In 2017, Smucker reported a 1% decline in revenue to due to the shift in the customers’ demand. The industry, on the whole, was seen as a sluggish and risk-averse industry. To overcome this challenge, several companies are expanding their footprint by either launching new products or venturing into new markets.
This deal is the latest addition to the recent acquisitions of pet food companies made by the company, bringing the total brands in the pet food portfolio to 15. The company plans to fund the deal with debt, excluding an expected tax benefit of about $200 million. The addition of Ainsworth pet nutrition is expected to generate net sales of about $800 million in the first year after the completion of the deal.
Apart from this acquisition, the company has also revealed plans to wrap up the U.S. baking business for which it is exploring various options. Sales from the company’s baking business, which is known for its Pillsbury brand, is expected to be $370 million in this fiscal year.
Pet food market value is expected to reach above $30.01 billion in 2022
This acquisition by Smucker comes a month after its longtime rival General Mills (GIS) displayed its interest to nab Blue Buffalo Pet Products for about $8 billion. According to a report by Zion Market Research, pet food market value is expected to reach above $30.01 billion in 2022. Major companies are venturing into the pet industry because of its massive growth potential.