Mars’ acquisition of the Iams, Eukanuba and Natura brands (outside Europe) from Procter & Gamble for US$2.9 billion in cash changes the dynamic of the dog and cat food market, particularly in North America. What will Mars get out of this deal, and what are the risks?
Mars will Account for a Quarter of the North American Market
As a result of this deal, Mars’ share of the North American dog and cat food market will jump from 16% to 25% (based on 2012 market share data), compared with Nestlé’s 36% share and the 11% share of both Del Monte and Colgate-Palmolive.
The real prize for Mars is undoubtedly the strong presence of Procter & Gamble’s brands in the North American premium segment, where they accounted for 19% of value sales in 2012. Combined with its existing 12% share, this almost puts Mars on a par with Nestlé (32%), ending its overdependence on economy and mid-priced brands and thus boosting its profitability.