2018 saw 75 mergers and acquisitions among pet food companies, equipment manufacturers, and equipment suppliers. Some acquisitions involved vertical integration with companies or suppliers purchasing other businesses involved in the supply chain, while other companies ventured into sectors outside consumables. What’s interesting to note is that human food conglomerates have started buying large or known pet food companies. How does this M&A impact the future of the industry?
Exploring Opportunities
Barkstrong, founded in 2017, has already acquired three small, natural pet food companies in 2018. Greg Eastwood, Barkstrong’s sales vice-president, said that the company was “looking for brands that can supply either geographic opportunities, additional brand intelligence or strong operators.”
“If a brand is well suited in its category and brings the aforementioned criteria, we would possibly be interested. The space is clearly consolidating and with the strong move to online, it’s become more of a math-driven technology play.”1
Large food companies like Mars Petcare and Nestle Purina have another reason besides expansion and capitalizing on efficiencies—an opportunity for synergy in the target company. While Mars is investing more in veterinary service providers to “make the world a better place for pets”, Purina is venturing into digital pet owner platforms and expanding its custom dog food business to “shape the future health and well-being of pets and people.”
Future Scenarios
With all these M&As happening in the pet industry, it is expected that brick-and-mortar pet businesses will move into online space as what happened with PetSmart when they purchased Chewy.com2. Other ramifications are “the breakdown of the pet specialty/mass divide, the mass premiumization of pet food, the crucial need of pet specialty retailers to differentiate from online and mass retailers by becoming even more service-oriented; and the race among pet food makers and retailers to come up with the next big super–premium pet food shopper draw.”3
There is also a significant interest among strategic and private equity buyers on private label manufacturing. This is due to its big advantage “to cut capital expenditures while reallocating additional capital to fund new product research and brand development,” according to Capstone Headwaters Pet & Animal Care Q1 2019 report on merger and acquisitions.
Taking the Plunge
The potential for your brand to grow by leaps and bounds is here. Let Addiction Foods be your partner through its private label services. Our customized services range from research and development to consumer insights, nutritional consulting to raw materials sourcing, product manufacturing to private labelling, and packaging services to brand owners and distributors as well as supermarket and retail chains. We can even service and export to many of the world’s fastest growing markets.
Addiction Foods’ dedicated facility in New Zealand embodies the very best in pet food manufacturing standards. From ethically sourcing cage-free, wild or free-range meats free from growth hormones or steroids to the latest equipment that delivers grain-free, hypoallergenic pet food following the industry’s highest levels, Addiction Foods’ private label service will help you and your brand reach its full potential.
Let Addiction Foods’ more than 20 years of experience work for you and your brand. Ask us about partnerships.
