Note: This interview was conducted prior to Steve King’s retirement effective December 31, 2021. He has served the pet industry for decades and we wish him well in his new ventures. The APPA is conducting a new search for a president & CEO.
Ask anybody about getting a pet during the pandemic, and the answer’s the same, “how did I live without him (or her?) before!” Steve King, the American Pet products association (APPA) president & CEO wholeheartedly agrees. Goodnewsforpets.com Editor Lea-Ann Germinder has long been an admirer of King’s work on the human-animal bond. He recently shared the story of how his beloved pet came into his family’s life, the association’s work during the pandemic and insights behind the $103.6 billion in pet industry sales in APPA’s 2020 state of the industry report – and what much more to expect in 2021.
Let’s start with the basics. tell us about Chase the Beagle.
When the pandemic started, we did not have a pet. We had lost our canine and were deciding what to do next – like numerous pet parents we weren’t quite ready to take the plunge again. My wife and I were working from home and we said, we need to get another dog. So, Chase the Beagle came into our lives.
We adopted him in July actually on my birthday last year, and as they do, he has made his way into our hearts. We love going out on our boat and he loves that too. I’m still on the Pet Partners board and Pet Partners sponsors the world’s largest canine walk each year and he and I participated in that. He’s just a fantastic addition to our family.
REFLECTIONS POST-PANDEMIC
You were named president & CEO of APPA in 2019. The pandemic hit in 2020, just a year into the job. At the time of global Pet Expo 2020, all of us were missing our colleagues in Asia and we didn’t yet know what was ahead. any reflections on what that felt like in 2020 and how it feels now?
Like everyone else we were taken aback by the severity of the pandemic. early on, other than the effects of the travel ban from China and the inability of our friends and colleagues from there to attend the show, it practically seemed like it was company as typical when we were at global Pet Expo last year. We didn’t know within a month the whole world would be shutting down. APPA immediately looked at how we needed to change what we did to help our members — again not knowing how long the pandemic would be. many people felt we were talking about weeks, not months and months turned into a year. APPA started offering educational content for our members that revolved around handling various aspects of the pandemic.
A critical relocation we made was helping our members take advantage of the various government programs that were being implemented to help companies during that time, i.e., the Cares Act and the Paycheck protection Program (PPP). We had webinars on topics developed to help companies survive. APPA worked with the Pet industry Joint Advisory Council (PIJAC) and other industry organizations to have pet stores declared as essential companies so that retail pet stores could continue to operate. With numerous other sellers shut down that was really essential because clearly pet owners needed a place to get the food and supplies that they needed for their pets.
We conducted a series of Covid-19 Pulse Studies that looked at pet owner behavior and trends relative to how they saw their animals during the pandemic and how their shopping practices had changed. This helped our members understand what consumers were doing and really offered value during a critical time.
PETS helping us through THE PANDEMIC
You’ve been a tireless champion of the strength of the human-animal bond through “Pets in the Classroom” and the Pet care count on before becoming president & CEO of APPA. How have animals helped us through this pandemic?
People turned to their animals during the pandemic in droves. The ability to have pet companionship in the home when you couldn’t be with friends and even other family members was extremely important. The whole social isolation and mental fatigue that was brought on by the pandemic was very tough. Certainly, with kids being kept at home and having so numerous of their other normal activities curtailed like sports and not being able to interact with other children in school having a pet in their day was important.
In fact, when some of the first stimulus checks went out to families in March and April, we saw a big increase in sales in the types of animals that you would typically associate with families with young children. Sales of animals like guinea pigs and hamsters really spiked as a direct result of people having some additional money in their pockets to keep the kids entertained and the inability to spend it on things like getaways and travel. There was a direct correlation between those two things.
CONTINUED growth IN giving love TO small animals
We love our dogs and cats, but in fact, according to the APPA, the small animal category enhanced 30 percent increase in total. Do you think that portends even much more activity in the small animal category?
This category includes aquatic fish, reptiles, birds, and the hamsters, gerbils for young children we discussed previously. A big increase during the pandemic was people were spending a lot much more time at home. It is likely to be sustained over time. These animals will continue to need to be cared for and need food and treats and toys. They will need to keep the animals healthy and happy.
Another aspect is the freshwater fish tank being a part of the home decor. people have been spending a lot much more time at home and have spent a lot much more money on upgrading their overall home design and adding things like a beautiful fish tank.
We spoke earlier about the value of animals during the pandemic. We know that fish in particular lower blood pressure and make people feel much more at ease during a time of high anxiety like we just went through. I think people will see the value not only in making the home environment much more beautiful but in how they feel too.
DOG and cat ADOPTIONS DOWN
Dog and cat adoptions are down. What does this represent for the industry overall moving forward?
The shelters didn’t have the animals (because of importation restrictions and being closed etcetera) so that was much more a chauffeur than lack of interest on the part of the public. It’s essential to note that adoptions represent about a third of canine acquisition and about 35% from cats. Two-thirds of those animals are from other sources, the one being families and friends and breeders, of course, and then strays wandering in. It’s concerning that the number adopted from shelters was down, but that’s likely to rebound.
