Market Insight: The pet sector
In recent years, the pet sector has, figuratively speaking, grown from a small pup into the large entity it is today, and there are no signs of it stopping.
The global pet care market exceeded $150bn annually for the first time in 2024 and is forecast to surpass $200bn by 2030. This follows the industry having achieved a historic 10% compound annual growth rate (CAGR) between 2018 and 2023.
Pet food is responsible for a large chunk of the industry’s success, resulting in a spur of M&A activity. With strong market increases and forecasts, including a significant CAGR, pet nutrition companies, as well those focused on pet accessories and pet care, are an ideal target for acquirers and investors alike.
Current M&A Landscape
Several key trends have shaped the UK M&A market in the pet sector in recent years.
Premium Products: Following an increase in customer-driven demand for specialised pet food products, many deals have been motivated by acquiring companies who presently produce such products or have the capabilities to do so.
Priv-pet Equity: PE firms account for a lot of M&A activity in the pet sector. In an evolving market, many established companies are offering a strong market position and growth potential.
Cost Synergies: Firms are looking to acquisitions for significant cost savings presented through economies of scale, streamlined operations and shared resources with synergistic operators, helping to enhance profitability.
Acquisition Synergies
Operational: Several manufacturers combining their operations can lead to enhanced efficiency, reduced duplication of resources and improved service delivery.
Financial: The right acquisition, or sale, can improve access to capital, optimise the complex cost structures that pet sector manufacturers and retailers typically navigate, and enhance financial performance through better cashflow management.
Knowledge and Expertise: Merging with or acquiring manufacturers with specialised expertise can accelerate innovation and enhance the acquirer’s capabilities in new operational practices.
Key Drivers for Acquirers
E-commerce: Online retail within the pet sector continues to grow. The online revenue share for pet food reached 34% in 2023, increasingly shaping the sector in its favour. For convenience, supermarkets often reign supreme in this area and continue to lead the market share despite the gap closing. Speciality stores offer exclusive items and brands that tap into niche markets. Fast delivery amongst younger customers has played a big part in this increase.
Pet Ownership: Pet ownership rates have remained steady throughout the past decade or so, but the number of pet owners surged during the COVID-19 pandemic, particularly dog owners. The UK’s PAW Report of 2011 showed the dog population as holding a total of 8.2 million furry friends, compared to 2024’s figure of 10.6 million. The number of households owning a pet in the UK sat between 46-48% in the early 2010s and even decreased to 40-45% for the remainder of the decade, but the pandemic spiked ownership to 59% in 2021, 62% in 2022 and 57% in 2023 (statista).
‘Part of the family’: Correlating with pet ownership, pet humanisation has also increased, due to more canine-friendly social attitudes. The Royal Veterinary College reports 99% of UK pet owners view their pet as being ‘part of the family’…and rightly so! Whereas the UK’s cat population has declined slightly in the past two decades, and significantly so for rabbits, dog ownership has heavily increased to match the number of cats and is projected to soon surpass them for the first time. Due to their sociability and loyal nature, increased dog humanisation has likely led to the spike in the ‘part of the family’ belief.
Healthier products: A stronger perception of pet humanisation has created a higher demand for premium and healthy food products. Parallel to the human food industry, natural and organic food are increasingly sought after, including plant-based options – and pet owners are willing to pay more. This alone piques the interest of investors and strategic acquirers.
The pet food and accessories market is diversifying and expanding, catering to new consumer demands, particularly the younger generations who are more tech savvy. In this evolving market, more M&A opportunities are becoming available year on year.
EBITDA multiple ranges in the pet sector
For companies operating in the UK pet sector, EBITDA multiples have generally ranged between 10x and 16x, with some premium deals achieving even higher valuations.
Factors driving higher valuations and EBITDA multiples include:
Increased pet ownership and spending: Like other countries, the UK has experienced a surge in pet ownership with a willingness to spend more on pets including higher-quality food, accessories and services.
‘Humanisation’ of pets: The trend of treating pets like family members has increased the demand for more premium products and services, driving up valuations and multiples.
Private equity interest: PE firms are increasingly interested in the pet sector, and the record levels of ‘dry powder’ – $3.7trillion at the start of 2025 – are leading to greater M&A activity and valuations.
Strong margin profiles: Companies with strong margin profiles are particularly attractive to buyers, leading to premium multiples.
Growth and consolidation: The pet industry is experiencing strong growth, and consolidation through M&A is a key trend.
Recurring revenue streams: Many pet companies, especially those which provide pet food and services, have recurring revenue streams which make them attractive to investors.
Specialisation and technology: Specialised veterinary practices, pet tech companies and subscription-based pet health services are also driving growth and attracting investment.
Market saturation and competition: As the market matures, competition is likely to increase, thereby creating opportunities for strategic acquisitions.
Niche brands: Niche pet food and accessories companies with strong brand recognition and loyal customer bases tend to fetch higher multiples.
Motivations of trade acquirers and consolidators
In recent years, trade consolidators’ interest in acquiring pet care manufacturing and distribution companies has been driven by the need to achieve scale, diversify expertise and strengthen their market position in a highly competitive and continually evolving industry.
As consumer demands for sustainable and innovative food solutions grow, businesses are increasingly seeking partners that can deliver integrated manufacturing, packaging and distribution services.
The predictability of recurring revenue from long-term contracts with major retailers and pet food distributors is another major attraction. This financial stability is especially appealing to private equity-backed consolidators seeking reliable returns.
Additionally, acquiring established pet care manufacturers or distributors allows consolidators to quickly incorporate advanced capabilities, such as automation, sustainable processing technologies and efficient supply chain solutions, which are crucial for remaining competitive in a fast-evolving sector.
