Cheerios Owner Buys Petcare Brand for $1.45 Billion

Snacking conglomerates all agree: Petcare M&A is the cat’s pajamas.

General Mills, the packaged food conglomerate behind such brands as Cheerios, Cocoa Puffs, and Bugles, announced on Thursday that it has agreed to buy the North American business of Whitebridge Pet Brands. This is General Mills’ fifth petcare acquisition in six years, and shows how packaged food giants are delving ever-deeper into the petcare industry.

A Dog’s Dinner

General Mills isn’t the only snackmonger to sink its teeth into petcare. Mars has an enormous petcare business, as does Nestlé. The packaged food industry has been on an M&A tear in a quest to diversify and offset downward trends in snack-food sales, which have been particularly hard-hit by inflation-sensitive consumers.

Petcare, despite its recession-resistant reputation, has shown some hints of weakness this year:

• Retail trade publication The Grocer reported the volume of pet food sales has fallen roughly 4.5% over the past 12 months. Jack Walker, co-founder of pet food brand Scrumbles, told The Grocer that is because pet adoptions are subsiding post-pandemic.
• Although overall volume is down, branded petfood’s overall revenue is up 1.7%, and according to Morgan Stanley, there is a generational shift towards spending more on your pets.  

Dr. Mouse M.D.: Food conglomerates aren’t alone in chasing after petcare consolidation. Last week, private equity groups Silver Lake and Shore Capital Partners banded together to form an $8.6 billion vet care group, the Financial Times reported. When all those lockdown puppies and kittens start developing arthritis and cataracts, the dollars will come rolling in.