What is the State of the Veterinary Industry?

Written by Eric Rittenhouse , MBA

As pet owners, we all know that our pet’s health is of the utmost importance, driven by the increased humanization of our pets as family. A recent study found that 78% of pet owners would consider going into debt for their pet, especially for medical emergencies. This reflects the growing humanization of pets and the increasing demand for quality care. However, the rising costs of pet care are raising concerns.?

The pet care industry has experienced significant growth, driven by both consumer demand and investor interest. However, this growth has also led to consolidation and rising costs.?

Key Trends

Increased spending: Americans spent over $38 billion on pet care in 2023, an increase from around $29 billion in 2019.?

Investor interest: Private equity firms have invested heavily in the veterinary sector.?Private equity firms invested $51.6 billion into the vet sector between 2017 and 2023, in addition to $9.3 billion in the first four months of 2024.?Small veterinary practices have been acquired by large corporations, which now own an estimated 25%-30% of US vet clinics, up from 8% in 2011, and around 75% of specialty clinics.?

Industry consolidation: Large corporations now own a significant portion of veterinary clinics.?Mars PetCare Inc. (yes, the candy company) is the largest owner of free-standing vet clinics in the US, with over 2,000 Banfield, VCA, and BluePearl locations.?JAB Holding Co., which owns brands like Panera and Espresso House, operates over 1,000 National Veterinary Associates hospitals and multiple pet insurance lines.?

Rising costs: Veterinary services have outpaced overall inflation.?In March, the Consumer Price Index was up 3.5% year over year for urban consumers, while the vet services category alone was up 9.6%.?The veterinary industry was deemed “low-risk, high-reward” by Capstone Partners in 2022.?

Interestingly, the American Veterinary Medical Association’s (AVMA) tracker observed that veterinary visits and medication purchases are down, despite revenue being up—a sign that consumers might be struggling to cover costs. However, is this “bubble” about to burst? In short, it's a robust industry from an investment standpoint, driven by our desire to do nearly anything for our pets. So, how do we care for our pets without going into debt?

The solution: now is the time to talk about wellness and preventive actions to not only bring these costs in line but increase our pets’ livelihoods.?

While the industry is thriving, there's a growing need to balance the pursuit of profits with the well-being of pets. A shift towards a wellness-focused approach can help mitigate rising costs and improve pet health.?

• Research and development: Invest in research to address chronic diseases and develop healthier pet products to combat these conditions.?

• Preventive care: Promote preventive measures through education and product innovation. On the product development front, increased focus on pet foods with healthy ingredients, functional benefits, alternative protein sources, and diets with a preventative health impact could be a viable option.?

• Collaboration: Foster collaboration among pet owners, veterinarians, and industry stakeholders to implement effective solutions. This could include implementing a nutritional preventative program with real benefits such as unique to breed and life stage. There is also a need for increasing education that is available about how food, treats, and supplements can impact a pet’s lifestyle.?

By prioritizing wellness and sustainability, we can create a more balanced and affordable pet care ecosystem that benefits both pets and their owners. The veterinary industry is robust with investment, and it is time to put wellness measures as the forefront topic of discussion, and putting cost-saving actions in place. This assures a win-win for pets, their humans, and the pet industry as a whole.??

Join the conversation and share your experiences. Have you faced challenges with rising pet care costs? Have you found effective strategies for maintaining your pet's health while managing expenses? Let's discuss solutions together.

About the author: Eric Rittenhouse works at BSM Partners as Business Development Manager. His areas of expertise include business development, sales and trade marketing while helping brand companies uncover and execute on opportunities to strategically dominate their niche in the consumer product space. He has completed the Blue Ocean Practical Introduction certificate by the Blue Ocean Academy, and is Action Selling Master Certified by Action Selling and The Sales Board.