Last year was relatively slow for pet food acquisitions, especially compared to 51 business deals in 2018. However, opportunities may exist in 2024 for private equity groups, banks and other investors who bet on the pet. Investment bank Harris Williams compiled a report detailing some of the characteristics investors look for in pet food companies.
Social and environmental ethics
Earth’s surface temperature in 2023 will be the hottest in recorded history, according to NASA scientists, beating the baseline period (1951-1980) by 2.1 degrees Fahrenheit. Every month from June to December sets a global record for that month, with July being the hottest month measured globally. As the reality of climate change sets in, environmental sustainability has become an important aspect of every business, not least because consumers demand it.
The pet food industry must also prioritize the long-term stability of Earth’s ecosystems, and investors are looking at companies’ environmental policies. In turn, pet owners have become more aware of social injustices and are scrutinizing supply chains to ensure that the products they spend money on are not made with slave labor or other exploitative practices. behavior.
“These topics will become more important to pet parents and have a greater influence on their purchasing behavior, and leading pet food companies are taking notice,” Harris Williams analysts wrote. .
Innovative pet food formulations and marketing
Many brands fill supermarket pet food aisles and online retailer pages. Dog, cat and other pet food companies face an outstanding challenge in this crowded market. The change is
“From unique ingredient functionality and appealing pet food formats to technology-enabled customer service and intuitive user experiences, there is a wide range of ways that food companies can differentiate themselves of pet within their niche,” Ryan Budlong, managing director of Harris Williams’ consumer group, wrote in the report.
International footprint
While many pet food start-ups originated in people’s home kitchens and began selling locally and online, investors can look for brands that have gone global.
“The best pet food businesses have large white space for growth due to access to large markets such as the US or multiple European and Asian markets,” wrote Daniel Wang, Harris Williams managing director and head of Asia-Pacific coverage.
Harris Williams analysts consider the pet food industry to be a highly resilient and attractive sector with expanding M&A activity. They believe that the industry provides many opportunities for investors to create long-term growth, value and differentiation.
