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Today, we're diving into the thriving U.S. Pet Food Industry - a market that’s more dynamic than a Labrador chasing a tennis ball. With Americans spending lavishly on their furry companions, pet food has become a big business, evolving beyond kibble to cater to some pretty sophisticated palates. 

Whether you're looking to invest in this booming industry or just curious about the market trends, we've got all the juicy details. So, grab a treat, and let’s explore why the pet food industry might be your next big opportunity!

INDUSTRY BREAKDOWN

U.S. Pet Food Market: More Than Just Kibble 🍖

The pet food industry in the U.S. is currently worth a whopping $75.82 billion and is expected to grow to a jaw-dropping $113.64 billion by 2029—clearly, people love their furry companions more than they love their savings accounts. It’s a dog-eat-dog world out there (not literally, we hope), and big players like Mars, Nestlé Purina, and Hill's Pet Nutrition are fiercely battling for market dominance with new products, facility expansions, and brand takeovers to meet the ever-growing demand. The market is going to the dogs—literally—with dogs taking the largest revenue share, and cats not too far behind. Millennials are leading the charge, treating their pets like family, which means they’re also dishing out for the best: think grain-free, organic, and even raw diets—because why shouldn’t Fido enjoy farm-to-bowl luxury?

For potential investors, this means there are plenty of bones to be had. 🦴 Whether you're looking at a small boutique pet food brand or an established distributor, the market fundamentals are strong, fueled by rising pet ownership and the convenience of e-commerce. It’s safe to say that this market’s bark is just as strong as its bite, with premium and specialized pet foods set to lead the pack for years to come.

Industry Trends

Pets aren't just pets anymore - they’re family members, and sometimes even our favourite children (don’t tell the kids!). People are investing more than ever to keep their pets healthy, happy, and around for as long as possible. Owners are sparing no expense to ensure that their pets live their best, and longest, lives.

This growing dedication to pet health has led to an explosion in demand for natural, organic, and high-quality pet foods that promote longevity and wellness. The premiumization trend is driven by owners who want only the best for their furry friends—whether it’s grain-free, high-protein, or even raw food. E-commerce has also made these options more accessible than ever, allowing pet parents to easily compare and buy specialized foods that fit their pets' specific health needs. With the willingness to invest in high-quality products that promise better health outcomes, it's clear that the pet food industry is thriving on the love people have for their "furry children."

The Finances

The pet food market is growing steadily, supported by increasing pet ownership and rising disposable income 🐾💸. The market size is expected to grow from $75.82 billion in 2024 to $113.64 billion by 2029, representing a robust opportunity for investors. One of the attractive features of this market is the ability to capture higher profit margins through premium products. The focus on health and wellness means consumers are willing to spend more for food that promotes their pets' well-being, especially products featuring high-quality, natural ingredients.

In addition to the premiumization trend, dry pet food remains the leading product type due to its convenience and cost-effectiveness. Dry food alone generated $42.7 billion in revenue in 2023, making it a popular option among health-conscious pet owners who appreciate the nutritional balance it offers. This focus on specialized, high-quality pet food opens up various avenues for new and existing businesses to capitalize on, particularly in segments like organic, grain-free, and age-specific diets. 🐶🐱

With significant competition from established giants, breaking into this market can be challenging, but niche brands focusing on premium, sustainable products can still carve out a profitable space.

Buy or Bust?

The U.S. pet food industry is a strong buy for anyone looking to invest in a growing market that has shown resilience even during economic downturns. With more Americans treating pets as family members, the focus on premium, healthy, and sustainable pet foods is only intensifying. Whether it’s the booming e-commerce channel or the rise in natural and specialized diets, there’s plenty of room for growth in this sector. If you’re ready to serve up some gourmet meals for pets and capitalize on this trend, it could be the perfect time to enter this market and take a bite out of this lucrative opportunity.

Check out these Pet Supply Stores for sale:

1. Established Pet Grooming & Retail Franchise Store In Atlanta - $229,000

2. Holistic Pet Food & Supply Store in Melbourne, FL - $117,647

3. Excellent Local Pet Specialty Store In Kelowna, BC - $650,000

Interested in a particular industry? Reply to this email with the industry you are curious about and keep your eyes peeled for upcoming issues. 👀 

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DEAL REVIEW

Established Specialty Pet Feed and Supply Store

This business is a premium pet supplies and food store in Tennessee.

Deal Facts 🔥

Green Flags 🟢

• Loyal Customer Base: The store has cultivated strong one-on-one relationships with clients, fostering a loyal customer base that values premium pet products. This loyalty reduces customer acquisition costs and supports consistent revenue.

• Consistent Growth: The business has grown year-over-year since the current owner took over in 2018, demonstrating a stable and thriving operation. Strong financial performance, especially with record growth in 2023 and ongoing in 2024, provides confidence in future profitability.

• Diverse Product Offering: By catering to various animal types, from pets to farm animals and wild birds, the store taps into multiple customer segments, spreading risk and offering diverse revenue streams.

• Growth Opportunities: Potential expansion options, such as improving online ordering, extending store hours, and opening a second location, offer clear paths to further increase sales and market presence.

Red Flags 🔴

• Leased Property: The business operates on leased property without specified lease expiration terms, which could present risks if the lease needs to be renewed or if rental rates increase unexpectedly.

• Inventory Not Included: The inventory is not included in the asking price, requiring an additional investment from the buyer, which increases the total cost and potential financial burden.

• Limited Seller Training: The current owner is only offering two weeks of training, which might not be sufficient for a smooth transition, particularly if there are complex supplier relationships or operational nuances.

• Dependence on Current Owner Relationships: Much of the business's success is built on the owner's direct relationships with clients. This could pose a challenge for a new owner to maintain the same level of customer connection and loyalty, especially in the transition period.

Possible deal structure: This deal could benefit from an earn-out structure, with an initial payment upfront and a second payment tied to gross profit performance over the next 12 months. This approach mitigates the risk of paying a premium for a record year and ensures the seller is compensated fairly if growth continues. Additionally, vendor financing over 24 to 36 months could help bridge any cash shortfalls, especially since traditional lenders may not finance inventory.

Watch Our Video Breakdown

For a more in-depth analysis, check out this video deep dive of the deal by our Founder, Morgan Tate:

Specialty retail was not your cup of tea 🫖 - but that’s okay! While we get the hesitation on investing in retail businesses, they are having their shining moment right now as more people would rather support small/local rather than big corporations. All that said, while everyone claims to support local, we know there are a couple of things you have in your Amazon cart during Prime days…

Want to learn more about this deal? Reply to this email with a “send me more details” and we will connect you with the broker!

TWEET HIGHLIGHT

We’ll scream it from the rooftops: BORING BUSINESSES MAKE MONEY! Everyone needs a plumber, roofer, or HVAC installer at some point, and spoiler alert—they’re not going away anytime soon (no AI bot’s fixing your leaky pipe!). So while the world chases the next tech unicorn, we’ll be over here, happily raking in cash from good ol' boring businesses. Who’s ready to get their hands dirty? 💰🧼

GOOD READS

Recommended Resources 📚

Below is a list of articles, books, and other resource we recommend for buyers or operators of small businesses!

1. Want to see the step-by-step process of acquiring a business? Check out FounderJar’s guide on buying a business for a complete overview, from searching to closing the deal.

2. Need help avoiding costly mistakes? Use BizBuySell’s due diligence checklist to make sure you don't miss any important details when buying a business.

3. Curious about what makes a business acquisition successful? Entrepreneur explains how to find the perfect acquisition, covering essential strategies for buyers.

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