As predicted by pet industry observers in 2019—and despite the COVID-19 pandemic—the pet industry was flush with mergers and acquisitions (M&A) in 2020 and into 2021, with many brands popular in the pet specialty channel changing hands. Companies, from existing pet product manufacturers to private equity investors, sought either to expand their market share in particular product categories or penetrate segments that were new for them.
The burst of activity seems a testament to the industry’s alluring strength and what seems like never-ending growth. Nonetheless, pet specialty retailers will be keeping a sharp eye on brands that are under new ownership, looking for assurances of continued support and product integrity. And in some cases, they may be looking for brands to step it up.
“Our executive team follows several pet industry trade periodicals, and we evaluate each merger and acquisition separately from a quality of product and relationship perspective,” said Rob Flanagan, president of Wag N’ Wash, a specialty retailer offering grooming, retail and self-wash services in nearly 20 locations nationwide.
“Typically, we wait 12 to 18 months after M&A to see how the logistics are worked out,” he added. “As long as the quality of the product is the same, and we maintain the same strong relationship with the vendor partners, M&As are often a positive.”
The past year saw a host of manufacturer acquisitions, particularly on the nutrition side of the industry. Some notable ones include: Whitebridge Pet Brands completing its acquisition of supplement maker Grizzly Pet Products in early March, J.M. Smucker selling its Natural Balance premium pet food business to private equity firm Nexus Capital Management LP in February, and premium pet food manufacturer BrightPet Nutrition Group purchasing MiracleCorp in January.
Vic Mason, president of trade organization World Pet Association (WPA), points to the COVID-19 pandemic’s effect on the industry as a driver of changing market dynamics.
“What the pandemic did was add fuel to the steady fire of the industry,” he said. “While the pet industry was already doing well pre-pandemic, the pandemic provided a new motivation for large corporations to acquire products and solutions that appeal to our ‘new normal.’ The industry is at a critical juncture; we have a tremendous opportunity to seize the day and make the most of these new trends.”
Whitebridge Pet Brands is a prime example of a rapidly growing company that is taking on brands in a variety of categories and seizing opportunities. The company was founded in 2015 with the merger of Cloud Star, a pet treat manufacturer, and Petropics, maker of Tiki Cat and Tiki Dog. Since then, the company has acquired several brands in the pet food and treat categories, including Crazy Dog, Dogswell, Pet Botanics and Buddy Biscuits.
“We are always looking for companies and brands that complement our existing portfolio and have good growth potential at retail,” said Olivier Amice, CEO of St. Louis-based Whitebridge Pet Brands. “Through research, we discovered this amazingly fast-growing and, we believe, untapped category of pet supplements, which led us to conversations with Grizzly Pet Products, a leader in that category.”
Whitebridge’s recent acquisition of Grizzly Pet Products is the company’s first foray into the supplement category.
“At Whitebridge Pet Brands, we want to help people bring health and happiness to pets through better nutrition, which we believe is natural and minimally processed foods, complements and treats, formulated to the specific needs of dogs and cats,” Amice added. “Supplements were a natural extension of our portfolio, and Grizzly products delivers on our promise to both pets and people.”
Read a more in-depth interview with Whitebridge Pet Brands on this topic.
In evaluating what mergers and acquisitions activity indicates about the pet industry, Mason asserts that it’s important to note the type of activity happening.
“For example, in 2018, C.J. Foods—a large private-label premium pet food manufacturer—purchased Lortscher Animal Nutrition, an ingredients supplier,” he said. “Now we are seeing the opposite. In January of this year, BrightPet Nutrition Group purchased MiracleCorp, a maker of premium pet food and equine products. Similarly, in December of last year, Barkbox and Bark Eats merged with North Star Acquisition Corp., making it a publicly traded company. What we’ve seen in these last two mergers is that big companies are acquiring smaller players—whether they are specialty retailers or have a share of the e-commerce market—which integrates the supply chain and demonstrates the value of premium products and convenient delivery.”
Nexus Capital Management’s recent acquisition of Natural Balance from corporate giant J.M. Smucker, in a sense, reverses the common trend of larger corporations snapping up small independent brands.
“We bought a specialty brand from a big company and are bringing it back to being an indie pet brand,” said John Sturm, chief revenue officer for Upland, Calif.-based Natural Balance Pet Foods.
The brand is planning to be faithful to its roots by focusing on the pet specialty retail channel and independents. Sturm said Natural Balance will not head toward grocery or mass-market retailer shelves. Natural Balance’s new leadership team, which comprises professionals with experience specific to specialty pet retail, will help the brand’s growth, he added.
“There is nothing here that we can’t improve upon,” he said. “We believe [Natural Balance] can once again be a favored pet specialty brand. There is a ton of room to grow if we work on innovation and the brand. We want to win pet specialty and indie pet.”
As companies work toward integrating newly acquired brands into their operations, the results of which remain to be seen, the impact of the industry’s M&A activity is clear, according to Mason.
“In terms of what this means for the health of the industry, I think we are all in agreement that the pet industry is in great shape and is looking towards a continued vibrant future with consumer demand driving corporate decisions,” he said.
Read a more in-depth interview with WPA’s Vic Mason on this topic.
PPN presents its list of top M&A news from January 2020 to now:
- Whitebridge Pet Brands Makes Fifth Acquisition
- Pet Supplement Co. FoodScience Corp. Acquired
- J.M. Smucker Completes Sale of Natural Balance
- United Raw Pet Foods Acquires Growlies
- BrightPet Nutrition Group Acquires MiracleCorp
- Manna Pro Products Expands Omnichannel Presence with Bullymake Acquisition
- Hemp Technology Closes Agreement to Purchase True Leaf Pet
- TA Associates Acquires Mid America Pet Food
- BarkBox Enters Merger Agreement with Northern Star Acquisition Corp.
- Solid Gold Pet Acquired by Hong Kong-Based Wellness Company
- Investment Firm to Acquire WellPet
- Lucy Pet Products Founder Acquires Breeder’s Choice Pet Foods
- Private Equity Investment Fund Acquires Majority Interest in BrightPet Nutrition Group
- Petmate Acquires Pet Qwerks
- Manna Pro Acquires Doggie Dailies
- C.J. Foods and American Nutrition Merge to Become Alphia
- Investment Firm to Acquire Radio Systems Corp.
- Destination Pet to Acquire VitalPet
- Purina Acquires U.K. Pet Food Brand
- Spectrum Brands Pet Acquires Omega Sea
- H&C Animal Health Acquires Angels’ Eyes
- Redbarn Pet Products Acquires Injection Molding Company
- Manna Pro Products Acquires Flea and Tick Brands
- Whitebridge Pet Brands Acquires Cardinal Pet Care
- Targeted PetCare Expands Cat Litter Offering with sWheat Scoop Acquisition
- Pestell Group Becomes Two Independent Portfolio Companies
- Radio Systems Acquires Clark Distributors