Following on the heels of a slow year for pet food mergers and acquisitions (M&A) in 2023, activity in 2024 increased only slightly. At least that’s the case in the U.S., according to a new report, “Cascadia Capital Pet Industry Overview: Winter 2024,” covering the third and fourth quarters of the year.
Europe, on the other hand, is having a moment: Of the pet food-related M&As in 2024 listed by my colleague Lisa Cleaver, more than 60% involved a company based in Europe. In some cases, both acquirer and acquiree were European companies. What gives?
European pet populations on the rise
The Cascadia Capital report offers a few clues. For one, while pet population growth in the U.S. is slowing, especially among dogs, some European countries are experiencing strong growth. Specifically, U.S. household penetration of pets declined to 63% in 2024, down from a COVID-19 high of 70% in 2020. The country saw pet numbers increasing at a compound annual growth rate (CAGR) of 2.4% from 2018 to 2023, but the CAGR is projected to fall to 1.1% from 2024 to 2028.
In France, pet ownership grew 5% from 2020 to 2024, surpassed only by the U.K.’s growth of 9% from 2021 to 2024, according to Cascadia, citing data from multiple sources. (FEDIAF, the umbrella federation of European pet food associations, also reported on pet population growth in the region in July 2024.)
Several of the largest pet food companies globally are based in the U.S., including Nestle Purina PetCare, Mars Petcare, General Mills and Hill’s Pet Nutrition, yet most have facilities and distribution around the world; and given the pet population picture in the U.S., they’re all ramping up their investments in other countries, particularly in Europe, the report says.
“Major pet franchises, such as Nestle Purina and Mars Petcare, have focused their investments on international opportunities to support the growing demand in these regions, especially during the domestic slowdown and stagnant sales performance,” the Cascadia report reads, giving the example of Purina and Mars collectively investing more than US$350 million during 2024 to expand their international production capacity and infrastructure.
In addition, General Mills joined the ranks of U.S.-based conglomerates acquiring European pet food companies with its April 2024 purchase of Edgard & Cooper, a leading independent premium brand based in Belgium.
Strong private label pet food market leads to M&A
Pet food-related M&A happening in Europe this year included deals on the supplier side, too, such as among pet food ingredient and equipment companies. Also noteworthy: Private label pet food giants like United Petfood, based in Belgium, continued their recent acquisition sprees. United started off the year with a bang, purchasing Vital Petfood Group of Denmark in January, just a month after acquiring De Haan Petfood of the Netherlands in December 2023.
Private label has long been a strong category in the European pet food market, approaching shares of 30% or more depending on the country and growing even more in recent years. In the U.S., while private label pet food sales experienced healthy growth in 2023, that was from a small base, and they have fallen back somewhat in 2024, declining 0.9% year over year, according to Cascadia. That seems to counter the narrative that more U.S. pet owners are turning to private label pet food in these ongoing inflationary times — which Cascadia attributes to “pet owner preference to keep with their preferred pet food brands despite the macro environment.”
The experts at Cascadia Capital expect pet food (and pet care) M&A in the U.S. to pick up in 2025, thanks to declining interest rates and a growing cache of unused capital for deals; the report describes a “motivated set of buyers and sellers, across both the private equity and strategic universe.” It will be interesting to watch if that happens, and if buyers and sellers in Europe also keep up their level of activity.
