Background and challenge

Early on in what is now a very active pet supplements M&A landscape, L.E.K. Consulting helped an emerging online leader with a multi-solution portfolio and consumer-friendly brand positioning. The goal was to articulate to investors both the attractiveness and runway of the category overall, as well as the brand’s uniquely strong positioning in this rapidly growing space.

Approach and recommendations

Our team began by assessing the size, historical growth and likely future trajectory of the pet supplements market. In light of the lack of strong data for this nascent category — which remains the case today — we leveraged multiple sources to develop proprietary estimates for market size and historical growth. We also helped frame the runway left for growth in this category by drawing parallels between the human supplements industry and its relative penetration, as well as by surveying non-users and their future likelihood to adopt.

We determined that the market was largely underpenetrated compared to the broader vitamins, minerals and supplements market for humans. We also determined that, overall, the pet supplement market was both attractive and growing, with significant room for growth remaining. Indeed, the pet supplements market now outpaces most other segments of the pet industry (e.g., food, treats and supplies). The market is benefiting from tailwinds including mainstream retail expansion, aging pets, millennial/Gen Z pet ownership and momentum for supplements that’s been driven (in part) by the COVID-19 pandemic. Notably, while we determined that the pet supplement market was growing prior to the pandemic, it saw an acceleration during the pandemic, and the future outlook was also very strong.

We also identified numerous reasons why the company would be able to continue to gain market share. Those reasons included a strong alignment with pet parent needs with a more approachable, easily understood and consumer-friendly brand positioning compared to that of legacy brands that sell to and position themselves for vets rather than consumers. The company’s SKU breadth also enabled it to take a “brand block” approach in key retail channels, placing all of its products together on a single shelf. We also framed numerous other growth opportunities for the brand, including geographic expansion, M&A and new products.

Results

We were able to educate and give confidence to investors that this emerging but still nascent category in the pet industry had significant opportunity for growth. We also helped articulate the strong and clearly differentiated competitive positioning of the client’s brand, including why it was uniquely positioned to benefit from continued market growth in the future, particularly by expanding into key brick-and-mortar retail settings. After a highly competitive process, the brand transacted for a very high multiple — even by pet industry standards.

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