The European pet food market comprises businesses that produce, distribute and/or sell pet food. Across the European landscape, we identified that most pet food producers either have a clear focus on branded or private label. This research further covers large retailers and speciality store chains, as well as wholesalers of pet food.

The production segment has a highly mature and capital-intensive nature, with several FMCG giants (e.g. Nestlé, Mars, Unilever) owning significant market share, followed by a fragmented long tail of private label producers and smaller players with premium positionings. We believe there is still ample room for private label producers to execute cross-border roll-up strategies. The retail and wholesale segments are more local, with most growth opportunities coming from e-commerce.

Sponsor-led interest in this “zero-beta market” (interview by Gain.pro) has been significant given (i) stable and sustainable growth rates, (ii) attractive profitability upside in premium niches and (iii) the fragmented private label market with room for buy-and-build plays (e.g. United Petfood). Recent investor activity has mainly centred around the high-end branded segment, which offers the greatest margin expansion potential on the back of brand-building investments.

ESG topics are primarily brought to the industry’s attention by external shareholders. Relevant topics are the same as those in human food production, albeit with a time delay. ESG focus points are regional sourcing, livestock conditions and organic ingredients. However, external supervision from authorities on these matters is lower than for other consumer goods industries.