Since the most recent update of the Petfood Industry Top Companies database, the global top five pet food companies built new facilities, fought legal challenges and competed to increase revenues.
Mars Petcare and Nestlé Purina PetCare remained in the No. 1 and No. 2 places, respectively, in the updated database in terms of 2016 annual revenues. Nearly US$10 billion in annual revenue separated Purina from third-place Big Heart Pet Brands. Hill’s Pet Nutrition remained in fourth place, while Blue Buffalo rose to fifth place after Diamond Pet Foods dropped off the list for lack of data.
5. Blue Buffalo
In 2016, Blue Buffalo reached roughly US$1.15 billion in annual revenue. Although that is less than one-fifteenth of Mars’ revenues, Blue Buffalo showed the strongest growth by far between 2010 and 2016 (see Figure 1). Blue Buffalo’s compound annual growth rate (CAGR) was 18.4 percent during that period, compared to the second highest CAGR of 2.3 percent by Mars.
Figure 1: Blue Buffalo's revenue growth was the most significant in terms of CAGR among the top five global pet food companies in 2016, as the company saw US$797.78 million in increased revenue from 2010 to 2016, according to data.
Since the last update of the Petfood Industry Top Companies database, Billy Bishop was appointed CEO of Blue Buffalo, replacing Kurt Schmidt in January 2017. Meanwhile, Blue Buffalo began construction of its Heartland Pet Food manufacturing and R&D facility in Indiana, USA.
Also, Blue Buffalo settled a 2014 false advertising lawsuit filed by Purina. In its complaint, Purina had alleged that Blue Buffalo’s pet foods contained poultry by-product meal, contrary to advertisement claims. Blue Buffalo subsequently filed lawsuits against the pet food ingredient broker Diversified Ingredients and Supplier, Wilbur-Ellis. In March 2017, Wilbur-Ellis and an employee of that pet food ingredient supplier were charged in federal court related to their roles in providing those poultry ingredients to Blue Buffalo.
4. Hill’s Pet Nutrition
Hill’s Pet Nutrition’s annual revenue increased by US$52 million from 2015 to hit US$2.26 billion. Hill’s also faced a legal challenge since the 2016 database update.
In December 2016, a class action lawsuit alleged that Hill’s Pet Nutrition, Mars Petcare, Nestle Purina, PetSmart and veterinary services providers engaged in price fixing of prescription dog and cat foods in the US, in violation of anti-trust and consumer protection laws.
Specifically, the plaintiffs called out Hill’s Prescription Diet, Purina Pro Plan Veterinary Diets, Royal Canin Veterinary Diet and Iams Veterinary Formula. However, a pet food industry consultant said the legal action lacks a foundation.
“The lawyers do not understand the nuances of selling pet foods, particularly therapeutic versus over the counter,” Ryan Yamka, PhD, of Luna Science and Nutrition, told Petfood Industry.
The past year wasn’t all strife for Hill’s prescription pet foods, though. In February 2017, Hill’s Pet Nutrition and AGL collaborated on a wearable pet monitoring system, called Vetrax, that is designed to work in conjunction with Hill’s SmartCare prescription pet food. The monitor provides round-the-clock behavioral information to help veterinarians diagnose and treat pets’ health conditions that may be correlated to diet.
3. Big Heart Pet Brands
Big Heart Pet Brands increased its annual revenues by 13 percent between 2010 and 2016, reaching US$2.3 billion, according to database figures. However, pet food segment sales continued to weigh on parent company, J.M. Smucker.
Figure 2: Big Heart Pet Brands came in fourth among the top five pet food companies in terms of revenue growth between 2010 (US$2 million in revenue) and 2016 (US$2.3 million), according to Top Pet Food Companies data.
