The Pet Industry: Food, Products and Vet Care

Introduction

US households spent $158 billion on their pets in 2025, up 3.7%, and the American Pet Products Association (APPA) projects $165 billion for 2026 in its annual state of the industry report, with roughly 2 points of that growth coming from inflation. That spending is spread across food and treats, veterinary care, supplies, medications and services such as grooming and boarding, and it has grown through recessions as well as booms.

The engine behind that growth is pet humanization: owners increasingly treat their pets as members of the family and spend accordingly, on premium food, better medical care and more products and services. For bankers, the pet industry is a group of related sectors rather than one: a branded food business with staples economics, a supplies business closer to discretionary retail, specialty and online retailers with recurring subscription sales, and a veterinary sector being consolidated by large groups and private equity. The sections below map the industry, then cover pet food, supplies, retail and autoship, veterinary clinics, and why pet assets have commanded premium valuations.

The pet economy breaks into a few large segments, each with distinct economics and buyers:

Food and treats make up the largest share of spending, with veterinary care second.

Pet Humanization

The long-running trend of owners treating pets as family members, which shows up as spending on higher-quality food, more frequent and advanced veterinary care, insurance, and premium products and services. Humanization is the main reason pet spending has grown faster than the number of pets and has held up better than most discretionary categories in downturns.

Pet animal health products, such as parasiticides and vaccines made by Zoetis and Elanco, overlap with the healthcare sector, while this guide covers the consumer-facing businesses: food, supplies, retail and clinics.

Who owns pets and why it matters

The demand side has shifted in ways that favor spending. Younger adults, many of whom delay or forgo having children, have become a large share of new pet owners, and they spend heavily on premium products and care. Cats have gained share relative to dogs in many households because they suit smaller homes and busier lives, which matters for companies weighted toward one species. And pets are living longer thanks to better food and medicine, which raises lifetime spending on senior care, chronic conditions and medications. These shifts support spending per pet even when the number of pets grows slowly.

Pet food is the most stable and profitable part of the industry, combining brand loyalty with repeat purchase. It behaves like a branded staple: pets eat every day, owners are loyal to what works for their animals, and switching diets carries a risk of digestive upset that discourages experimentation.

Premiumization

The defining trend in pet food is premiumization. Owners have moved from mainstream dry kibble toward premium, natural, grain-free, high-protein and, most recently, fresh and refrigerated food. Each step up raises spending per pet sharply, while the cost of making the food rises much less, so premium brands carry high gross margins.

The big deals in pet food have followed premiumization. General Mills bought Blue Buffalo, the natural pet food brand, for about $8 billion in 2018, and in December 2024 completed the acquisition of Whitebridge Pet Brands' North American premium cat feeding and pet treat business, including Tiki Pets and Cloud Star, for about $1.45 billion. Fresh pet food has been one of the fastest-growing segments, and its leaders have attracted both strategic interest and public investors.

Fresh and refrigerated food

Fresh pet food has different economics from dry kibble. It needs refrigerated manufacturing, a cold supply chain and, in stores, dedicated refrigerators that the brand often owns and places in retailers itself. Online subscription brands deliver fresh meals directly to owners' doors, with portion sizes tailored to each pet. These models need heavy upfront investment in plants and refrigeration, so fresh brands often run at low margins while they scale, and investors value them on growth and the margins they expect at maturity. For bankers, fresh pet food is a classic case of a growth asset whose value depends on believing the long-term margin story.

Channels

Pet food is sold through a wide range of channels: grocery and mass merchants for mainstream brands, warehouse clubs, pet specialty retailers, online retailers and veterinary clinics, which sell therapeutic diets prescribed for specific conditions. Premium brands historically relied on pet specialty stores for distribution and education, but they have expanded into mass and online as owners buy where it is most convenient. That shift has pressured pet specialty retailers while widening the reach of premium brands. The broader patterns of channel mix and margins are explained in the article on the consumer channel map.