Ultimately, these acquisitions enable consolidators to solidify their presence in a lucrative market, drive innovation and adapt to the shifting preferences and regulatory requirements in the pet sector.
Access to specialised expertise and technology: Acquired businesses often bring specialised knowledge in areas like sustainable manufacturing practices, advanced pet food safety technologies, or efficient logistics systems. Trade consolidators use these acquisitions to enhance their capabilities and address high-demand areas within the sector.
Recurring revenue streams: The predictability offered by contracts with major retailers or pet service companies is highly attractive. These steady revenue streams appeal particularly to private equity-backed consolidators seeking reliable returns on investment within a rapidly growing sector.
Sustainability and innovation demand: Increasing consumer and regulatory pressure for sustainability has created demand for eco-friendly practices and innovative pet food solutions. Acquisitions allow consolidators to rapidly adopt new technologies and processes, positioning themselves competitively in the market.
Synergies and cost efficiencies: Consolidators achieve economies of scale by integrating operational elements such as logistics networks, procurement and production facilities across multiple acquisitions. This integration reduces costs and improves profitability, making businesses more competitive in a price-sensitive market.
This approach enables consolidators to build robust, scalable operations capable of meeting the evolving demands of the pet sector.
What types of businesses are strategic acquirers pursuing?
In the UK pet sector, strategic acquirers are targeting companies that can enhance their market presence, diversify offerings and deliver specialised expertise. Ideal acquisition targets often exhibit niche capabilities, strong customer relationships, impressive growth metrics and alignment with consumer and regulatory trends in sustainability and innovation.
Niche providers and specialised expertise: Acquirers seek businesses offering highly specialised products or services that bring unique capabilities to their portfolio. Companies with expertise in areas such as organic foods or sustainable packaging are particularly attractive.
High-growth and high-margin operations: Firms with a track record of rapid growth, or those operating in high-demand segments such as healthier products or premium goods, are prime targets. Strategic buyers value strong revenue growth and healthy profit margins.
Holders of proprietary tech or processes: Businesses with proprietary technologies or innovative production methods – such as efficient food waste management systems or exclusive recipes – offer competitive advantages. Intellectual property that enhances production efficiency or product differentiation is highly valued.
Strong customer retention: Companies with loyal, long-standing client bases and strong retention rates are prized for their predictable revenue and potential for upselling value-added services, such as premium delivery or customised packaging.
Access to new markets or regions: Strategic buyers are also targeting firms with a presence in underserved regions or emerging market segments. Companies offering an established foothold in growing regions or demographics, such as younger customers seeking health-conscious products for their pets, are particularly appealing.
By focusing on these types of acquisitions, strategic acquirers in the pet sector aim to build robust, future-ready businesses capable of addressing evolving market demands.
Strategic interests of private equity and investment buyers
The pet sector is attracting significant interest from private equity (PE) and investment buyers. This heightened attention is driven by the sector’s rapid growth potential and ongoing market consolidation efforts.
Key strategic interests include:
ESG considerations: There is a growing emphasis on environmental, social and governance criteria among investors, leading to an interest in companies that align with sustainable practices and renewable energy goals.
Value creation: Private equity firms often pursue operational improvements and strategic repositioning of acquired companies to create value before exiting through resale or public listings.
Long-term growth potential: Many investment buyers are focused on sectors with growth potential, and the evolving landscape of consumers’ preferences towards certain products due to dietary, lifestyle and medical necessity provides an opportunity to capitalise on the rapidly growing preference for ‘premium’ products amongst certain consumer groups.
Market Insight
Having previously touched on the UK having surpassed the 50% and 60% marks for households owning at least one pet, annual sales of pet food products in the UK stands at £5.75billion. The rest of Europe also consists of pet-loving countries – 50% of European households own at least one pet, contributing to annual sales of €29.2billion for pet food products and a volume of 9.9 million tonnes (Statista 2024).
The value of the dog food market was the UK’s highest, totalling £1.84billion, with cat food amounting to £1.43billion. Imports to the UK amount to £1.1billion annually, while exports stand at £296million, shipping most of its products across the European continent.
The industry is poised for growth driven by the following factors:
Human-grade products: More demand for products made with natural ingredients that closely resemble ‘people food’.
Private equity: PE firms are heavily investing in the sector at present, with particularly strong investor appetite for established brands and scalable operations.
Sustainability drives: Increasing demand for eco-friendly production, reduced food waste and sustainable sourcing.
Healthy products: Growing appetite for plant-based, organic and health-oriented foods.
Who let the dogs out: A significant increase in the population, as well as the humanisation of dogs by their owners.
Apps and subscriptions: Younger generations are more adept at using online services and value subscription-based brands/products.
These trends not only reflect changing consumer priorities but also highlight areas where M&A activity and investment are likely to grow, positioning the sector for dynamic development in the coming years.
Which pet food-related companies has KBS Corporate advised?
Law Print and Pack acquired by SCG Packaging
Stockport-based Law Print works with a global network of accredited packaging manufacturers and suppliers, with pet food packaging one of its specialist areas of expertise. Law Print was sold, in a deal overseen by KBS Corporate Finance, to a company listed on the Stock Exchange of Thailand which offered significant synergies and further global expansion.
Pet Mate acquired by Ethos Partners
Pet Mate, a prominent Surrey-based designer, manufacturer and distributor of innovative pet products, was acquired by a private investment office, London-based Ethos Partners.
If you are the owner of a pet food company or an acquirer interested to know more about the opportunities in this sector, contact us through this website, with complete discretion assured, to gain further information.