Nestlé Purina PetCare’s acquisition of Merrick Pet Care, announced in July, makes some sense for both companies. As with most pet food merger and acquisition deals globally over the last several years, each party had something to gain.
For the seller or pet food company being absorbed, such a transaction may mean getting more funds for research, product development, facilities, market expansion (for example, internationally) or more. Or, it may signal an owner wanting to retire or move on to another business venture. I suspect that for Merrick, selling first in 2010 to Swander Pace, a private equity firm, represented an influx of cash to innovate and develop new products and lines, plus a chance for founder Garth Merrick to pull back, though he has remained involved, right up to (and, presumably, after) the sale to Nestlé Purina.
As for Nestlé, Its purchase of Zuke’s, a natural treat maker, in early 2014 provided an entry into the ever-popular, fast-growing natural category; adding Merrick’s successful brands and full lines of natural and organic pet foods cements that. “The big three US mass marketers of pet food—Nestlé Purina, Mars and Big Heart Pet Brands—are all investing heavily in the natural segment via brand reformulations, new product introductions and acquisitions,” said Packaged Facts in a press release after the Nestlé-Merrick announcement. In July 2014, for example, Nestlé revamped its Purina One Beyond line, adding grain-free and superfood ingredients to distinguish it as a natural brand, the release said.
Yet how do consumers react to these deals, especially “pet parents” with strong beliefs about a company or its brands? Within hours of the Nestlé-Merrick announcement, comments—mostly negative—were flying on social media. Merrick’s Facebook pages received thousands of posts for several days, with many lamenting the company’s “selling out” to a larger corporation of which many commenters apparently have a very low, even adverse, opinion. Merrick gamely responded with assurances that it would not changes its formulations, ingredients, manufacturing practices or quality standards, but most of these consumers weren’t buying it.
In fact, many commenters said they would immediately switch to non-Merrick pet food brands, seemingly unwilling to wait and see if the company would stick to its promises. Did Merrick/Swander Pace and Nestlé Purina anticipate this type of reaction, or believe it’s enough to impact sales or slow Merrick’s recent fast growth? The PR and marketing folks may need to put in a lot of time and effort in the coming months to simply keep, let alone grow, Merrick’s customer base.
Impact of Nestlé-Merrick deal