Mars, Inc. is buying private-label pet food maker Doane Pet Care Enterprises, its second pet-food acquisition announced this month.
Acquisition is one of three growth strategies active at Mars and its Masterfoods USA division. McLean, VA-based Mars is also pushing R&D and investment in core marketing to spur growth, funding much of it through money that’s been freed up by productivity improvements over the last several months.
“We’re much more aggressively driving for real innovation and acquisitions,” Masterfoods USA President Bob Gamgort told PROMO earlier this month. Productivity improvements include benchmarking supply chain costs and overhead: “We see that freeing up money to invest in marketing” and acquisitions, now accelerating in the U.S. after heavy activity overseas. “We’ve done it [improved productivity] in a very Mars way: quietly,” he said.
“The addition of Doane’s U.S. operations will provide production capacity to accelerate our innovation pipeline and operating flexibility to better respond to our customers’ needs,” Gamgort said in a statement last week.
Mars will use Nashville, TN-based Doane as the core of its consolidated Mars North American Pet business, including Doane’s 20 U.S. plants and two distribution centers. Doane President-CEO Doug Cahill will manage the newly merged division, whose centralized location enables Mars to respond quickly to shifts in consumer demand.
“The combination of Mars’ brands, science and innovation with Doane’s supply chain excellence will significantly improve Mars’ business performance and competitive position,” Cahill said in a statement.
Mars is buying Doane from equity firm Teachers’ Private Capital; the deal is expected to close within the next several months. Terms were not disclosed. Teachers’ Private Capital will sell Doane’s European business to a third, undisclosed party.
Earlier this month, Mars bought S&M NuTech, maker of Greenies dog snacks. The 4-year-old brand dominates the dog-treat segment and compliments Masterfoods’ pet food portfolio.
Masterfoods’ dog biscuit/snacks sales are up 6% to $64 million in food, drug and mass outlets (excluding Wal-Mart), but its dog food sales are down: dry food fell 4% to $245 million and wet food fell 2% to $267 million for the 52 weeks ended March 19, per Information Resources Inc.
Doane’s fiscal 2005 sales were $991.6 million, down 5.7% from the year before, mostly due to domestic cost-sharing arrangements and pass-through on lowered commodity costs.
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