Lower pet foods sales contributed to a first fiscal quarter 2016 overall net sales decrease of 5 percent for the J.M. Smucker Co. compared to 2016, said Mark Smucker, president and CEO, in the company's earnings conference call in August 2016. In November 2016, Smucker reported that net sales in the pet food segment decreased by US$35.7 million to US$531 million for the second quarter. That trend continued into the fourth quarter, Smucker reported in April 2017, as pet food segment profit decreased US$20.1 million, led by sales declines in 9Lives and Meow Mix cat foods.
2. Nestlé Purina PetCare
At US$12.1 billion, Nestlé Purina PetCare attained the second-highest annual revenue of all pet food companies worldwide.
Purina faced several legal issues in the past year. Like Hill’s and Mars, Purina was included in the class action lawsuit against prescription pet foods. In November 2016, a California federal judge dismissed a 2015 class action lawsuit that alleged Purina’s Beneful dry food sickened dogs. On May 23, Hormel filed a lawsuit against Purina in the United States District Court of Minnesota, which alleged that Beggin’ Strips infringed on Hormel’s “Black Label” trademark.
Purina also had a busy year outside the courtroom. Nestlé Purina opened a US$86 million pet food factory in Ribeirão Preto, Brazil in that will make wet food for cats and dogs from the Friskies, Cat Chow, Pro Plan and Dog Chow ranges. In Bük, Hungary, Purina opened a new production hall at its facility in February 2017, making the plant Purina’s largest pet food production center in Europe. Also in February, Purina’s Oklahoma City, Oklahoma, USA, pet food and treat manufacturing facility achieved zero waste to landfill status, the seventh Purina facility to do so in the US.
1. Mars Petcare
Mars Petcare likely remains in the top spot, a position the company has held since Petfood Industry’s Top Companies database was started in 2010. However, updated figures weren’t available for the company, so its exact 2016 revenues are unknown.
Despite a lack of hard data, Mars seems to be expanding. In July 2016, Royal Canin, a subsidiary of Mars, announced the construction of a new pet food manufacturing facility in Sioux City, South Dakota, USA, which includes an investment expected to exceed US$100 million. Mars Petcare also plans to open a pet food research center in Ulyanovsk, Russia, which will cost 782 million rubles (US$13.7 million).
The pet food company announced in January 2017 that it will buy VCA, a pet hospital operator, for US$9.1 billion. With the deal, Mars acquired nearly 800 pet hospitals in the US and Canada that join Mars’ other veterinary businesses, Banfield Pet Hospital, Bluepearl and Pet Partners.
Like many other pet food companies, Mars Petcare also spent time in the courtroom over the past year. In August 2016, Mars Petcare agreed to settle Federal Trade Commission (FTC) charges against Eukanuba brand dog food. Specifically, FTC alleged that the company claimed, but could not prove, that a 10-year study found that dogs fed Eukanuba could extend their expected lifespan by 30 percent or more.
In November 2016, Mars filed a lawsuit against J.M. Smucker for alleged trademark infringement of Mars’ Greenies Pill Pockets treats by Smucker’s Milk-Bone Pill Pouches pet treats.
Top 10 pet food companies worldwide
The worldwide top five pet food companies for annual revenues all call the US home, although they have multinational business units. Spectrum Brands/United Pet Group, another US-based company, took sixth place. The US may be the world’s largest pet food market, but that doesn’t mean pet food companies based in Asia and Europe aren’t thriving.
Japan’s Unicharm grew from US$47 million in annual revenue in 2010 to more than US$733 million in 2016. That placed it at No. 7 globally. Unicharm’s compound annual growth rate of 48 percent beat Blue Buffalo.
In Europe, Laroy Group in Belgium and Germany-based Deuerer and Heristo all experienced revenue growth over the past several years. Those three companies filled the eighth, ninth and 10th places in the updated Top Pet Food Companies database.
Petfood Industry’s researchers attempted to update the database with the latest figures for 2016. However, many companies do not release their revenue figures publicly, so some major companies may not be accurately represented. For example, Diamond Pet Food occupied the fifth place spot based on 2015 revenue figures, but dropped off the list this year for lack of data.
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