Healthy Pet Deals in 2019

The Nutrition Capital Network (NCN) Database tracked 19 pet product acquisitions in 2018 having natural, organic, or other healthy attributes, up from nine in 2017. While 2019 looks likely to lag 2018 based on the number of acquisitions reported in the first half of the year, financings are keeping up a brisker pace. Premium and natural food trends continued to be themes in 2019, as did online opportunities and CBD-added products.

Fundamentals for growth in pet products generally remain solid as spending continues to rise. According to the American Pet Products Assn., in 2018 $72.56 billion was spent on pets in the U.S., to which food contributed $30.32 billion. For 2019, it estimated that $75.38 billion would be spent on pets in the U.S., including $31.68 billion for food. Online purchasing remains a strong trend. Investors have poured more than $100 million into direct-to-consumer pet food companies since the start of 2018, according to a Cascadia Capital report entitled “Pet Industry Overview – Spring 2019.” The Farmer’s Dog raised $49.1 million in three financing rounds, making the brand the top funded.

Financings in the pet food category of the nutrition and health & wellness industry in H1 2019 included the following:

  • MidOcean Partners exited its remaining investment in former NCN Presenting Company Freshpet Inc., a manufacturer of fresh food for dogs and cats distributed in branded refrigeration units. MidOcean initially invested in 2010 after identifying Freshpet as a category changer. Freshpet reported fourth quarter 2018 net sales of $51.6 million, up 30% over the prior year period.
  • Farmer’s Dog raised an $8 million Series A led by Shasta Ventures. The direct-to-consumer platform uses proprietary algorithms to create customized fresh meals. The company has raised $49.1 million in three financing rounds, making the brand the top funded.
  • Wild Earth Inc., a pet food biotech startup developing no-meat kibble made from renewably sourced fungi, closed a Series A investment of $11 million led by repeat investor VegInvest. The company also received $550,000 on the ABC hit Shark Tank for 10% of the company.

Financings in the pet supplement category included the following:

  • Dane Creek Capital Corp. acquired RawPaw Natural Foods of Canada, a distributor and marketer of pet supplements complementing a raw pet food diet.
  • Balance Point Capital, a maker of supplements for humans (and their dogs) announced an investment in SmartyPants, Inc., a portfolio company of North Castle Partners.
  • Manna Pro Products, a manufacturer of pet care and nutritional products, is acquiring Hero Pet Brands, a provider of pet nutrition, grooming and cleanup products, the latest in a series of acquisitions by Manna Pro in the healthy pet nutrition segment.
  • Hemp company Elixinol acquired a 25% stake in Altmeds LLC, maker of Pet Releaf hemp-derived CBD products.

Acquisitions announced in the pet segment of the nutrition and health & wellness industry in H1 2019 included the following:

  • Global flavor and fragrances company Symrise AG acquired three Missouri pet-food-ingredient businesses from Darrco LLC for approximately $900 million in debt and equity. The move was described as a “strategic acquisition of an all-natural nutrition business with annual sales of $220 million.”
  • Chrysalis Acquisition Partners Inc. acquired a majority equity ownership interest in Phoenix Imports Inc., a distributor of premium, natural, single-ingredient meat and bone dog treats.
  • Red Collar Pet Foods acquired Hampshire Pet Products, a co-manufacturer of corporate brand pet treats, in addition to natural and organic products. Red Collar is owned by Arbor Investments, which acquired the private label pet food manufacturing business of Mars Petcare in December 2018 and re-named it Red Collar.
  • Hyper Pet LLC announced a merger with OurPet’s Company, a provider of pet toys and feeders, in a deal valued at roughly $20 million. Hyper Pet has acquired several pet brands since 2016, including Aussie Naturals, Outback Jack, Wild Eats and pet toy supplier R2P Pet.
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