CapEx deep dive (I): fresh food and healthcare drive targeted investment in the pet industry

While companies across industries are ramping up capital expenditure to enhance their technology and Artificial Intelligence (AI) capabilities, the trajectory within the pet sector remains less clear.

Some companies are slowing down these investments, as others are projecting growth for 2026, mostly on improving their technological and AI capabilities.

Hyperscaler capital expenditure is set to accelerate further, with spending from the so- called “big five” – Amazon, Microsoft, Google, Meta and Oracle – widely forecast to exceed $600 billion (€509B) in 2026. This represents a 36% increase compared to 2025, according to industry reports.

Category divergence

Christoph Wunn, Director of Consumer Products & Services at the US investment banking firm William Blair, says it really depends on the subcategory.

“Overall, within pet food, there are certain pockets where we have seen increased investments in capacity, one being fresh food,” he says in conversation with GlobalPETS.

The momentum is driving investments from both brands and co-manufacturing businesses that supply these brands. Wunn states that the pattern can also be seen in freeze-dried and air-dried pet food.

Additionally, Reto Hess, Equity Strategist at Swiss LGT Private Banking, points out that decisions are highly company-specific, with some of them actively investing in strong growth opportunities.

“Others – particularly those that are part of larger consumer goods groups – may currently be more cautious with capital allocation, reflecting the more challenging environment facing parts of the broader consumer staples sector and the limited level of segment-level disclosure available,” he shares.

The case of Freshpet

Freshpet is one of the biggest proponents of fresh-food investment in the pet industry. For fiscal year (FY) 2025, ending 31 December 2025, the company allocated $148.1 million (€127M) to CapEx. This puts the ratio relative to net sales at 13.4%, which is considerably elevated, Hess explains.

The capital expenditure guidance for 2026 remains unchanged, with the company projecting investments of around $150 million (€129M). But the American-based manufacturer noted during its fourth-quarter earnings call that it can increase this budget.

“If we do decide to retrofit more than just one bag line with new technology and we have a large rollout of fridge island units, we may choose to increase CapEx by anywhere between $20 million (€17M) to $50 million (€43M) so that we can capture those benefits sooner,” says CEO Billy Cyr.

The American pet player also expects a significantly larger share of capital expenditure to be directed toward new technology lines in 2027, says Hess.

Health care strength

Health and wellness-related services and products, such as healthcare solutions and pet supplements, are also seeing investment momentum, Wunn says.

For instance, IDEXX, specialized in diagnostic and healthcare software products, projects a 12.8% growth in capital expenditure, from roughly $160 million (€138M) in 2025 to about $180 million (€155M) in 2026. According to the firm, investments target “commercial resources and higher R&D spend related to advancing the company’s innovation roadmap.”

Supplements, in particular, are at a crucial stage of development. “The category grows, but there isn’t enough capacity out there in the market to continue to support that growth. This is why we are seeing increased spending, especially on the co-manufacturing side,” the William Blair Director explains.

The German corporation Symrise invested in supplements last year through Probi, a company it acquired in 2024. In its last report, Symrise said it plans to scale existing capabilities to augment growth, projecting a mid-term CapEx target of 4-5% of sales.

General market

Across the industry, AI is driving a capital expenditure supercycle, according to the consulting firm PricewaterhouseCoopers (PwC), as companies are spending “multitrillion dollars” to build AI infrastructure and capabilities.

Of course, this is led by big tech companies such as Amazon, Google, Meta, Microsoft, OpenAI and Oracle, among others, but it also has a minor impact on other businesses. “This capital expenditure wave is still at an early stage and will continue to absorb funding,” PwC adds.

For S&P 500 companies (formed by large-cap US equities), overall CapEx rose by 19% in 2025 and is expected to see an additional 13% increase in 2026, Hess analyzes. Excluding IT companies, big tech companies and the financial sector, CapEx in the US increased by only 1% in 2025 and is projected to grow by 3% in 2026.

The spending spree is not the rule for all industries. “Based on Bloomberg consensus, the energy sector accounts for the largest share of CapEx (17%), followed by consumer discretionary (13%) and utilities (12%),” the analyst states.

In the pet market, although there is enthusiasm about the benefits of data analysis and the use of AI in operations, uncertainty about how to capitalize on them remains, Wunn notes, which keeps the sector cautious about significant investments.