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Today I read some very interesting articles about pet food M&A in Petfood Industry’s daily news bulletins from December. Articles that seem to beg for some comments.
Personally I find it confusing to read about companies in the M&A list that are not in pet food per se. I see e.g. companies in the equipment industry that also sell to pet food companies, but not only. In 2024 there were 5 of these companies not exclusive to pet food out of the 26 M&As mentioned.
I don’t know what the comparison with previous years looks like if a more “puristic” approach would be chosen and only pet food companies would be allowed into the equation.

The article mentions a possible surge in the M&A activity in 2025. I see no indisputable justification for this position. The fact that PE firms are sitting on surplus cash does not automatically mean that they will spend it on pet food companies. Other industries may look more attractive today! And even if there are buyers in abundance, does that mean that there are sellers to match the demand?  Do owners see 2025 as the right time to sell or do they prefer to further boost their performance and sell at a later date? What I mean to say is that in M&A there are two parties that have a position and a point-of-view, not only the money.

I believe the question that we must ask ourselves is: will the pet food industry be as attractive in 5 years’ time as it is today? If we take into account that we are bound to see further consolidation in a market that offers slowing growth, if any. I mean in the saturated markets.
We cannot continue to assume that the sky is the limit and that the people upon whose decisions we are dependent – colloquially known as pet owners – will continue to accept prices for pet food that take a steadily bigger bite out of their disposable income pie?
I have my doubts about that, the more so because the perceived differences between good and top become smaller and smaller. In other words, the price-difference is less and less justified by the performance difference. And that is why I think that premiumisation as a strategy component is in the process of slowly fading away!

When this happens, one of the key building-blocks for sometimes excessive valuations of companies or brands will lose its shine and valuations will adapt themselves to new realities, away from the pet food bubble that continues to build up.
Maybe decision-makers re. M&A share my line of thought and start to behave more cautiously than some of them have done so far. Whatever the case may be, we must stop to extrapolate the past, see that as our future and call that our strategy. All industries are subject to change, even ours. And it is the acceptance of change (that we cannot stop anyway) that will provide the platform for new initiatives and hopefully breakthroughs that I think our industry desperately needs.