 more than the lower group during the 10-year period, with the impact being a much greater increase in dollars available for discretionary consumer spending.
Because of the increasing income inequality, which is expected to continue its trend for the foreseeable future, there is a growing disparity in pet-owners’ ability to allocate discretionary dollars toward pet products and services. When considered in combination with the growing importance and status of pets in our lives, the success of premiumization is not surprising. But because premiumization is focused on the upper segments of the market, pet owners in the lower brackets of the income/wealth distributions are increasingly less able to afford products and services for their pets.
Data from the 2024 National Pet Owners Survey (NPOS), commissioned by the American Pet Products Association (APPA),4 clearly demonstrate the impact of this ongoing trend. Across a total of 3,669 dog-owning households (and a corresponding 5,231 dogs), the mean and median total annual ownership expense per dog were $1,120 and $679, respectively. Across 3,389 cat-owning households (encompassing 6,097 cats), the mean and median annual ownership expense per cat were $748 and $470 in total, respectively.
These remarkable findings lead to three important conclusions:
1. The skewed annual pet ownership expense distributions (with the means being much higher than the medians) have arisen from premiumization, i.e., focus on the more expensive, premium segments of the markets. The pronounced gap between mean and the median – for both dogs and cats – indicates that the per-pet spending in the upper end of the distributions is disproportionately high. In fact, at the 90th percentile, total annual ownership expenses were $2,500 per dog and $1,575 per cat, respectively. Premiumization has been a successful strategy for growing the markets for pet products and services as indicated by the strength of the upper ends of the total expense distributions. Although this segment of the market may well decrease in relative size as income and wealth inequality continue to increase, focus on premium pet products and services should not be abandoned going forward. The approach has achieved notable success to date.
2. The median annual total ownership expense values of $679 for dogs and $470 for cats indicate that pet ownership can actually be quite affordable. The fact that 50% of dog and cat owners spent less than these levels suggests that, while pet ownership *can* be very expensive, it doesn’t *have* to be. For 50% of dog owners, total expenses were about $13/week/dog or less; for 50% of cat owners, total expenses were about $9/week/cat or less.
3. In the pet products and services markets, a large segment of “lost pet owners” exists. These are pet owners in the middle to lower segments of the markets who are not actively targeted in a premiumization strategy. This community of pet owners has not generally been the traditional focus of growth strategy for pet products and services, but as such it now represents a substantial opportunity into the future. Consider the following:
- The trend of increasing income and wealth inequality is expected to continue, so this segment of the market should be expected to grow.
- Although income and wealth inequality are expected to continue increasing, real incomes have been increasing across the spectrum. So, discretionary dollars should also be expected to increase – at least somewhat – in all segments. Because of the ubiquitous strength of the human/animal bond, it is reasonable to expect that some of these dollars can be targeted for pet products and services.
- Providers should consider offering a carefully designed continuum of pet products and services, one that can cater to the lower and middle segments of the market. In Veterinary medicine, this is considered a “spectrum of care.”5,6 In effect, a greater emphasis on thoughtful market segmentation is warranted.
So, what does all of this mean for animal health and Veterinary medicine? In short, Veterinary and medicine costs together rank at or near the top of annual ownership expenses for both cats and dogs, whether considering means or medians. And with the rapidly increasing costs associated with ongoing advances in science, medicine, and specialization across Veterinary products and services have clearly been an important part of the premiumization trend. Much like the broader pet products and services markets, an increasing community of “lost pet owners” is no longer able to fully access Veterinary care financially.7 New business models, pricing/payment strategies, and modes of delivery – including “spectrum of care”,5,6 telemedicine, and increasing delegation – are warranted.8 We’ll take a much deeper dive into Veterinary costs in a future article, but at this juncture it will suffice to say that the growing challenges of access to pet healthcare present a very real opportunity for Veterinary medicine.
In summary, premiumization has been – and will likely continue to be – a winning strategy for pet products and services, including Veterinary medicine and animal health. But effective premiumization has also led to a substantial, and increasing, opportunity when the growing community of “lost pet owners” is considered. Success in this segment of the market will require strong emphasis on market segmentation, challenging traditional approaches and creating a continuum of products and services accessible across the increasing span of income/wealth. In the end, it is important to remember that pet ownership (including healthcare) *can* be very expensive – but it doesn’t *have* to be.
REFERENCES:
1. Bolen, D. 2025 State of the Pet Industry Update: Market Overview & Key Consumer Shift, The Pet Summit, Global Pet Expo, March 24, 2025.
2. Siripurapu A. The US inequality debate. Council on Foreign Relations, 2022. Available at: https://www.cfr.org/backgrounder/us-inequality-debate (accessed 06.30.25).
3. U.S. Census Bureau, Current Population Survey, 1968 to 2024 Annual Social and Economic Supplements (CPS ASEC). Historical Income Tables: Income Inequality, Table A-4b. Selected Measures of Household Income Dispersion. Available at: https://www.census.gov/data/tables/time-series/demo/income-poverty/historical-income-inequality.html (accessed 06.27.25).
4. American Pet Products Association. 2024 National Pet Owners Survey. Available at: https://americanpetproducts.org/data-platform.
5. Brown, C., Garrett, L., Gilles, W.,Houlihan, K., Pailler, S., Putman, H., Scarlett, J., Treglia, L., Watson, B., Wietsma, H. Spectrum of Care: more than treatment options. JAVMA, 2021; 259(7)712-717. Doi:https://doi.org/10.2460/javma.259.7.712-717.
6. Moore, R., Read, E., Fingland, R., Stone, L., Hare, T. A new dimension in learning: implementing an outcomes-based veterinary curriculum with a focus on spectrum of care. JAVMA, 2021; 261(9)712-717. https://doi.org/10.2460/javma.23.07.0383
7. Lloyd, J.W. The veterinary market’s invisible hand. Today’s Veterinary Business, NAVC, Dec 1, 2024. (available at: https://todaysveterinarybusiness.com/invisible-hand-viewpoint-1224/, accessed 06.30.25).
8. Lloyd, J.W. Uncertain economy? A thoughtful look ahead at the market for veterinary services. Animal Health News and Views, June 1, 2025. (available at: https://animalhealthnewsandviews.com/uncertain-economy-a-thoughtful-look-ahead-at-the-market-for-veterinary-services/, accessed 06.18.25)