With pet food, Lakeville’s Post Consumer Brands now a $4B company

Post Consumer Brands for the first time passed $4 billion in annual revenue — and more than $500 million in profit — as the cereal maker’s big bet on pet food pays off.

The Lakeville-based company behind Fruity Pebbles and Honey Bunches of Oats picked up several pet brands early in 2023 for $1.2 billion and another kibble manufacturer for $235 million later that year.

Following the first full fiscal year owning pet brands like Nutrish and 9Lives, Post Consumer Brand’s sales are nearly double what they were in 2022.

“I’m very proud of our fiscal 2024 results,” said Nicolas Catoggio, CEO of Post Consumer Brands. “Our employees worked extremely hard this past year to fully integrate our pet business into Post Consumer Brands while optimizing costs.”

Post Holdings CEO Rob Vitale called out a “remarkable start for our pet business” on a conference call with analysts Friday, and said it’s performing twice as well as expected.

But there’s still work to be done.

“Inflation has leveled, but has not receded. Consumers, and therefore, volumes remain under pressure,” Vitale said.

Post Consumer Brands has also seen its profit margin fall from pandemic-era highs as the company runs out of room to raise prices and as consumers reduce grocery spending where they can.

“Shifting consumer preferences from branded to private label or other value products” has reduced sales volumes, and shoppers are increasingly choosing Post’s “lower-margin” options, the company wrote in a filing.

The early focus with pet food has been keeping demand steady, which has helped keep Post’s market share level in the category.

“If you exclude the impact of our now-complete co-manufacturing agreement with the J.M. Smucker Company, our volume was in-line, if not better than the category as a whole,” Catoggio said.

Now the company plans to “relaunch” Nutrish in January and continue marketing its other top sellers to widen its reach.

“As we move into fiscal 2025 we shift our attention from stabilizing to strengthening our premium brands,” said Jeff Zadoks, chief operating officer.

While pet food overall has seen remarkable growth after a surge in pet adoptions during the pandemic, fellow cereal maker General Mills has found with the Blue Buffalo brand the category is not a license to print money. Consumers are typically unwilling to switch once they find the right food for Fido, and extras like treats have seen declines amid tighter budgets.

The challenge, through pricing, promotions and advertising, is to capture the pet parent from day one and hopefully keep them for life.

Meanwhile, cereal is slowly declining “in line with the pre-COVID historical trend,” Zadoks said. Cattogio said cereal consumption over the past year was “solid.”

Vitale said there’s reason to believe cereal growth will return to “flat-ish” over time.

After closing an Ohio cereal plant this year, Vitale hinted there could be more moves to right-size the manufacturing footprint.

“We have miles to go in respect to optimizing our network,” he said, though no potential closures appear imminent.

“The point at which it becomes an issue is when the plants become deleveraged, and we no longer have the ability to shrink capacity,” Vitale said. “We’re quite a ways from that.”

Post, the St. Louis-based holding company of the consumer brands division, which also owns Hopkins-based egg company Michael Foods, is still keeping an eye out for more acquisitions.