It is essential to note will the supply of dogs keep up with the demand particularly after seeing what we did with the pandemic. The number of animals that are in American households has enhanced and can be expected to continue. APPA is supporting a bill that was introduced in the last Congress that has been reintroduced this year called: The healthy canine Importation Act. We’re working with groups like the American Veterinary medical association (AVMA) and the American Kennel Club (AKC) and others that would improve the federal government oversight of imported dogs. We want to make sure that they have proper veterinary certification so that potentially harmful zoonotic diseases aren’t coming in with these animals.
APPA thinks importation is probably going to be an increasingly essential source of dogs in particular that are not being met by the shelters and other sources. We want to make sure that these animals are healthy and well cared for. This bill could be an essential element with money to help the federal government regulate those imports much more closely.
PET FOOD growth and TRENDS
According to the APPA, pet food and treats led the market in terms of volume increase with $42 billion in sales or a 15.1% increase. There continues to be a proliferation of product choice. Is the volume in trends, trial or stocking up? Do you see this category flattening as the pandemic lessons?
Stocking up on pet food has already receded. There was a lot of issue early on that people wouldn’t be able to get food for their pets. That’s mostly subsided although there are some spot shortages here and there. That’s much more related to raw material supply issues and some slowing of the manufacturing process due to COVID safety protocols. What we’re seeing is a continuation of the premiumization trend along with a issue for general pet health that’s driving the increase in sales dollars.
What hit home with the seminars that were held at global was that some of the fastest growing categories of pet food are the higher-end categories. While they are a relatively small portion of the total market, their growth is much higher than other food categories. Refrigerated and fresh fast food grew 21% last year and frozen food was up 14%. The other element is all the new animals that are in households will continue to grow and need much more food so that’s going to have an impact.
Finally we’re likely going to see some inflationary elements come into play this year in commodity prices. some of the estimates that I’ve seen indicate about a 5% increase in pet food prices across the board simply as producers pass along some of the enhanced cost that they have for raw materials.
PET owner DEMOGRAPHICS
Millennials have surpassed boomers in terms of their share of pet ownership and expenditures the last few years. statistics on Gen Z were reported for the first time in 2019. Is there anything amazing to comment about these demographics and their purchases for 2020?
The many recent national pet owners survey that looks into all the generational demographics very closely will not be out until June. We did not want to skew the numbers by being out in the field during the pandemic. In general we know that these generations view animals as members of the family, even much more so than the Boomer generation. They use products that Boomers used to view as luxuries as essential to the care of their pets. Pet tech, supplements, fashion have grown as Millennials have become the largest pet-owning segment of the market.
Some of the work that we did last year taking a look at and identifying the trends particularly with the Gen Z generation will be interesting to look at further. They’re really coming into their own as far as pet owners. They very much see their animals as friends and companions, much more so than the Millennials. As they start to form households and enter the workforce, they’ll continue to support those types of products that they feel helped them to keep their animals healthy and pleased and part of the household. The strong purchasing practices of Millenials continue with the Gen Z generation.
INCREASED VETERINARY care FOR new PETS
Let’s talk about vet care and product sales, which represent a significant $32.3 billion. Can you break that down a little bit much more in terms of what is driving those purchases of services?
The American Veterinary medical association (AVMA) reported that veterinarians experienced a 50% increase in new animals being brought to veterinary clinics per week during March – August 2020 timeframe. Banfield in a report in late January or early February this year reported seeing a 9.2% increase in juvenile dogs and 12.4% much more juvenile cats for veterinary visits in 2020 vs. 2019. clearly the largest chain of the veterinary clinics in the country with over a thousand hospitals, saw a significant increase in the number of new animals coming into their clinics.
E-COMMERCE VS. IN-STORE
With e-commerce driving so numerous purchases and manufacturing challenges, what are some ways independent sellers are successfully competing?
One thing that has had unexpected success was purchase online/pickup in-store. You can purchase online and pick up in the store the same day. It’s hard for the pure online companies to offer that speed and convenience. A number of retail stores are also using third parties like Uber to deliver to customers’ homes. That’s a part of their omni-channel method to serving their customers. customers also tend to interact with conventional stores in an omni-channel matter. The customer that comes into the store to purchase will also make online purchases through the store’s site and either have it delivered to their home or pick it up in-store.
Stores that have invested in their online presence and their ability to conduct e- commerce through their site are being successful. stores are using their online presence to create a community and content for their customers. It keeps people coming back to their sites and seeing what new information they have or the ability to connect with other pet owners. These are all techniques that pet stores are employing very efficiently to compete with e-commerce. As vaccines get out and people feel much more comfortable in shopping in-store, the ability to bring your canine with you into the pet store and walk around and see new products, in-store sales will rebound.
INDUSTRY STATISTICS
The industry has been steadily on the upswing. then the pandemic hit. Did you ever think the industry would break over $100 Billion in sales in the pandemic? What is your prediction for 2021?
We were certainly surprised. Our original projection for 2020 was under a $100 Billion. In the early days of the pandemic, we received reports that indicated sales of products, hard goods in particular, would be down considerably for the year. The increase that the industry got amazed everyone, even with about a 21% decline in pet services. That was the category that was really hit hard during the pandemic. Understandably with people not traveling there was less need for board and pet sitting. early on in the pandemic, groomers were not able to operate because they were not considered essential businesses.
For 2021,