1H 2020 Deal Hound – Pet M&A Report

The unexpected arrival of COVID-19 in the first half of 2020 confirmed long-held beliefs that the Pet Industry is often among the most immune to turbulent economic conditions. Business Insider puts it bluntly, “Basic pet care is a consumer staple like food and electricity.” People will always care for beloved pets. But the unusual start to 2020 has also shown that even the Pet Industry can’t avoid change this time. While temporary retail store closings, distancing rules, and limited human interaction led to a spike in pet food sales during a period of stocking up (OK, hoarding) early on, the industry appears now to be heading down a potentially bumpy road toward e-commerce – internet sales – driving the sector into an electronic age it has struggled to adapt to. Difficulties migrating pet supply sales to e-commerce date back to the spectacular dot.com crash and burn of Pets.com, which in 2000 went from an $82 million IPO to bankruptcy in just nine months. But pets are an important part of our lives. So successful suppliers will find ways to adapt. Even as the pandemic led to job losses and decreasing incomes, pets helped people cope. According to the American Pet Products Association’s (APPA) “COVID-19 Pulse Study,” 72% of owners said spending time with their pet helped reduce stress during the pandemic. For many, having a furry pal is more than a diversion, and pet owners recognize the benefits and are willing to spend to preserve their relationships…