Nestlé knows how to grow volume and diversify services. We only have to look at their recent USD$7 billion deal with Starbucks for the marketing rights for customer and commercial sales for Starbucks coffee is worth to know that Nestle is serious about growing their business.
However, diversifying outside of their “coffee zone” is even more impressive when you look at the pet food market. Of the total pet food market of 90,6 billion dollars (2018) they have a market share of 21,2%, just lagging a bit behind their big competitor Mars.
Where Mars has also been investing in buying veterinary practices globally the last two years, Nestlé did not seem to be interested, but this recently changed with a deal between Independent Vet Care / Evidensia and Nestle. What is says it that vet practices are “hot” in the chocolate industry and a battle is going on between the two giants for acquiring the best veterinary practices in a strategic fight over the influence on pet owners. It helps to have not only pet food but also veterinary care in your company’s portfolio and be able to increase the number of places where pet owners are confronted with the large variety of pet food. Diet is an important subject in the vet’s consulting room that can be addressed by the veterinarian, or the veterinary technician. An appointment with the veterinarian is the ultimate moment to explain why the pets need these highly sophisticated foods tailored to their individual condition. Having this conversation with customers is highly valuable for the pet food producers since it needs education (and persuasion) and repetition to make pet owners understand the concept and how it influences the wellbeing of their pets. This is not a conversation you can easily and comfortably have with experts in a retail setting.
Furthermore, pets are suffering the consequences of increased “welfare” just like humans too. They gain weight easily due to lack of exercise, bad nutrition and as they age. They also develop diabetes, renal and bladder disorders, cancer etc. so they also need a diet with vegetable oil, Omega 3 and 6, anti-oxidants and a long list of extra vitamins.
It is an incredible market where people talk about “pet parents” and the pet has been given the status of the new kid. Everything is possible and when an economic recession hits the last thing you want to do is hurt your family.
Mars has been leading the way with the purchase of Banfield Pet Hospitals, Veterinary Clinics of America, AniCura, small animal reference laboratories and other related companies. With the deal of Nestlé and the IVC/Evidensia group, it becomes clear Nestlé is also in the race. The owner of this group is the Swedish EQT private equity group. Both EQT and Nestlé have not commented on this news but in February EQT stated that a 20% share of this group was valued at 3 billion USD. Analysts talk about a first and substantial step of Nestlé in the world of veterinary practices.