As the premier pet commodity – and further bolstered by the global resources of leading market players including Nestlé Purina, Mars, General Mills (Blue Buffalo) and Colgate-Palmolive (Hill’s) – the industry pet food has not only resisted COVID-19, it has, overall, come out on top. In the first months of the pandemic and subsequent waves, storage increased sales of pet food and other commodities, leading market watchers to expect a proportional correction. leading, at best, to a breakeven point in sales in 2020 compared to the “crisis-free” years preceding the pandemic. Instead, the home trend, the boom in pet adoption, and the adaptive behaviors of consumers, marketing, and retail have driven even higher spending levels in 2020.
In the February 2021 Packaged Facts pet owner survey, nearly three-fifths (56%) of respondents said COVID-19 had an impact on their household’s level of pet food spending. company, with six times the increase in their expenses (29%) than as opposed to the reduction (5 percent). As these numbers suggest, the U.S. pet food market has gotten through 2020 with flying colors, with sales increasing nearly 16% to $ 44 billion, roughly double the average annual growth rate over the years. five years before the pandemic.
This warm demonstration of the pet food industry during the pandemic and the concomitant increase in pet adoption has rekindled interest from the investment community, with pet food manufacturers from company, traders and suppliers in the foreground. In a telling illustration of the fertile times, in the last quarter of calendar year 2020, four of the pet food industry’s oldest and most respected natural brand companies changed hands:
- In October, Joey Herrick, veteran of the pet food industry and founder of Natural Balance Pet Food, bought Breeder’s Choice Pet Foods from Central Garden & Pet, along with brands such as Breeder’s Choice, AvoDerm and Pinnacle, as well as personalized private labels.
- In November, private equity and investment firm Clearlake Capital Group LP purchased WellPet from its former private equity owner, Berwind Corp. Founded in 1926 as Old Mother Hubbard Natural Dog Treats, WellPet produces premium natural pet foods under the Wellness, Eagle Pack, Holistic Select label. and the Sojos brands, as well as Old Mother Hubbard dog treats and Whimzees dental treats and treats.
- In November, Health & Happiness Group International Holdings Ltd. (H&H Group), based in Hong Kong, acquired Solid Gold Pet for US $ 163 million. Founded in 1974 as a supplier of holistic nutrition for dogs and cats, Solid Gold Pet produces a wide range of complete and balanced wet and dry diets, meal garnishes and supplements.
- In December, Nexus Capital Management LP signed a definitive agreement to acquire the Natural Balance pet food business from JM Smucker for approximately $ 50 million in cash, and at the end of January 2021, the agreement was finalized. Founded in 1989, Natural Balance was sold to Del Monte in May 2013 through a merger agreement and acquired by Smucker in 2015 with its $ 5.8 billion purchase of Del Monte’s Big Heart Pet Brands, whose food portfolio for pets also included 9Lives, Milk-Bone, Meow Mix, Kibbles’ n Bits, Gravy Train, and Nature’s Recipe (which remain the property of Smucker).
Poor performance is one of the reasons a venerable brand changes hands, but the same is true for good or improved performance, so one can only speculate on the justifications for the Solid Gold and WellPet transitions several months after the release. pandemic. Solid Gold reported sales of $ 55 million in the U.S. and international markets in September alone, with a year-over-year growth rate of 39%. In mid-March 2021, a few months after acquiring WellPet, Clearlake replaced Camelle Kent-Rizkalla as CEO with Reed Howlett, a former CEO of Nature’s Variety.
The situation for Natural Balance appears more rosy, with Smucker reporting disappointing pre-divestment sales, even though Natural Balance generated net sales of around $ 220 million in Smucker’s fiscal year ended April 30. Natural Balance was a stepson of the mass-market driven Smucker pet food family, particularly in relation to also celebrity-backed Rachael Ray Nutrish, the gem of the Ainsworth Pet acquisition. Nutrition by Smucker for $ 1.7 billion as of April 2018. It may also be enough to assume that Breeder’s Choice, a company specializing in companion animals, had not met the high hopes of Central Garden & Pet, which had paid $ 25 million for the company in 2006.
One thing the four sales / acquisitions mentioned above have in common is that they involve super premium natural pet food brands anchored in the specialty pet channel that are now on a new playing field against e-commerce and mass premiumization, the latter trend driven strongly by the success of the mass brand Nutrish and the Blue pet crossover. As Petfood Industry Editor-in-Chief Debbie Phillips-Donaldson puts it in her ‘Adventures in Pet Food’ blog on December 11, 2020, “… it’s clear that Natural Balance, a super premium brand traditionally available through channels like the specialty for pets, no longer suitable. the Smucker strategy. What we can’t predict is whether that portends a move away from the superpremium and the specialty channel, for the market as a whole or just for this company and this situation.
The truer words have never been spoken. Also under fire from electronic communications, the pet chain is undergoing strategic transformation on several fronts, including its growing reliance on services and proprietary brands to drive physical sales, and an online presence of more and more solid. It seems unlikely that any of the four reputable pet food companies recently sold above would suddenly swerve into physical mass channels given the already overheated competition from superpremiums / natural there. Then again, when it comes to “pet exclusive” brands that are mushrooming, never say never.
David Lummis is the Senior Pet Market Analyst for Packaged Facts, a division of MarketResearch.com, and author of Packaged Facts US Pet Market Outlook, 2021-2022: The data cited is from the February 2021 Packaged Facts survey of pet owners. (packagefacts.com)