Pace of Transaction Activity in the Nutrition and Health & Wellness Industry Gains Marginally in 2018
M&As are down 5% in 2018 but financings are up 9% as rate of growth in the number of deals slows from blistering pace of the past four years.
NCN Transaction Database tracks 942 total deals in 2018
After four years of dramatic growth that averaged almost 40% annually, the Nutrition and Health & Wellness Industry saw only a 3% increase in transaction activity in 2018 compared to 2017, with the number of mergers and acquisitions (M&As) down 5% and financings up 9% compared to 2017, according to Nutrition Capital Network (NCN) and the NCN Transaction Database.
Pet Transaction Highlights in 2018
Pet Food, Supplements and Branded Food & Beverage Lead the Top M&A List
Petfood placed two deals on NCN’s top 10 list of M&As in the nutrition and health & wellness industry in 2018, with General Mills’ acquisition of Blue Buffalo Pet Products for $8 billion at No. 2, and Ainsworth Pet Nutrition (Rachael Ray Nutrish), acquired by The J.M. Smucker company, for $1.9 billion at No. 6. The acquisition of Pinnacle Foods by ConAgra Foods ranked as the largest in the industry in 2018 at $10.9 billion.
Natural & Premium Petfood and Pet Service Platforms
In 2017, the NCN Transaction Database showed a substantial uptick in deals in natural & organic pet food, subscription pet food delivery, and at-home veterinary and online care services. That trend continued in 2018, with a consistent stream of large and small pet related transactions, two of which ranked in the top largest M&As:
- General Mills’ acquisition of Blue Buffalo Pet Products for about $8 billion, and
- The J.M. Smucker Company’s purchase of Ainsworth Pet Nutrition LLC and its star brand, Rachael Ray Nutrish, for approximately $1.9 billion.
Natural pet food remains a driving force in the U.S. pet food market thanks to “mass premiumization,” according to a report by Packaged Facts that concludes: “For the first time in years, as of early 2018, mass channels appear poised to surpass pet specialty in pet-food sales growth.” A June 2018 editorial in Petfood Industry online noted that 31 M&A pet food deals had taken place already in 2018, and that the familiar model of one pet food manufacturer or marketer buying another is evolving as food conglomerates purchase large or iconic pet food brands, and new, smaller companies buy up equally small brands.
Ownership changes also occurred in the ingredients and distribution side of the business, notably Cargill’s purchase of Pro-Pet (private label and co-manufacturer); Kemin Industries’ acquisition ofdistributor Agri-Marketing Corp.;the acquisition of Lortscher Animal Nutrition by C.J. Foods, a custom manufacturer of premium pet food; and Tyson Foods’acquisition of the poultry rendering and blending assets of American Proteins Inc.,expanding Tyson’s presence in the animal feed ingredient business.
Notablepet segment transactions in branded products and services in 2018 included:
- Dane Creek Capital Corp. added to its raw portfolio by acquiring Pets4Life, Spring Meadows Natural Pet Food,and Naturawls Pet Products, in addition to leading a $4 million seed round in PetPlate, a direct-to-consumer meal subscription service.
- Barkstrong LLC acquired Great Life Pet Food, Wild Calling! Pet Foods, and Pioneer Naturals dog food.
- Manna Pro Products LLC purchased Vetscience LLC and its Fruitables brand of premium natural dog treats.
- NomNomNow raised $13 million for custom dogfood with participation from Bullish, CircleUp, e.ventures, Tandem Capital and Greycroft.
- Nulo Pet Food, a premium pet food brand, raised $5.5 million in February according to an SEC filing, and Main Post Partners announced an undisclosed strategic growth investment in June.
- Sport Endurance Inc. announced a letter of intent to acquire TruDog, a family-owned brand of nutritional food, supplements, and pet care products for dogs, cats, and horses with a goal of exploring the potential for CBD usage among pets.
- BrightPet Nutrition Group boosted its healthy portfolio with Phoebe Products LLC, a manufacturer of baked and freeze-dried pet treats.
- Charlee Bear Products, owner of Charlee Bear Dog Treats, acquired Hound & Gatos canned pet food designed around the Paleolithic diet.
- H.I.G. Capital closed the sale of Pro-Pet LLC to Cargill Inc.
- Inflexion Private Equity invested in British pet supplement company Lintbells, its third investment in the animal care arena. Inflexion said the UK market for pet supplements is worth approximately £100 million and growing at 7% per annum.
- CleverPet, the leader in pet engagement technology, closed an investment with strategic investor Pet Wellness Partners to bring total capital raised to well over $2 million.
- Wag!, an on-demand mobile dog-walking and dog care service startup, announced a $300 million commitment from SoftBank Vision Fund.
- Rover.com, a network of pet sitters and dog walkers, announced an investment of $125 million led by T. Rowe Price Associates.
- Nestlé Purina PetCare purchased a majority stake in Tails.com in the UK, a direct-to-consumer, customized dog nutrition business.
- In Australia, Mad Paws, an online marketplace for pet services, announced a $5 million series A funding led by Qantas.
- BabelBark completed a $4.5 million Series A funding to expand globally. Launched in 2016, BabelBark connects pets with pet care businesses such as veterinary practices,