Jan 22, 2014
By Debbie Phillips-Donaldson
The petfood and pet care industries have been a hotbed of merger and acquisition (M&A) activity for several years now; in fact, even during the recession, that activity picked up, unlike in most other industries. Thus, last week's announcement that Nestlé Purina PetCare had acquired Zuke's Performance Pet Nutrition, a maker of natural, functional treats, came as no real surprise to anyone working in or watching our industry.
Nestlé Purina itself has been on a small buying spree: last year it bought Petfinder.com, an online pet adoption portal. And market research firms and others tracking petfood have speculated the company was in an acquiring mood. For example, in its Pet Food in U.S., 10th Edition report, released last year, Packaged Facts stated: "As the only major player without a leading natural brand originating in the pet specialty channel, Nestlé Purina may also be shopping around, given Mars’ acquisition of Nutro, Procter & Gamble’s purchase of Natura and Del Monte’s acquisition of Natural Balance." To date, Nestlé Purina hasn't acquired a natural petfood maker, but with its line of treats, Zuke's comes close. According to Bloomberg News, reporting on the Zuke's purchase, Nestlé is "seeking to expand in the fast-growing natural petfood business."
So who, or what, is next? There's no doubt more deals are on the way. All the buzz (off the record, of course!) is still about Del Monte and that, after divesting its human food business last year to focus on pet products, has money and is ready to spend it on acquisitions. However, reports that Del Monte might be targeting P&G's petfood brands (articles and speculation on this were rampant last fall) have died down. In fact, earlier this month, an analyst from Euromonitor said he believes P&G will stay in the pet care sector because its petfood sales actually increased -- only by 2%, but that was better than the performance for some of the company's other business units.
It all makes for interesting gossip and a fun parlor game. But considering that future M&A deals could greatly impact the industry's competitive landscape, it bears watching and waiting for any actual (and possibly inevitable) announcements. Not to mention, remembering that these transactions involve real companies with real products that consumers and pet retailers count on and real employees whose livelihoods might be affected.
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