Food giant General Mills recently announced an $8B deal to acquire Blue Buffalo, a natural pet food brand with nearly $1.3B in sales.
As we discussed in our Top 2018 Tech Trends report, the premium pet care industry is becoming more and more attractive for several reasons:
With declining childbirth rates in the US, Japan, France, and other countries, people have more to spend on dogs and cats.
Pet ownership is increasing in the developing world while millennials in China, India, and other areas are spending more on their pets. But only 20% of dog owners in Asia buy packaged dog food (vs. raw vegetables and meat), so brands have major room for growth.
New technologies are letting us all learn more about ourselves. This raises our expectations for understanding our pets, giving rise to startups like Embark (23andMe for dogs), Ollie (personalized meal plans for dogs), and others.
As people’s eating habits shift toward natural, organic, and plant-based foods, they seek the same for their pets.
My parents’ dog, for example, is supposedly gluten-free — and you better believe they’ve upped their dog food spend accordingly.
The big dogs make moves
General Mills isn’t the only one spending big on pet care.
Nestle (which owns Purina) views pet care as a key growth area. Cargill acquired premium pet food brand Pro-Pet last month while Softbank’s Vision Fund invested $300M into “Uber for dog walking” startup Wag.
Going forward, consumer companies of all types can use pet care to draw in new customers.
Pet food lends itself to new buying methods: subscriptions (it’s eaten on a predictable schedule), voice ordering (people tend to stick with the same brand), and e-commerce and delivery (it’s heavy, and can be inconvenient to carry home from the store).
It can also be bundled with services like dog walking or house cleaning. And as offices increasingly allow dogs (Amazon even opened an in-house pet park) brands have new opportunities to sell their pet food on site.