Investments that are driving the pet industry

The pet industry continues to attract significant amounts of money. The larger sums seen recently are for mergers and acquisitions (M&A), but there have also been major investments in production capacity expansion and business divestitures.

Billion-dollar transactions

One of the biggest announcements was made in June, when agribusiness specialists Bunge and Viterra announced their merger to create an “innovative global agribusiness company”. The operation, that is expected to be complete by mid-2024, is worth approximately $34 billion (€31B).

At the same time, Bunge has invested in Singapore- based insect product manufacturer Nutrition Technologies, to increase the use of insects as a mainstay ingredient in different applications, including pet food.

Also announced in June: Swedish investment company EQT plans to take over British veterinary drug producer Dechra Pharmaceuticals for £4.46 billion ($5.73B / €5.21B).

Franchise Group in the US, which owns companies such as Pet Supplies Plus and Wag N’ Wash, has entered into a definitive agreement and merger plan with a consortium that will acquire approximately 64% of the company’s issued and outstanding common stock. The transaction value was $2.6 billion (€2.4B). This is one of the top 5 deals in the sector made in the period 2018-2023, according to financial database PitchBook.

Mars has announced the acquisition of Heska, a global veterinary diagnostic and specialty product provider. Heska will join the multinational’s pet division. According to PitchBook, the deal was worth $1.5 billion (€1.4B).

Investing in production in Europe

Investment on the production side has captured most of the headlines about transactions in the European region.

In April, Finland’s pet retailer Musti Group acquired full ownership of the Premium Pet Food Suomi Oy factory in Lieto. Following the deal, the firm stated the estimated positive profit impact of the transaction to be around €3 million ($3.3M). Musti CEO David Rönnberg says that the move was strategic, as it allows the company “to deepen” its commitment to sustainably produced products.

Pet food producer VAFO has acquired British pet food firm Pooch & Mutt in a “multi-million-pound deal”. Earlier in the year, the Czech firm invested €16 million ($17.6M) in a new 3,000 sqm factory – the largest of its kind in Finland and its first production facility in this country. It also acquired a majority share in Swedish wholesaler Lupus Foder in April, in a bid to build its Scandinavian footprint.

European acquisitions

Swedish pet retailer ZOO.se has taken over e-commerce site Tinybuddy, making it the second- largest pet food and products provider in Scandinavia.

Fresh dog food brand Butternut Box expanded its footprint across Europe by acquiring Polish fresh dog food company PsiBufet. Over the past few years, the London-based company has raised over £1 million ($1.29M / €1.17M) in capital from a number of investors.

In May, Symrise successfully acquired a 30% ownership stake in Swedencare. The German corporation, that was obliged by regulations to make a takeover bid, offered kr5.9 billion ($561M / €509M) for the Malmö-based pet health company. Symrise clarified the situation – although it planned to increase its shares in Swedencare, it did not want full ownership. The Board of Directors of the Swedish corporation rejected the bid a few days later.

Funding rounds

Insect start-up Ÿnsect has secured a Series D funding round worth €160 million ($176M) from new and existing stakeholders. The French company, that recently appointed Shankar Krishnamoorthy as its new CEO, wants to develop its portfolio and accelerate marketing authorizations for its ingredients across various target markets, such as North America and Asia.

Belgian pet food producer Edgard & Cooper raised €20 million ($22M) in February to boost product innovation and increase its European footprint.

Australia

In 2023, fresh pet food firm Lyka secured AU$55 million ($37M / €33M) worth of investment. The last capital injection was AU$25 million ($17M / €15M), which will be used to triple its production to help meet demand.

Sydney-based online pet retailer PetCircle has announced an investment of AU$75 million ($50M / €46M) to accelerate its plans to secure a larger share of the Australian pet supply industry. In a recent interview with PETS International, CEO and Co-founder Michael Frizell said that the online pet retailer aims to increase its customer base from the current 800,000 to 1 million within the next 5 years.

Rest of the world

Indian pet supplier Drools raised $60 million (€54M) in June from investment firm L Catterton. This will help the company leverage its commercial network and expertise in consumer insights. CEO Dr. Shashank Sinha said to PETS International that this operation will help them enhance their manufacturing capabilities and improve existing facilities. The firm also expects to expand its footprint across Asia, Europe and the US.

Southeast Asian private equity firm Creador has bought a 40% stake in Malaysian pet food manufacturer Pet World, aiming to accelerate the company’s expansion. Earlier this year, Pet World had announced its plans for an IPO in Singapore worth $100 million (€91M) by the end of 2023.

In the US, pet food manufacturer Alphia has invested $5 million (€4.5M) in pet health and wellness company Better Choice, in a bid to “establish a direct manufacturing relationship and stabilize business outlook”.

Pet insurance takeovers

The pet insurance sector has once again captured the interest of investors. JAB Holdings has expanded its global portfolio with the recent acquisition of American pet insurance Pumpkin. PitchBook valued the deal at $110 million (€100M).

Earlier in the year, JAB-backed pet insurance provider Pinnacle Pet Group took over London-based Animal Friends Investments. It also entered the French market with the takeover of animal health insurance broker HD Assurances, which operates across Belgium, France and Italy. The holding company owns 5 pet insurance firms in Canada and the US, and 5 more in the UK and Europe.

Divestitures

Despite the generally good performance of the pet category, some companies decided to sell part of their businesses in the first half of 2023.

American pet food company J.M. Smucker announced the divestiture of some of its pet brands for $1.2 billion (€1.1B) to consumer goods firm Post Holdings. Post hopes for an annual turnover of $30 million (€27M) after the third year of operation. While J.M. Smucker admits it is unwilling to exit the pet food market entirely, the manufacturer hopes to focus on areas that offer the strongest growth and profit potential.

Rumors have also been circulating about the potential sale of the pet portfolio of Brazilian food processing company BRF. Some sources have indicated that one of the interested companies is Nestlé. The company has reportedly offered R$1.7 billion ($359M / €326M). Nestlé Brazil refused to comment to PETS International on any developments.