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To Mars And Beyond

0612_Mars

Image source: Unsplash.com

What's going on?

A dog in space! No, not Laika, but European vet chain, AniCura – it’s been acquired by astronomical American food conglomerate Mars Inc. for over $2 billion.

What does this mean?

Mars has been adding to its existing pet businesses, which include furry household brands like Iams and Pedigree. Last year, it acquired pet hospital operator VCA Inc. for more than $9 billion. And just last week, it decided that UK vet chain, Linneaus Group, was the cat’s meow – so it bought that, too. Monday’s purchase, AniCura, was founded in 2011 and looks after some 2 million pets each year across its 200 veterinary practices.

Why should I care?

For markets: What’s good for the goose is good for the gander.


Although Mars is a private company (meaning investors can’t buy and sell its shares on the stock market), it’s not insulated from recent trends in the packaged food industry. Several companies in the sector are suffering from low sales growth and having difficulty increasing their prices. Earlier this year, public companies J.M. Smucker and General Mills bought into the pet sector, acquiring Ainsworth Pet Nutrition and Blue Buffalo, respectively. However, stocks of both companies have fallen by almost 20% since their announcements – investors may think that adding pets isn’t going to be a quick ‘n’ cuddly fix for either company.



The bigger picture: The pet sector offers fetching growth potential.


Most consumer products (like packaged food and drinks) aren’t growing particularly quickly these days, but pet products is one area that’s wagging its tail, thanks to high growth. This has been helped by consumers seeing pets more as one of the family – and upping their spend on pet food, toys and healthcare as a result. This might be one reason Mars launched a $100 million venture capital fund focused exclusively on investing in companies in the pet sector (from food to genetics) in March.

Originally posted as part of the Finimize daily email.

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