Pet Food Sector Prime Acquisition Target for Food Giants

Driven by increased focus on pet health and the powerful role in pet owner lives of the human-animal bond, U.S. retail sales of pet food will rise by a total of 16 percent between 2015 and 2018 to reach $33 billion, according to a new report from Packaged Facts. This presents a prime opportunity for companies traditionally known for producing food for humans entering the pet food category.

“The mature yet thriving outlook for the pet food industry makes a foray into the market a worthwhile venture for just about any food company, especially considering the continued emergence of premium priced and natural and organic pet products that are helping drive sales in many pet retail categories," said David Sprinkle, research director for market research publisher Packaged Facts.

J.M. Smucker’s $5.8 billion purchase of Big Heart Pet Brands (maker of Meow Mix, Milk-Bone, Pup-Peroni and Kibbles ‘n Bits) has been one of the more notable recent acquisitions made by a food industry giant. Last year Mars, a company best known for its delectable candy products, scooped up Iams and Eukanuba from Procter & Gamble in a $2.9 billion acquisition. Adding Iams and Eukanuba strengthened Mars’ already impressive pet-brand portfolio, which included Whiskas and Pedigree.

The acquisition of Big Heart Pet Brands gives Smucker’s one of the top three players in the dog and cat food segment. According to “Pet Food in the U.S., 11th Edition" report, the U.S. dog and cat food market remains top-heavy, with the Nos. 1 through 3 companies accounting for over 69 percent of U.S. retail sales in mass and pet specialty channels in 2014. On a tier of its own is Nestlé Purina with a 35 percent share. Mars added 6 percent to its total when it acquired P&G’s pet brands in 2014, to move to a 21-percent share. Big Heart Pet Brands follows as the only other company with a double digit share of the market, at 13 percent.

The multibillion dollar pet food industry continues to transform with new ingredients and science, emerging consumer demands and market segments, and evolving value chains. Food Product Design’s sister media brand Petfood & Animal Nutrition 2.0 is dedicated to this very concept. This year’s Petfood & Animal Nutrition 2.0 tradeshow will be held Oct. 20-21 at the Chicago Hilton. The event will feature a dynamic educational forum and exhibit hall of suppliers showcasing ingredients, manufacturing solutions and packaging innovations to bring new pet food and animal nutrition products to market. Click here to find out more.