M&A activity in the pet food space doubled in 2021 vs 2020 and is not going to stop.
“People are going to continue to invest in this market. The market will keep growing despite the disruptions seen,” Worth Turner, CEO of Customer Veterinary Services – a Florida based maker of pet nutritional supplements said at the AFIA Pet Food Conference at IPPE in Atlanta today.
Turner estimates the global M&A spend in the pet food market at $260 billion; $110 billion was spent in the US alone. About 50% of investors come from the industry and the other 50% from private equity, he said.
“It’s a large and scalable market which is still growing,” he said, adding that growth is seen at +11%, nearly four times more than GDP growth at 3%.
“It’s a market with strong core fundamentals,” he added. “67% of households have pets; 73% of them treat their pets like family."
Turner argued that despite the M&A deceleration spotted in the pet food space by private equity firms in H2 2022, the market, given its nature, has to grow despite the disruptions seen in supply chains. Turner believes there may still be some pullback by private equity investors in the first half of 2023 as more of a wait and see attitude is expected. However, the pace can pick up again later on in 2023.
Investors are interested in scalability and driving innovation, sustainability and accelerating speed to market for product launches, securing IP rights, diversifying revenue streams and building contingency plans to eliminate risk of outages for customers, Turner said. The pet food market offers these opportunities.
