Pet Food Companies

What Makes Your Pet Food Different?

If you make your pet’s food, you already know what is different from those pet foods that you buy off of the store shelves. You actually know what ingredients are in the food because you put them there.  Hopefully, you used trusted experts such as those at BalanceIT® to formulate your concoction rather than just reading a book that has recipes with little science behind them.

With so few companies owning so many brands, you have to ask yourself once again…with this twist.. what makes their pet food different? You have probably seen this graphic floating around…

Pet Food Companies

Where Is Your Brand?

You can see from this graphic that the pet foods that you thought were independent brands have actually been eaten by what have been known as a food company (Del Monte), two candy companies (Mars & Nestle) and a toothpaste company (Colgate-Palmolive).

Why do these huge companies want to own pet food brands?

Big Heart

Big Heart Turned to Jam

Perhaps this recent news release from the J.M.Smucker Company who just ate the Big Heart (formerly Del Monte owned) brand of foods and treats will shed some light on that answer:

Company enters the growing, $21 billion pet food and snacks category,

continuing its leadership position in consumer packaged goods

This is directly from the news release:

ORRVILLE, Ohio, Feb. 3, 2015 /PRNewswire/ — The J. M. Smucker Company (NYSE: SJM) (“Company”) today announced it has entered into a definitive agreement to acquire Big Heart Pet Brands in a cash and stock transaction valued at approximately $5.8 billion, which includes approximately $2.6 billion of net debt.

Big Heart Pet Brands is the largest stand-alone producer, distributor, and marketer of premium-quality, branded pet food and pet snacks in the United States.  Its portfolio of brands includes Meow Mix®, Milk-Bone®, Kibbles ‘n Bits®, 9Lives®, Natural Balance®, Pup-Peroni®, Gravy Train®, Nature’s Recipe®, Canine Carry Outs®, and Milo’s Kitchen®.  The Company estimates Big Heart Pet Brands’ net sales will be approximately $2.3 billion and adjusted earnings before interest, taxes, depreciation, and amortization (“EBITDA”) will be approximately $450 million for Big Heart Pet Brands’ fiscal year ending May 3, 2015.

Big Heart Pet Brands, with nearly 2,500 employees, is headquartered in San Francisco, California.  The company is currently owned by a consortium of investors led by funds affiliated with Kohlberg Kravis Roberts & Co. L.P. (“KKR”), Vestar Capital Partners (“Vestar”), Centerview Capital (“Centerview”), andAlpInvest Partners Inc. (“AlpInvest”).  The company changed its name from Del Monte Corporation to Big Heart Pet Brands following the sale of its fruit, vegetable, and other consumer foods portfolio on February 18, 2014.

Strategic Rationale
The acquisition provides the Company greater scale and strategic balance to its current portfolio while positioning it for continued growth.  Strategic benefits are expected to include the following:

Acquiring Big Heart Pet Brands will provide the Company with an immediate and significant presence in the $21 billion pet food and snacks category, one of the largest and fastest growing center-of-the-store categories in the United States.
Big Heart Pet Brands holds the number one position in pet snacks and a strong presence in the pet specialty channel, both representing key growth drivers for the overall category.
The acquisition is consistent with the Company’s strategy of owning leading food brands in attractive center-of-the-store categories, with a focus onNorth America.
Executive Comments
“The acquisition of Big Heart Pet Brands supports Our Purpose of ‘helping to bring families together to share memorable meals and moments’, as we recognize that pets are cherished members of the family,” said Richard Smucker, Chief Executive Officer.  “With approximately two-thirds of U.S. households having at least one family pet, we will now be able to serve the mealtime and snacking needs of the whole family.  We look forward to working with Big Heart Pet Brands’ experienced and talented team to leverage our combined capabilities and scale, while further enhancing value for all our constituents.”

The full news release can be found here.

Now this all sounds good when they say they want to meet the “mealtime and snacking needs of the whole family” but when you read further down the news release you will see this:

“Financial Impact
The addition of Big Heart Pet Brands further strengthens the Company’s ability to enhance shareholder value over time.”

 

So, I’m thinking that these big companies are really looking after their shareholders first, not the family members referred to as pets. Again we ask, “What makes your pet food different?”

I am so happy that Amelia has chosen a private company, that is owned by the employees, to provide me with my mealtime and snacking needs. These people are working on behalf of pets first…keeping us healthy with high quality ingredients that will never be marginalized by shareholder profit.

So what do you think of all of these big companies gobbling up the Pet brands so that they can fill the center aisles? Leave your comment below…

Living in the moment,

Schatzi

Pet Companion to Animal Lover Amelia

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