Pet food draws big-name investment, private equity focus

Large investment firms are following the pet food and pet care industries, which also continue to attract private equity investors and acquisitions.


The pet food and pet care markets have been attracting outside investment interest for well over a decade now, thanks to their ongoing growth even during recessions and pandemics. Much of the robust mergers and acquisitions (M&A) activity the markets have experienced has come from private equity and similar investors.

But you know an industry has seized the spotlight when it earns the attention of a large and well-known investment firm like Morgan Stanley. The financial giant recently released a report on the pet industry, predicting the U.S. market to nearly triple in size, to US$275 billion, in less than 10 years (2030). That’s a pretty bold show of confidence and validation of the industry’s enduring strength.

Forecast driven by pet ownership, spending increases

One of the reasons Morgan Stanley gives for its optimistic forecast is growth in pet ownership, to date as well as into the future. The firm’s economic and housing research teams estimate the “growth trend of U.S. pet ownership more than tripled during the pandemic,” accompanied by necessary spending on pet food, pet products, veterinary care and more. That trend estimate jibes with other sources in terms of the increase in pet adoptions in the U.S. over the past 18 months.

Specifically, 66% of U.S. consumers responding to a survey conducted by Morgan Stanley Research and AlpaWise, the company’s survey and data group, now own pets. The results led the group to predict that millennials will drive continued growth in pet ownership. “While the pandemic accelerated pet ownership, household formation among millennials and gen Z will likely sustain it,” the report says. “In the AlphaWise survey, 65% of 18- to 34-year-olds plan to acquire or add a pet in the next five years, helping drive what’s expected to be a 14% increase in pet ownership by 2030.”

Millennials will also lead the way in increased spending on pets, the survey showed; a Morgan Stanley analyst projected a rise in average annual household spending per U.S. pet to US$1,292 by 2025 and US$1,909 by 2030, up from US$980 in 2020. That could result in the pet industry experiencing topline compound annual growth rates of almost 8%, compared to 3% over the past decade.

Pet food M&A continues apace, too

Meanwhile in the present, pet food continues to attract investors and private equity attention, spurring M&A deals. Just in the first week of August 2021, Partner in Pet Food (owned by investment company NDX Group) announced its intention to acquire Mispol, EU-based investors acquired Whitebridge Pet Brands and Mid-America Pet Food (owned by a private equity group) bought Nature’s Logic. All of that activity follows on more than 20 M&A deals in 2021 through July, many also driven by private equity or similar investment.

Of course, none of that focus or investment would be possible without pet owners spurring ongoing growth by bringing more furry ones into their families and spending more on them. That provides a great foundation to keep building on.




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