Wednesday, July 13, 2016

Part 2: Who manufacturers Pet Foods by Meg Smart DVM PhD

Part2: The Pet food Manufacturers

Branded vs Private Label/Co-packing

Most pet food companies co-pack all or some of their diets. Co-packing  can involve dry and wet foods and most of the major pet food companies have some of their diets manufactured for them or they will also co-pack diets for large grocery chains such as Costco, Walmart, Loblaw’s. These chains can in fact have several co-packers making their diets. All the co-packer needs is the nutrient profile of the diet and  the company’s bags .  The co-packer may formulate the diet using their ingredients or they will use the ingredients requested by the company they are making the diet for. The company that owns the brand may not have any input as to the source of ingredients.

The only way the consumer can tell if the diet is co-packed is by looking on the label which will state: “product Manufactured for” or manufactured by.

The extent of co-packing came to light during the melamine disaster, when some of the major pet food companies had some of their canned diets co-packed. Co-packers can manufacturer hundreds of different diets for individual companies using the same main ingredients for all. The average price is 1/3 below thet branded counterpart and market share is growing about 11% annually. Future appears strong with plenty of room to grow

Mergers and Acquisitions:

For more complete information on how complex the industry is visit the truth about pet foods

Within the pet industry mergers and acquisitions are common. In 2011the pet industry was growing and profitable as pet owners worldwide were spending more on their pets annually. This attracted the interest of investment and outside institutions as they recognized the resiliency of the pet industry.  The reasons for Mergers and acquisition are outlined in

Within the top ten pet food manufactures mergers and acquisitions are a means of improving their position

Private equity companies are also looking at distribution of pet products.

This is a complex area where changes occur often, sometimes it is difficult tell who the players are.

Most pet owners are not knowledgeable about these mergers, this is because the parent company brings the new acquisition into the family but allow them to operate as they did prior to the acquisition  taking advantage of its reputation. This allows the parent company to use its successful marketing strategies to put out an apparently new line of diets under a different brand name yet similar to their own lines. Thus increasing their market share.

Presently the big three mass marketers of pet foods –Nestles Purina, Mars NS Big Heart Pet Brands (Delmonte) are investing heavily in the natural segment via brand reformulation (this does not necessarily mean new  and better ingredients) instead it may represent a change in their marketing strategies, These mergers and acquisitions are now occurring globally. These mergers and acquistions are considered by the bigger companies as a form  of research and development . This allows them to more rapidly position themselves to where the consumer’s doller is going

 Plant Relocation or Expansion into another region

The decision to expand the manufacturing facilities either locally or into another country are options. That take into consideration:

·         The economic advantages

·         The proximity to a viable market


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