Dive Brief:
- General Mills acquired pet food supplement brand Fera Pets for an undisclosed amount. The purchase is the cereal giant’s first step into the pet supplement category.
- The acquisition also is the first by its recently launched growth equity fund. The initiative is designed to help General Mills scale and expand newly purchased businesses for future integration into the company’s core portfolio.
- The acquisition allows General Mills to expand its presence in pets, which it first entered into in 2018 with its $8 billion acquisition of Blue Buffalo.
Dive Insight:
With the cereal category continuing to struggle, General Mills is making a bigger play in the growing pet space.
John Parrish, General Mills’ vice president of disruptive growth, said in a statement that the Fera Pets acquisition helps the CPG giant lean into the wellness side of pet food. “The pet wellbeing category is on the rise, as more families look to take care of their pets the same way they take care of their own health,” he said.
The launch of the growth equity fund could help General Mills take advantage of its presence in emerging categories. The company’s decision to build up Fera Pets before folding it into its larger operations could indicate that General Mills wants to scale the business so it’s large enough to benefit from its marketing, innovation and supply chain expertise used with its other brands.
The opportunity to have a health-focused brand within its pet portfolio aligns with how General Mills hopes to position itself within the category.
In its most recent quarterly earnings call, CEO Jeff Harmening said the rough inflationary environment is weighing on its pet segment, with flat retail sales in the last quarter. The executive said it is shifting its Blue Buffalo advertising to “emphasize the brand’s simple and clear message of ingredient superiority,” such as real meat being its first ingredient and no artificial flavors or preservatives.
One of General Mills’ main competitors is also capitalizing on the growing pet category.
Post Holdings, another leading cereal giant, entered the space early this year with its $1.2 billion purchase of several brands including Rachael Ray Nutrish and Kibbles ‘n Bits. Last month, Post announced the purchase of private label and co-manufactured pet food maker Perfection Pet Foods for $235 million. Mars, through brands such as Pedigree, and Nestlé, with Purina and Fancy Feast, also have large presences in the pet category.