Pet pampering surges as millennials practice parenting

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Credit: Illustration by Ad Age/ Composite images istock

Brett Gursky flies first-class. And so does his dog Buddy, a Maltese-Chihuahua mix that he rescued two years ago. When Gursky, a writer-director-producer based in Los Angeles, goes to the Beverly Hills Hotel for meetings, Buddy comes along. And Buddy, who has 3,200 Instagram followers and receives monthly treat boxes from a site called PupBox, is a regular at the Chateau Marmutt—no relation to the iconic Hollywood hotspot Chateau Marmont—where he's pampered with baths, clippings and brushings costing as much as $40 a day.

"Once you see how much they enjoy it, you just keep doing it," says Gursky, 38. "I don't have kids yet, so this is good practice."

Yes, it's the Year of the Dog on the Chinese calendar and in some people's hearts, but for marketers, it's actually the year of the pet. Thanks to pet owners like Gursky, the $63 billion pet industry, already up 22 percent in five years according to market research firm IbisWorld, is in relentless expansion.

A host of new brands and services are transforming the category with more premium offerings, like farm-to-table chow, anti-anxiety assistance, personalized veterinary care and technology-infused collars, clothing and leashes. Meanwhile, larger traditional pet companies are in acquisition mode, snapping up the competition.

The offerings arrive as millennials are overtaking baby boomers as the largest generation of pet owners and reshaping the industry according to their demanding expectations. Millennials now make up 38 percent of the pet-owning population to boomers' 35 percent, according to the American Pet Products Association, a Stamford, Connecticut-based outfit that counts 1,300 manufacturers as members.

"The trend is really toward high-end brands," says Jack Curran, a senior analyst at Ibis. "Businesses are trying to take advantage of the fact that people want to give their pets the best possible options for everything."

Pet insurance

Millennials are not just pet owners—they are "pet parents," spending more money on and giving more to their animals than previous generations, says Curran. As they, on a broad level, delay having children until later in life, pets help millennials practice responsibility.

When pets got sick in the 1960s and '70s, there weren't that many options to treat them, Curran adds. That was changing as today's millennials were growing up in the '80s and '90s, letting them become more attached and setting higher expectations for care. Many dollars are going toward wellness products to keep pets happy and healthy longer. "That's where some of this demand and willingness to spend anything on your pets is coming from," says Curran. Witness pet health insurance, where revenue has more than doubled in the last five years to over $1 billion, according to Ibis. There are now 1.8 million insured pets in North America.

Insurers have increased their offerings. Nationwide, which now insures exotic pets like rabbits, has seen 18 percent year-over-year growth in pet insurance this year, and has its own Nationwide Pet Twitter account to engage consumers, Chief Marketing Officer Terrance Williams recently told Ad Age.

Pets are also becoming a marketer's best friend.

Many brands that don't even sell products for the category are taking advantage of consumers' animal devotion by including pets in their ads—a practice that has been in play for a while but is now gaining even more traction. J. Crew recently thanked consumers for placing an order by emailing them an image of a dog on some denim. "You make us so happy, we want to do the same. ... So, here is an adorable little pup curled up on a pile of jeans," the email read. Brands such as Farmers Insurance and Mercedes have recently tapped critters for their marketing as well, while others like Target have long maintained canine mascots. Subaru advertises its cars as "dog tested."

"Everyone is using pets as part of advertising campaigns," says Bob Vetere, president and CEO of the American Pet Products Association. "You will see dogs, cats, fish, anything pop up in commercials for any type of product out there because of the public's embracing of pets as that necessary part of life."

Pet technology

As interest surges, the money follows. From 2012 through 2016, investors plowed $486 million into pet technology in 172 deals, according to data from CB Insights, which tracks venture capital funding. New companies like The Farmer's Dog, which sells high-quality dog food and has raised $10.1 million in funding since its 2016 founding, and Rover, which connects pet owners with service providers like dog walkers and has raised more than $200 million, are reaping the benefits.

In March, Mars Petcare (the pet division of Mars Inc.), Michelson Found Animals Foundation and R/GA Ventures, the agency's investment arm, formed Leap Venture Studio, an accelerator program for pet technology startups. They announced the first six participants, including a company that makes special vitamins and a platform that connects veterinary hospitals with pathologists for quicker diagnostics, earlier this month.

"The main concentration of the growth—what investors are looking to invest in—are the ones being responsive to this millennial upsurge," says Vetere.

