The J.M. Smucker Co. will pay $1.9 billion to purchase Ainsworth Pet Nutrition, a premium pet food company known for its Nutrish brand pitched by Rachael Ray. Smucker is also said to be considering selling its baking division, led by the Pillsbury brand.
The acquisition comes on the heels of General Mills’ purchase of Blue Buffalo Pet Products in February for $8 billion, indicating both companies’ high expectations for the growth of the “wholesome” pet food category. "Wholesome" products make up 10% of the pet food market and are gaining market share.
"Ainsworth Pet Nutrition is an excellent strategic fit for our company, as the Rachael Ray Nutrish brand adds another high-growth, on-trend brand to our pet food portfolio," J.M. Smucker CEO Mark Smucker said in a statement. "Their team has done a tremendous job growing this business, building Nutrish into one of the most recognizable premium pet food brands in the United States."
Nutrish holds a leading position and is one of the fastest-growing brands in the premium dry dog food segment within the grocery and mass channels, a key growth driver for the overall category. The addition of Nutrish to the Smucker portfolio will significantly expand the company's presence in this area, complementing its Nature's Recipe brand.
Pet food/snacks has become the largest center-store category in the U.S. food and beverage market, according to Smucker, generating over $30 billion in annual retail sales across all channels, and remains one of the fastest-growing categories. The company said that the “acquisition and the addition of the high-growth Nutrish brand will increase the scale and further accelerate the growth profile of its pet food business.”
Akshay Jagdale, equity analyst at Jefferies, notes that while Nutrish is primarily sold in grocery stores, “there seems to be a big opportunity to expand into the Specialty channel (the Nutrish brand recently announced expansion into PetSmart) and e-commerce, which are channels where Smucker’s (SJM’s) pet food business is more established. Furthermore, SJM believes the Nutrish brand can extend into the Cat and Pet Snacks category, where its current presence is negligible. The Nutrish brand has strong credentials and is complementary to SJM’s current portfolio of pet brands, making SJM a sizable player in the premium dog food category in the Mass channel, where the company under-indexed previously. The obvious benefit that SJM brings is scale.”
In addition to its purchase of Ainsworth, Smucker announced it is exploring strategic options for its U.S. baking business, including a potential sale. The review encompasses products sold in U.S. retail channels under the Pillsbury, Martha White, Hungry Jack, White Lily and Jim Dandy brands, along with all relevant trademarks and licensing agreements.