(Bloomberg) -- Swiss fragrance and flavor group Givaudan SA is considering entering the pet food market, potentially via acquisitions, in a bid to take advantage of a fast-growing sector.
“People spend more money on pets than kids nowadays,” Chief Executive Officer Gilles Andrier said in an interview. The sector’s “spectacular growth,” has benefited rivals Symrise AG and Nestle SA, which both have significant pet food exposure, he added.
An acquisition of a maker of pet food ingredients could help give Givaudan “a foot in the space, a starting point,” Andrier said. However, he noted that it can be hard to find the right targets in a highly competitive market.
Zurich-listed Givaudan makes various ingredients and scents that are used in a wide range of household and personal care products, as well as food. The 40 billion Swiss franc ($47 billion) group’s skin cream and make-up division, which has been expanding through acquisitions as well as organically, provides components such as antioxidants, surfactants and oils used by large cosmetic companies, including L’Oreal SA.
Andrier said that overall Givaudan has in the past year gained substantial market share from its competitors - including BASF SE, DSM-Firmenich AG and Symrise — and is optimistic about the end-of-year results. His comments boosted shares last Wednesday as he talked about the company’s expansion in the “active beauty space” at a conference.
The company’s stock has enjoyed a 50% rally in the past year, by far outpacing gains in the Swiss Market Index in the period, thanks to increasing optimism over sales growth.
Snapping up a company supplying the pet food sector will potentially provide Givaudan with ingredients, flavors and products that are specially designed to make pet foods, treats and supplements taste better, said Andrier.
The global pet food market is projected to rise from $320 billion to almost $500 billion by 2030, according to Bloomberg Intelligence, as the pet population rises and animal owners increasingly search for premium food and services.
Currently, Nestle SA, through its pet unit Purina, is one of the largest manufacturers of pet supplies alongside Mars Inc., General Mills Inc. and J.M. Smucker Co. Symrise recently announced it intends to submit a mandatory public offer for all shares in SwedenCare AB, a Swedish pet food company, in which it is already majority shareholder.
--With assistance from Levin Stamm.
