With cereal sales on a steady decline, General Mills is betting on another hot segment—high-end pet supplements for “fur babies.”
The 95-year-old food company today announced the acquisition of Los Angeles-based Fera Pets, a vet-founded pet supplement company, for an undisclosed amount.
This is the latest in a string of deals the food giant has made in the pet arena. Last year, General Mills acquired Tyson Foods’s pet treats business for $1.2 billion, and it previously bought another pet treat company, called Blue Buffalo, for $8 billion. John Parrish, General Mills VP of disruptive growth, says high-end pet supplements is a $2 billion space today, but he expects it to hit $3 billion in five years.
“People continue to humanize their pets and believe pets are family,” he says.
In many companies, the growth of pet food is eclipsing that of human food products. People adopted and bought millions of pets during the pandemic, and sales of pet food soared to $25 billion last year, up nearly 39% from 2019, according to consumer research firm NIQ. Those pet owners also tend to be wealthier, health conscious, and more inclined to serve their pets human-grade food.
The American Veterinary Medical Association has segmented a “pampered pets” type of pet owner, who is under 35 (or between 45 and 54), with no kids or spouse, and likely to make either under $25,000 or more than $200,000 a year. In fact, some pets may be eating more nutritional meals than some humans.
Raining cats and dogs
The trend isn’t lost on the overall food industry. Mars, maker of Kind Bars and M&Ms, raked in $19 billion in pet sales, the highest in the world last year, according to Petfood Industry News estimates. Nestlé, the world’s largest food company, noted that its Purina pet food and care was its largest and fastest-growing category last year. Earlier this year, cereal company Post Holdings announced plans to buy the pet food brands Rachael Ray Nutrish, 9 Lives, and others for $1.2 billion.
General Mills executives discovered Fera last spring when they came by the startup’s booth at the Global Pet Expo. Eight months later, they inked an acquisition deal. Veterinarian Michelle Dulake cofounded Fera with longtime friend Emily Hsu in 2017 after seeing that people wanted alternatives to medicine for their pets. So, they designed supplements made from organic botanicals and Chinese herbs shown to help gut health, joint issues, vomiting, and skin and coat issues.
General Mills made the acquisition through its new Gold Medal Ventures growth equity fund, which will acquire and grow high-potential brands in both human and pet food markets. Unlike typical acquisitions, the acquired brands—including Fera—will continue to operate as separate companies in a General Mills LLC. Founders get access to capital to grow the business and expand the product lines, and they can tap General Mills’s expertise in ingredient sourcing, logistics, supply chain, marketing, and more. But they’re wholly owned by General Mills.
“We let founders do what they do best,” says Parrish. “They’ll have support but continue to be founder-led, they’ll hire their own staff, they’ll run their own business.”
The Gold Medal Ventures is another strategic way General Mills is working to boost innovation. A decade ago, it started 301 Inc, an early-stage venture investment fund, and four years ago, it launched G-Works, an internal venture studio stacked with cofounders building 11 businesses. The studio launched Good Measure, which makes blood-sugar-friendly bars, and Carbe Diem, low-carb pasta.
“Most of the value within CPG is built in the startup market, and General Mills really specializes in maximizing $100 million-plus brands and building them into billion dollar brands,” says Parrish. And now, those brands aren’t limited to humans.
Recognize your brand’s excellence by applying to this year’s Brands That Matter Awards before the early-rate deadline, May 3.
