SOURCE: Packaged Facts

Packaged Facts

March 09, 2011 10:53 ET

Acquisitions, Investments Reshape Post-Recession U.S. Pet Food Market

NEW YORK, NY--(Marketwire - March 9, 2011) - In the post-recession world, acquisitions and capital investments are reshaping the pet food market, according to "Pet Food in the U.S., 9th Edition" by market research publisher Packaged Facts.

Fueling marketer, retailer, and capital investment interest is the relatively stability of the market vis-à-vis other consumer product industries. According to the report, retail sales of pet food reached $18.4 billion in 2010, up 2.8% over 2009 levels. While this rate represented a slowing of category growth (the first time since the turn of the century that sales didn't grow by 3% or more annually), it also signaled the pet food market's relative strength in the face of economic hard times.

During 2010, Procter & Gamble/Iams acquired holistic pet food maker Natura, Nestlé Purina bought fast-growth treats maker Waggin' Train, and Del Monte was snapped up for the tidy sum of $5.3 billion by a group of investors including KKR. As indicated by Wind Point Partners' early 2011 acquisition of Petmate, which has expanded from pet carriers to a wide-ranging line of pet accessories, this keen interest in all things pet spans product categories. Breathing additional dynamism into the market are health-related marketing and product development initiatives including new weight-loss foods and programs from major market forces including Hill's and Purina and a flood of special-diet and condition-specific functional foods and treats that take pet pampering to yet another new level.

"Given that Procter & Gamble now has Natura and Mars Nutro, Packaged Facts suspects that Nestlé Purina may be shopping for a 'true' natural pet food brand (i.e., one born in the pet specialty channel) to acquire, and it will be interesting to see which of these three top-ranked pet food companies is first to make the pet-specialty-to-mass leap with such a brand," says David Lummis, senior pet market analyst for Packaged Facts. "Such an event is only a matter of time."

Packaged Facts expects to see additional acquisitions of natural pet companies by mainstream market leaders during 2011 and 2012. It would not be surprising, for example, to see PetSmart or Petco snap up a leading producer of natural/holistic pet food, in order to fast-track their own expansion into natural via an exclusive brand, which could in effect become the chain's private label. In this vein, five companies stand out as possible acquisitions targets:

  • WellPet LLC, which is currently in the hands of investment management company Berwind Corp.

  • Natural Balance, a top marketer of natural pet food in the pet specialty channel and a top seller for Petco.

  • Halo Purely for Pets, majority owned by private equity fund Pegasus Capital Advisors.

  • Nature's Variety, which produces natural raw and traditional pet food; its parent corporation, M.I. Industries, is backed by investment firm Catterton Partners.

  • Castor & Pollux, a top organic pet food brand in the pet specialty and natural supermarket channels.

"Pet Food in the U.S., 9th Edition," provides market size estimates for the overall retail universe, while quantifying mass-market sales to the marketer/brand share level using data from SymphonyIRI. It also charts market size and marketer share figures for the natural supermarket channel, using SPINSscan sales tracking data. The report thoroughly documents shifts in the competitive landscape, new product and retail developments, and trends in pet food purchaser demographics, brand preferences, cross-channel shopping, and cross-product purchasing. Consumer profiling is based on exclusive data from Packaged Facts' own quarterly surveys of pet owners; customized cross tabulations of Experian Simmons consumer survey data; and data shared with Packaged Facts by the American Pet Products Association (APPA). Dozens of images of pet food and treat products and consumer and trade ads are included to illustrate the state of the market. For further information, please visit: http://www.packagedfacts.com/Pet-Food-Edition-2763920/.

About Packaged Facts -- Packaged Facts, a division of MarketResearch.com, publishes market intelligence on a wide range of consumer market topics, including consumer goods and retailing, foods and beverages, demographics, pet products and services, and financial products. Packaged Facts also offers a full range of custom research services. To learn more, visit: www.packagedfacts.com. Follow us on Facebook, LinkedIn and Twitter.

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