Ben & Jerry’s for the dogs?
Yes, literally! The makers of Cherry Garcia and Chunky Monkey will be bringing their talents to the burgeoning pet treats space. Spending on dog treats has increased dramatically these last few years, growing 44% between 2015 and 2020 to $5.5 billion, according to Euromonitor. Ben & Jerry’s, the Unilever subsidiary, will enter the segment by offering non-dairy treats or “Doggie Desserts,” which will be sold in supermarkets and pet stores throughout the United States. Initial products will include a peanut butter with pretzel swirl “Pontch’s Mix,” and a pumpkin and mini cookie “Rosie’s Batch.” The Doggie Desserts will be made from the same quality ingredients Ben & Jerry’s uses in its non-dairy human desserts.
What does this mean for the sector? To start, there will continue to be interest in platforms and add-on acquisitions in the pet treat space. General Mills, which makes Cheerios and Haagen-Dazs ice cream, acquired Blue Buffalo pet food in 2018, and in 2015, J.M. Smucker Co. acquired Big Heart Pet Brands, the makers of Meow Mix and Milk Bone dog biscuits. We expect this trend of large multinational owned platforms acquiring and, in the process, bidding up the valuations for quality pet food producers.
As we indicated in a prior deck on the sector, the pandemic precipitated a boom in pet ownership and a corresponding demand for pet-food, grooming products, beds, and toys. American Pet Products Association, a pet products trade group indicated that the number of U.S. households with pets rose 6.5% to 84.9 million between 2015 and 2020. According to UBS, the boom is not waning, with an estimated 92 million households in United States predicted to have at least one pet by the end of 2023. That number is up from 85 million in 2018. And as Chewy founder Ryan Cohen recently observed in an interview with CNN Business, “Pets don’t eat less during recessions. “The last thing people typically pull back on is their pet.”