The competitive landscape

The market is concentrated at the top, led by Nestlé Purina and Mars Petcare, with Hill's (owned by Colgate-Palmolive), General Mills and J.M. Smucker among the other large players, alongside fast-growing independents. Smaller brands compete on ingredients, positioning and channel focus, and many are owned by private equity firms that build them up and sell them to strategic buyers. Store brands are present but less dominant than in human food, because owners are cautious about what they feed their animals.

Supplies, everything from toys, beds, crates and leashes to cat litter, aquariums and grooming tools, behave more like discretionary retail than like pet food, with lower brand loyalty and more price competition.

More cyclical, more competitive

Many supplies are bought occasionally, can be postponed and are easily compared online, so they are more sensitive to the economy and to price competition than food. Hardgoods in particular are often manufactured in Asia, which makes them exposed to freight costs and tariffs, and store brands and marketplace sellers compete aggressively. Consumables such as litter, waste bags and treats behave more like food, with steady replacement demand.

The pandemic boom and hangover

Supplies demonstrated the risk of pull-forward demand. Pet adoptions rose during the pandemic, and spending on supplies surged as new owners equipped their homes. When adoption rates normalized, supplies sales fell back while food and veterinary spending kept growing, and retailers and suppliers that had expanded inventory and capacity for the boom were left with excess stock. The lesson for valuing supplies businesses is to look past the boom years to a normalized level of demand, the same principle described in the article on staples versus discretionary demand.

Medications and health products

Pet medications, from flea, tick and heartworm treatments to prescription drugs for chronic conditions, sit between supplies and veterinary care. Historically most were sold by vet clinics, which earned meaningful margins on them. Online pet pharmacies and retailers have taken a growing share by filling prescriptions written by vets, often at lower prices, and regulators have pushed for more transparency: the UK competition authority noted that medicines can be cheaper online and required vets to tell owners so. For clinic groups, that shift is a pressure on one of their most profitable revenue lines.

Pet retail has been reshaped by the move online and by subscription buying.

Pet specialty stores

The two largest pet specialty chains, PetSmart and Petco, combine product sales with services: grooming, training, boarding and, increasingly, veterinary clinics inside their stores. Services bring customers back regularly and are harder to buy online, which helps defend the stores against e-commerce. Both chains have long histories of private equity ownership, which reflects the stable, cash-generative nature of pet retail.

Online and autoship

The largest online pet retailer, Chewy, built its business on autoship: customers schedule regular deliveries of food and supplies at a discount. In its fiscal 2025, Chewy reported net sales of $12.6 billion, according to trade coverage of its annual results, with Autoship customer sales of $10.5 billion, or 83.3% of the total, from 21.3 million active customers spending an average of $591 each.

Autoship

A subscription purchasing model in which a customer schedules recurring deliveries of products, such as pet food, litter or medications, at set intervals, often in exchange for a discount. Autoship makes revenue highly predictable and raises customer retention, because orders arrive automatically until the customer changes or cancels them.

Autoship gives online retailers unusually recurring revenue for a retailer, and it shifts bargaining power: an owner on autoship rarely compares prices each month. Amazon, Walmart and the pet specialty chains offer their own subscription programs, so the channel is competitive, but the model has made pet one of the most successful e-commerce categories. The economics of selling online are covered in the article on DTC and Amazon.

Pet insurance

Pet insurance has grown alongside rising vet bills. Owners pay monthly premiums to cover accidents, illnesses and, in some plans, routine care, and insured owners tend to spend more on veterinary treatment because a large share of the cost is reimbursed. Penetration in the US remains far below levels in the UK and Scandinavia, which gives insurers a long runway, and retailers, employers and vet groups increasingly distribute policies. Insurance links the retail and clinic sides of the industry: it supports higher vet spending, and it gives insurers and their partners data on pet health and owner behavior.