Two years ago, Mars, which owns well-known brands such as Pedigree and Whiskas, created a "Connected Solutions" division to focus on the technology of pet care. Run by Leonid Sudakov, the former chief marketer of Mars Petcare, the new division acquired Whistle, a GPS pet-tracker startup, two years ago, and also houses DNA-testing business Wisdom Health, which traces breed background and lineage.

One of the biggest pet categories attracting innovation is food.

Brett Podolsky helped found The Farmer's Dog because of his Rottweiler's health issues. Only homemade, fresh food seemed to cure her. Podolsky, a former hedge fund executive-turned-standup-comedian, started his Brooklyn-based company to offer other pet owners similarly nutritious pet food.

"Nobody would ever want to eat fast food for every meal in their life," he says. "We wanted to make it easy to give dogs the healthiest lifestyle."

The Farmer's Dog, which offers food subscriptions nationwide, grew its business by 800 percent last year and is on track to grow another 500 percent this year, according to a spokeswoman, who could not disclose more specifics. Pet owners are not shying away from its turkey and parsnips or beef and lentil concoctions, despite the cost, which starts at $3 a day for the smallest of pups, Podolsky says. And Mars Petcare just introduced its own premium brand for dogs and cats, Wild Frontier. The line includes "grain-free, animal-based recipes with multiple sources of prey and nutrient-rich organs, which pets' ancestors sought first after the hunt to help them thrive."

Pets are also getting pampered at spas and hotels. At the Posh Pet Hotel, a luxury resort in West Palm Beach, Florida, dogs and cats can enjoy flatscreen TVs, filtered water, classical music and acupuncture. Similarly, the 14-unit chain Pooch Hotel provides pool time and webcams.

Credit: Illustration by Ad Age/ Composite images istock

At pet services provider Rover, which was founded seven years ago, it's unclear which is growing faster—the company, which has doubled revenue every year since its founding, according to a spokeswoman, or the number of dogs in the company's Seattle headquarters (some 85 of them). Rover screens pet service providers, such as groomers, walkers and boarders, and helps connect them with owners. The company, which bought competitor DogVacay in May, now has 200,000 sitters on its platform and has been pushing several national ad campaigns on TV to grow further. Rover works with Pereira O'Dell in San Francisco for all creative and just brought on PHD as media agency of record.

"We're a national and local company all at once," says Halle Hutchison, VP of marketing, touting the ease the brand brings to pet owners who need a dog sitter, groomer or walker on the fly. "In the future, we want to become more of a lifestyle brand so people can incorporate Rover into their daily dog-care life in ways they haven't done in the past."

Wag the dog

Of course, both the newcomers and established pet brands have to compete with the elephant in the room: Amazon. The e-commerce giant has been ramping up its private-label brand Wag, which it unveiled a few months ago. Wag sells dry dog food in five flavors and is expected to expand to other categories. (The company did not respond to a request for comment.) Experts say Wag's offerings are becoming similar to a local pet store's, as Amazon is able to track purchase behavior and keep tabs on the likes and dislikes of pets for future recommendations—much like a pet store associate.

That's a problem for traditional retailers, but they aren't standing still. Petco opened its first physical PetCoach store in July, after acquiring the brand last year. PetCoach provides veterinary care as well as grooming and training services. Petco declined to comment on the effort.

PetSmart last year hired a new chief marketing officer, hospitality veteran Joshua Kanter, to build consumer loyalty for the 32-year-old brand. That means a new loyalty program, more modern product assortments, and more events to draw customers to the store, along with traditional TV and digital advertising, the bulk of which is created in-house with some external partners such as Triptent, a New York-based shop.

"We're not offering an amazing ad—it's an amazing experience," says Kanter. "Everything we've tried to do is about helping pet parents confidently make the best choices for the pets in their lives."

The company expects to highlight its changes, like the 800 hours of training every PetSmart groomer receives, in its ads.

In addition, PetSmart last month introduced Sample Saturdays, a monthly tasting for dogs and cats to try new food treats.

"PetSmart is not a new brand seeking to create brand awareness," Kanter says. "We're an established brand and our priority is to help consumers understand what they can find at PetSmart that they can't find at other places."

Yet to win the favor of Buddy, the rescue-dog-turned-Hollywood regular, retailers like PetSmart will have to continue to beef up their offerings for animals now accustomed to life's finer things.

"They go from the streets to the Hollywood Hills," explains Gursky, Buddy's owner, noting that rescue dogs especially, which are common in L.A., often have owners who treat them extravagantly. "They get extra pampered because of the lifestyle out there." 

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