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Packaged goods company Post Holdings, the new owner of the brands, is optimistic about the future.
News recently surfaced that American pet food manufacturer J.M. Smucker divested some pet food brands to Missouri-based Post Holdings for $1.2 billion (€1B).
The firm created a new pet food division and believes the takeover will open “exciting doors.”
A company spokesperson shared with GlobalPETS that the purchase of brands Rachael Ray Nutrish, 9Lives, Kibbles ‘n Bits, Gravy Train and Nature’s Recipe provided “a compelling entry point into the highly attractive and growing pet food category.”
Post Holdings, considered a leader for consumer brands in North America, is mainly centered around the refrigerated, food service and food ingredient sectors.
What’s next?
Following the deal, Post Holdings expects the transaction to be “immediately accretive to Post’s free cash flow, and it will leverage existing infrastructure while expanding capabilities of Post Consumer Brands.”
The consumer goods holding hopes for an annual turnover of $30 million (€27.5M) after the third year of operations.
GlobalPETS learned that Post Holdings gained 1,100 employees in manufacturing, distribution and office spaces after its foray into the pet business.
Looking for another deal?
The acquisitions gained attention from numerous financial watchdogs. Analysts from private wealth management business Bernstein suggested the deal could be a way for J.M. Smucker to go after retailer Freshpet. According to Bernstein, the pet food manufacturer “could have Freshpet in their sights as a premium pet food business.”
Bernstein analysts suggested that the divestiture of pet food brands “implies fairly clearly that management is looking to do another deal.”
Investment banking company UBS said after selling around 50% of its pet portfolio, the company “is likely to deliver more consistent top-line growth in the future and will improve its margin profile.”
A new business vision
While J.M. Smucker admits it is unwilling to exit the pet food market “entirely,” the manufacturer hopes to focus on “areas of our business that offer the strongest growth and profit potential.”
CEO Mark Smucker said a while ago that they would be focusing on dog snacks and cat food brands.
According to the latest earnings released earlier this week, the firm’s pet business has shifted from approximately two-thirds pet food and one-third pet snacks to about 60% pet snacks and 40% cat food.
The manufacturer plans to increase investment within the “fast-growing and high-margin dog snacks category” and reach sales of $1 billion (€931.9M) in the future.
Pet food sales accounted for $3 billion (€2.8B) in the last 12 months to 30 April 2023, making up 36% of the total sales. In FY 2022, the pet portfolio hit $2.7B (€2.5B).
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