Latest / The Demographics Podcast with Fexingo: Aging Populations, Birth Rates, and Economic Impact / How Falling Birth Rates Reshape the Pet Industry
Transcript
- Lucas: So Luna, we've spent forty-nine episodes now looking at how falling birth rates ripple through just about every industry you can name. Luna: Funeral homes, travel, insurance, even caskets — we've covered a lot of ground. Lucas: Right. And one thing that keeps coming up is that when couples have fewer kids — or none at all — they redirect that time and money somewhere else. Luna: And for a growing number of them, that 'somewhere else' is a pet. Lucas: Exactly. The pet industry has been quietly booming for years, but the demographic tailwind behind it is getting stronger. Today we're going to look at how falling birth rates are reshaping the pet industry — and I don't just mean more dog food sales. Luna: Before we dive deep — and I say this genuinely — if this podcast has ever made an economic concept click for you, or if today's episode feels worth the price of a coffee, there's a link for that. Lucas: Yeah, it's buy me a coffee dot com slash fexingo. That's the whole thing. Keeps the show ad-free, no pressure at all. Luna: And it really does help. Now, Lucas, give me the big number that sets the stage for today. Lucas: So the American Pet Products Association does a national pet owners survey every year. The 2025 edition had a striking data point: among households headed by someone under 35, childless homes now account for 38 percent of premium pet food and pet healthcare spending. Luna: Thirty-eight percent — that's up from 22 percent a decade ago. That's a massive shift. Lucas: It is. And when you break it down, it's really two trends feeding each other. First, more young adults are delaying marriage and kids, so they're living alone or as couples longer. Second, those who do stay childless are spending on pets at a rate that far outstrips the overall spending growth on pets. Luna: I've definitely seen this among friends. They don't have kids, but they have a dog that gets birthday parties and a raw-food diet. Lucas: Right. And there's a term for it now — 'pet humanization.' It's the idea that owners increasingly treat their animals like family members, not property. That has huge implications for product development, marketing, and pricing. Luna: So which companies are leaning hardest into this? I imagine Mars and Nestlé Purina are paying close attention. Lucas: They absolutely are. Mars Petcare alone accounts for roughly a quarter of the global pet food market. And in their last investor day — this was early 2026 — they explicitly said their growth strategy for North America hinges on 'premiumization and humanization.' They're investing in refrigerated, fresh-frozen pet food lines that look like they belong in a grocery store chiller, not a pet aisle. Luna: And Nestlé Purina responded with their own fresh-food brand, 'Just for Pets,' which launched in late 2025. I remember seeing ads that literally showed the ingredients on a cutting board next to a chef's knife. Lucas: Exactly. The packaging looks like a premium meal kit. And the price reflects that — a month's supply for a medium dog can run you about one hundred twenty dollars. That's more than a lot of people spend on their own groceries. Luna: So who's buying that? It's not families with three kids and a mortgage. It's dual income no kids couples who have disposable income and a small dog they adore. Lucas: Exactly. And the data backs that up. According to the same APPA survey, childless households under 35 spend an average of over seven hundred dollars a year on pet food alone. That's roughly double the per-pet spending of households with children. Luna: And it's not just food. Pet insurance is another area that's exploded. In 2020, about 2.5 million pets in the US were insured. By the end of 2025, that number was over 5.5 million. Lucas: More than doubled in five years. And the average annual premium is about six hundred dollars. So you're looking at a market that's grown from roughly 1.5 billion dollars to over 3.3 billion in annual premiums. Luna: And again, the demographics favor it. Younger, childless owners are more likely to insure their pets because they see them as dependents. They don't have a human kid's health insurance to worry about, so the pet's vet bills become a priority. Lucas: That's a really good point. And it connects to something broader: the emotional economy of smaller families. When you have fewer humans to pour love into, the pets get a bigger share. Luna: There's actually a sociological study that came out of the University of Oxford in 2024 — they looked at spending patterns in seventeen developed countries and found that for every one percentage point drop in the fertility rate, per-household pet spending rose by about 0.8 percent. Lucas: That's a pretty tight correlation. And it suggests this isn't just a fad. As long as