Oct 16, 2013
By Debbie Phillips-Donaldson
Del Monte's announcement last week that it was divesting its human canned food business to focus on its petfood products was quite a bombshell -- at least for me, from both a personal and professional level. As a consumer growing up in the US at the tail end of the Baby Boomer generation, I have always regarded Del Monte as one of those iconic food companies. I can remember my mom serving Del Monte fruits and vegetables or other products from Del Monte brands such as Contadina and S&W. In fact, Del Monte as a brand has been a fixture in US grocery stores and food channels for over 120 years.
The company has owned petfood brands for several decades but didn't make a big entry into the industry until 2002, when it acquired H.J. Heinz Co.'s brands, including 9-Lives and Kibbles 'n' Bits. Since then, while its petfood business has grown steadily into the fifth largest petfood company globally, it still had only about 3% global market share, according to Euromonitor, far behind industry leaders such as Mars and Nestle Purina at over 20% share each. (Del Monte's US petfood market share reached 12% in 2012, according to Packaged Facts, but that still lags behind Nestle's US share of 36% and Mars' of 16%.)
Yet Del Monte's acquisition of Natural Balance Pet Foods earlier this year signaled that the company was ready to push for increasing its petfood business and market share. This most recent announcement, that Del Monte is selling its Consumer Products business (the human canned food brands) to focus on petfood and snacks -- and will even change the company name to reflect that focus -- provides confirmation that the company plans to go big on petfood.
This all follows the company's acquisition itself in 2011 by KKR & Co LP, Vestar Capital Partners and Centerview Capital. So, after two years into that deal and what Del Monte itself calls an internal strategic review, its executive team decided a focus on petfood "provided the best opportunities for growth."
No doubt Del Monte is also reacting to reports that Procter & Gamble is seeking buyers for its petfood brands, along with other "under-performing business units." Perhaps Del Monte is even a potential buyer for Iams, Eukanuba or Natura (or all three)? Currently, Del Monte and P&G have the same share of the US petfood market, 10%, and are very close in sales and market share globally; the Natural Balance acquisition probably moved Del Monte ahead of its closest competitor on the global list.
The next few months should prove interesting as we see what steps Del Monte and other companies take next and how they affect the global petfood market.
Sign In to add a comment
Posted by : firstname.lastname@example.org (Email
| Visit) on 11/01/2013
View All Posts >>
--- Thank you for your patience ----
If you have any issues logging in or any other need feel free to contact us.