Veterinary care is the second-largest part of pet spending and the fastest-consolidating. For decades it was dominated by independent practices owned by their vets. Over the past fifteen years, corporate groups have bought thousands of clinics.

Clinic economics

A general practice clinic earns revenue from wellness visits and vaccinations, diagnostics, dentistry, surgery and medications, and profitability depends on how fully its vets' time is booked and how much diagnostic and surgical work it performs. Emergency and specialty hospitals, which treat complex cases referred by general practices, earn more per visit but need specialist staff and expensive equipment. Because the main constraint is the number of vets, clinics that can attract and keep staff, and support them with technicians and modern equipment, grow faster than those that cannot.

The consolidators

The largest groups include Mars, which owns Banfield, VCA and other networks; groups backed by JAB Holding such as National Veterinary Associates; and a wide range of private equity-backed platforms, alongside listed groups in the UK and Europe. Consolidators buy independent practices, centralize purchasing, recruitment and systems, add services such as diagnostics and specialty care, and sometimes build new clinics.

The hardest part of a vet roll-up is keeping the vets. Selling owners often stay on as practicing vets, and their goodwill with clients is much of what the buyer pays for, so deals commonly include earnouts, retained equity or employment terms that keep them involved for several years. When the culture or clinical autonomy changes too quickly, vets leave, clients follow and the acquired earnings shrink. Consolidators that integrate back-office functions while leaving clinical decisions with local teams tend to retain staff better than those that standardize everything.

The mechanics of these roll-ups are covered in the article on consumer services roll-ups, and the sponsors that run them in the article on consumer private equity firms.

Labor and regulation

Two constraints shape vet economics. The first is labor: veterinarians and veterinary technicians are in short supply in many markets, so wages have risen and clinic capacity is limited by staff more than by space. The second is regulatory scrutiny of consolidation. The UK's Competition and Markets Authority (CMA) concluded in its final decision on veterinary services in March 2026 that average vet prices rose 63% between 2016 and 2023, that six large groups control the majority of practices, and that in at least three out of five cases large groups buying independent practices led to higher average prices. Its remedies include mandatory price lists, written estimates for treatments over £500, a cap of £21 on prescription fees and clear disclosure of who owns each practice.

Pet assets have often traded at premium multiples compared with other consumer businesses. Several features explain why:

Those features have made the sector a favorite of both strategic buyers, such as Mars, Nestlé and General Mills, and private equity firms, which have owned many of the leading retailers, clinic groups and brands. The valuation drivers behind these premiums are covered more broadly in the article on what drives consumer valuation multiples.

Exit routes are varied. Sponsors that build pet platforms sell them to strategic buyers, to larger sponsors or, in strong markets, through public listings, and pet retailers and food brands have used IPOs to fund growth and give early investors liquidity. The breadth of buyers, from food conglomerates to animal health companies and infrastructure-style investors in clinic real estate, is one reason pet sale processes tend to be competitive.

Risks to the premium

The premium is not guaranteed. The post-pandemic slowdown in pet adoptions, the fall in supplies spending and the pressure on pet specialty retailers showed that pet assets are not immune to cycles, and the growth of pet ownership has slowed in some markets. Regulatory scrutiny of vet pricing adds a new risk for clinic platforms, and the shift of medications and food to online and mass channels squeezes businesses that relied on higher prices in clinics and specialty stores. Buyers who paid peak multiples for pet assets in 2020 and 2021, at the height of the adoption boom, often found that the normalized earnings were lower than the forecasts they had bought. The lesson is to underwrite pet businesses on normalized demand and to separate the durable effects of humanization from the temporary surge of the pandemic years.

For bankers, the pet industry offers a steady flow of mandates: sales of premium food brands, refinancings and exits for sponsor-owned retailers and clinic groups, roll-up acquisitions and, occasionally, public listings. Understanding which part of the pet economy a business sits in, and how much of its growth comes from humanization rather than from a temporary surge, is the starting point for every one of them.