birth rates stay low in developed economies, the pet industry has a structural tailwind. Luna: Now, let's talk about the less obvious segments. Pet funerals, for instance. Lucas: Pet funeral services — I know we did an entire episode on the funeral industry, but we didn't focus on pets. And this is a niche that's growing at about 14 percent annually since 2020, according to the International Association of Pet Cemeteries and Crematories. Luna: Fourteen percent year-over-year. That's faster than the human funeral industry, which is essentially flat. Lucas: Right. And it's not just cremation. We're seeing dedicated pet cemeteries with headstones, memorial services, even grief counseling for owners. The average cost for a pet funeral with cremation and a memorial service is around one thousand five hundred dollars. Luna: And who's paying that? Again, largely childless households. If you've never had to plan a funeral for a human relative, or if you view your pet as your child, that expense feels justified. Lucas: There's a company called 'Paws to Rest' that operates in twelve states. They told a trade publication that over 70 percent of their clients are couples without children at home, and the average age is 38. That fits the demographic profile perfectly. Luna: So the pet industry is essentially becoming a shadow child-rearing economy. The same emotional and financial patterns — feeding, healthcare, education, even bereavement — are being replicated for animals. Lucas: I think that's exactly right. And the more you look, the more you see it. Doggy daycares, pet-friendly travel, pet strollers — all markets that barely existed twenty years ago, now worth billions. Luna: But is there a downside? I mean, are we over-investing in pets at the expense of other things? Lucas: That's a fair question. Some economists argue that the pet boom is a symptom of delayed adulthood — people are substituting pets for the responsibilities they're putting off. But from a purely economic standpoint, it's a rational response to changing demographics. Companies that ignore this trend are leaving money on the table. Luna: And for investors, it's a clear signal. Pet care stocks have outperformed the broader consumer staples sector for five consecutive years. Lucas: They have. And while past performance doesn't guarantee future returns, the demographic trend is baked in. The cohort of young adults who are childless in their twenties and early thirties is the largest in American history. Luna: So the question becomes: how much further can this go? Can pet ownership rates keep rising, or is there a ceiling? Lucas: Pet ownership rates in the US have been fairly stable — around 66 percent of households own at least one pet. So the growth is coming from spending per pet, not more pets. And there's probably a limit to how much you can humanize a pet before it becomes absurd. Luna: But then again, people said that about pet insurance ten years ago, and look where we are. Lucas: Fair point. I think the real frontier is what I'd call 'pet wellness' — things like genetic testing, acupuncture for dogs, even pet-specific probiotic supplements. That's where the premium dollars are flowing now. Luna: And that's a market that barely existed five years ago. So maybe the ceiling is higher than we think. Lucas: Possibly. One thing we haven't mentioned is the impact on veterinary services. With more spending per pet, vet clinics are expanding and offering more specialized care. The average vet visit now costs about 20 percent more in real terms than it did in 2019. Luna: And that's driven partly by demand for advanced procedures — things like hip replacements, chemotherapy, dental surgery — that used to be reserved for humans. Lucas: Right. And this is where the demographic link is clearest. If you're a childless couple earning a decent income, spending three thousand dollars on a dog's knee surgery feels reasonable. If you have two kids and a mortgage, it's a much harder choice. Luna: So the pet industry is essentially benefiting from a kind of demographic dividend — the money that would have gone to human children is being redirected to pets. Lucas: Exactly. And that dividend is likely to persist as long as birth rates stay low. So for anyone watching these trends, the pet industry is a fascinating case study in how demographics drive consumer behavior. Luna: Alright, Lucas — if listeners want to dig into the numbers we mentioned today, where should they start? Lucas: The American Pet Products Association's National Pet Owners Survey is the gold standard. It's updated annually and breaks down spending by age, income, and household type. Also, Mars Petcare's investor presentations are publicly available and very detailed. Luna: Great. And as always, if this episode made something click for you, find us at buy me a coffee dot com slash fexingo. That's the only ask we make. Lucas: Thanks for listening, and we'll see you next time.