Posted24 January 2022

As the Millennial and Gen Z populations dominate as pet owners, we continue to see that they value pets as an extension of their close family. We have found the key consumer trends driving the pet food industry include humanization of pet diets, desire for sustainability, health-consciousness, elevated treats, and online shopping preferences.

The recent spike in pet parenthood coupled with a growing desire to treat pets as family creates an opportunity for pet food manufacturers to draw more direct parallels between pet and human food. Take for example Nestle Purina, who released a Fancy Feast cookbook for humans inspired by their product line launch in 2020. Appealing to consumers through human-grade food and accessories could contribute to greater future growth.

Consumers are looking for pet food and treat options that are sustainable, traceable, and responsibly sourced. It’s critical to raise awareness about the sourcing and manufacturing process through marketing and packaging strategies. Take The Farmer’s Dog, a company growing in popularity because of their personalized food subscription service coupled with a promise that their food is tested on humans.

Online shopping for pet food and products has also continued to increase, in part due to the pandemic, but also because of the convenience factor. Pet owners are diligent in finding the highest quality and best value for their pets, which means they use online channels to browse, compare, and ultimately purchase pet food. Packaged Facts expects e-Commerce sales to cover 34% of the pet food market by 2024.

The Global Pet Food market was valued at USD 34060 million in 2019 and is expected to reach USD 40840 million by the end of 2026, growing at a CAGR of 2.6% during 2022-2026. 2021 started off strongly for pet food M&A when several transactions were announced in just the first few days of the year. By May 2021, 15 deals had occurred, many of them involving Private Equity, a trend that has continued. At least 44 pet food-related M&A deals happened globally in 2021, compared to about 25 in 2020, that’s quite a jump, more than 75%, demonstrating the ongoing strength of the pet food market despite continued economic uncertainty and supply chain disruptions brought by the pandemic.

The most recent pet food activity includes large companies—J.M. Smucker selling its private label dry food business to Diamond Pet Foods, United Petfood buying Teeling Petfood—and smaller deals, including a PE firm acquiring Pet Ventures/Pet n’ Shape, Antelope buying Bocce Bakery and, most recently, Inspired Pet Nutrition acquiring Pet Food UK, also via PE funding.

In terms of pet food M&A activity, it may be too soon to judge, but the high level of activity seems likely to continue.