Does the number of pet food mergers and acquisitions (M&A) over the pastmonth, spanning December 2020 and the beginning of January 2021, indicate thatpet food is set for a dynamic year? Or at least one of continued change.
Despite all the crises and upheaval of 2020, that year still saw more than 25pet food deals among companies, suppliers and related retailers. And that wasbefore December. In that month alone, J.M. Smucker sold its Natural Balancebrand to investors; TA Associates, a private equity firm, bought Mid AmericaPet Foods; and Inspired Pet Nutrition, the UK producer of Harringtons and Waggpet foods, announced that its majority shareholder, L. Catterton, had agreedto a sale to CapVest Partners LLC.
There was also a deal on the supplier side, with Layn Natural Ingredientsacquiring Wagott, a Chinese exporter of green tea extract. Meanwhile, in petretail, Barkbox, the online purveyor of custom and subscription-based toy andtreat boxes for dogs (which now also has a custom dog food service, BarkEats), merged with North Star Acquisition Corp., making it a publicly tradedcompany; and Nordic agricultural giant Felleskjøpet Agri bought Dyrekassen AS,Norway’s leading online pet store. Whew!
Several pet food deals in first few days of 2021
Now, just in this first week of January—the first couple of business days ofthe year—several more pet food deals have been announced. First, BrightPetNutrition Group (which was itself acquired by A&M Capital Partners in October2020) said on January 4 that it is buying MiracleCorp. and its portfolio ofproducts, including freeze-dried and other pet treats under the Stewart brand.
That same day, Manna Pro, maker of pet treats and other animal nutritionproducts, announced it is acquiring Bullymake, a direct-to-consumer (DTC) dogtreat subscription service for “power chewer” dogs. Then Dane Creek Capital,which has been among the most active in the pet food M&A space the past fewyears, especially with raw pet food companies in Canada, said its United RawPet Foods subsidiary will buy Growlies Pet Food, a Canadian pet specialtyretailer focused on raw foods. This is Dane Creek’s and United Raw’s firstacquisition into pet retail; that this information was included in the pressrelease makes me believe it will not be the last.
Online and retail focus, plus supply chain integration
With the COVID-19 pandemic sending e-commerce into hyperdrive in 2020—which isonly continuing this year and is expected to keep growing even after the viralbeast is finally under control—it’s no surprise that some of the dealsmentioned here, as well as others earlier in 2020, involve online petretailers or DTC subscription services for pet owners. Interest in suchcompanies is also likely to continue.
Yet much of the recent pet food M&A activity also echoes trends we’ve seen forseveral years now: a mix of big names, whether companies or brands, as well assmaller players; strong activity in the supplier and retail sectors, as wellas the manufacturing/marketing side of pet food; and, perhaps most striking, ablending of such sectors that, at least for the parent companies, integratesthe supply chain to some extent.
Most recently, it’s agricultural conglomerates like Felleskjøpet Agri inNorway or pet food manufacturing brand owners like Dane Creek buying petretailers. A few years ago, it was deals like ADM, the ingredients giant,acquiring Crosswinds, a contract and private label pet food and treatmanufacturer, in 2017, or the reverse, with C.J. Foods, a larger private labelpremium pet food maker, buying Lortscher Animal Nutrition, an ingredientssupplier, in 2018.
C.J. made another splash in early 2020 when it bought American Nutrition,another pet food manufacturer (private label and its own brands). The dealincluded a division called Veracity Logistics, further integrating thecompany’s supply chain. (C.J. subsequently renamed its combined manufacturingside as Alphia and the ingredients side as LANI.)
What does this all mean for 2021 and beyond?
Will such integration continue, and will we see even more pet food M&A dealsthis year and after? The strong start to 2021 may say yes. No matter what, theactivity to date provides proof that pet food remains a vital, vibrant marketon the upswing, no matter the prevailing events and currents.
Source: Debbie Phillips-Donaldson Petfood Industry
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