Post acquires another pet food company for $235 million

Post Holdings is spending $235 million to buy another pet food company that will be folded into its large Lakeville-based Post Consumer Brands unit.

Post announced Tuesday it will acquire Perfection Pet Foods, a California-based private label pet food maker, and its two manufacturing plants.

The acquisition, expected to close by the end of the year, adds to Post's growing stable of pet food options. Earlier this year, the company paid $1.2 billion for a portfolio of pet food brands, including Kibbles 'n Bits and Rachel Ray's Nutrish.

"This acquisition highlights our commitment to growing our pet business by expanding our business model into private label and co-manufacturing production," Nicolas Catoggio, CEO of Post Consumer Brands, said in a statement. "We're also happy to welcome more than 250 employees to the Post Consumer Brands team."

Best known for cereal, including Fruity Pebbles, Grape-Nuts and Honey Bunches of Oats, Post entered the pet category when spending on furry friends was rising following a pandemic pet adoption boom.

U.S. pet owners are expected to spend nearly $63 billion on pet food and treats this year, according to the American Pet Products Association, an 8% increase from 2022.

Across the pet food industry, about half of the sector's growth since 2019 is because of inflation — price increases — according to a recent analysis by John Gibbons, who writes the "Pet Business Professor" blog.

There has also been a strong preference for premium brands among pet owners in recent years, part of the "humanization" of pet food, which has also led to higher sales from higher-priced bags of kibble.

Gibbons says strength in the industry is due to "pet parents' absolute number 1 priority — the health, wellbeing and safety of their pet children, which starts with the quality of their food."

However, a lack of manufacturing capacity and rising input costs have limited profit margins at brands such as General Mills-owned Blue Buffalo.

Post said the Perfection Pet Foods plants it is acquiring will help bring more pet food manufacturing in-house and open the door to co-manufacturing for other brands.

"Perfection Pet nicely complements our recent acquisition of several pet food brands by enabling us to compete in additional segments and more effectively leverage the combined manufacturing footprint," Post Holdings CEO Rob Vitale said in a statement.

Though it could be a year or more until all of Post's pet food acquisitions are fully integrated, company leaders told analysts in August the brands were exceeding expectations.

"We have not yet begun to invest in brand rehabilitation," Vitale said at the time. "We are building this over the long-term."