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Sales of Licensed Pet Products Up 5.2% in 2016

Licensed pet product sales grew 5.2% in 2016 to reach $443 million in the U.S./Canada, according to TLL’s Annual Licensing Business Survey. That makes it one of the fastest-growing product categories we track, behind only the massive food/beverages with 6.0% growth in 2016.

A new report from Packaged Facts reveals that the pet toy category grew 4% from last year to reach over a billion in retail sales in 2016. The percentage of households with either cats or dogs purchasing toys has stayed above 53% over the last six years, and has been steadily growing. Last year, only 36% of dog owners surveyed said that their pet regularly uses household items as toys more than commercial toys.

TLL also tracks licensed retail sales of pet apparel, accessories including leashes and name tags, food, and other products like bowls. We don’t (yet) track sales for things like audio books for dogs—Amazon’s recently launched such a service with dog behavior expert Cesar Millan.

According to the American Pet Products Association (APPA), total U.S. sales of pet products increased by 4.4% in 2015, to reach an estimated $60.6 billion. Spending is expected by the APPA to increase 3.9% this year to $69.36 billion. That means that the dog and cat toy industry is just 1/60th of the whole picture. And the share of licensed sales is even smaller, making for bright opportunity as licensed human-oriented goods gain greater traction.

The emerging trend of pet “parenting” has bolstered demand for premium pet products and services. It has also led to increased demand for specialty products, including toys and other products licensed from fashion, entertainment, and celebrity properties, as pet parents seek to share their favorite brands with their pets. And with 68% of U.S. households—or 84.6 million homes—owning a pet, according to an APPA survey, demand is expected to continue to grow.

The Licensing Letter Sourcebook lists 44 licensees who manufacture pet products, and the list of brands is vast—including sports leagues like the NFL, MLB, and NHL; health and beauty brands like Arm & Hammer and Burt’s Bees; entertainment brands like DC Comics, SpongeBob SquarePants, and WWE; and properties with more obvious connections like Hello Kitty, Boo – The World’s Cutest Dog, and Garfield.

B&M Retailer Dominance & E-commerce

Large chains PetSmart and Petco—which dominate the U.S. pet store channel with a combined market share of more than 60%, according to IBISWorld—tend to pursue exclusive licenses. For example, PetSmart has exclusive licensed deals with Ellen DeGeneres’ new ED pet line, Grumpy Cat, and Martha Stewart Living. Petco has exclusive deals for branded Star Wars, Trolls, and Dr. Seuss pet products.

These deals are critical in maintaining relevance as ecommerce platforms like Amazon continue to seize market share. According to Nielsen, 16% of pet care sales in 2016 were made online, and ecommerce is one of the fastest-growing distribution channels.

PetSmart recently bought out online pet retailer Chewy for $3.35 billion. PetSmart held only a 2% share of ecommerce sales in 2016, according to market research firm 1010 data. In contrast, Chewy beat Amazon as the biggest seller of pet food online, with a 48% share of the market compared against Amazon’s combined share of 40%. By comparison, rival Petco had 4% share in 2016.

More recent estimates from Slice Intelligence show that Amazon and Amazon Prime Now together accounted for 57% of the online pet food and pet supplies market in Q1 2017, followed by Chewy with 25%. The rest of the players each held less than a 5% share of the market; PetSmart only held a 1.7% share, while Walmart and its acquired grabbed just 1.9%.

Sales Have Gone to the Dogs

According to Packaged Facts, about 75% of all sales of pet toys go to the dogs, with the remaining quarter spent on toys for cats. TLL estimates that of all pet products that are licensed, a slightly higher share can be attributed to dogs (78.8%) versus cats (20.3%) and other species like birds, small mammals like gerbils and hamsters, reptiles, and fish (0.9%).


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