Woolworths, the leading Australian supermarket and retail chain, has announced the acquisition of a 55 per cent stake in domestic pet food and accessories retailer Petspiration for a total of $586 million. This acquisition will enable Woolworths to expand its presence in the pet care market and capitalise on the growing demand for pet products.
Petspiration owns and operates the retail brand PETstock, which has a network of 276 stores in Australia and New Zealand boasting an enterprise value of approximately A$1.7 billion.
The acquisition, which was concluded after 18 months of negotiations, will give Woolworths a majority stake and access to its 276 retail stores, loyalty program with 2.4 million members, and its own brand range including Caribu and Glow.
After experiencing a puppy boom during the pandemic, Australians have been able to experience unprecedented levels of pet ownership, with the specialty pet sector being estimated to be worth a staggering $10 billion annually.
The move is part of Woolworths’ plan to expand its offering in the pet industry and capitalise on a surge in pet ownership over the past year. With Australia’s pet industry worth an estimated $12 billion, the move is a shrewd one for Woolworths, which is already the country’s leading pet food retailer.
The investment is a major one for Woolworths and follows research that shows that pet ownership is at an all-time high, with Australians now owning more than 12 million pets. The trend has been largely driven by millennials, who are increasingly turning to pets for companionship.
Brad Banducci, CEO of Woolworths, declared the specialty pet sector is a vast and expanding retail market in which Woolworths has only a peripheral presence.
“Given the high penetration of pet ownership across Australia and New Zealand, a specialty pet store is a logical adjacency,” Mr. Banducci said.
“By partnering, we will be able to better fulfill our customers’ pet family needs through a diverse selection of pet products and services, bolster the Everyday Rewards loyalty program, and create substantial value for both companies.”
Shane and David Young, the founders of Petspiration, first began their business in Ballarat, Victoria over thirty years ago, and have since developed it into the second largest pet retailer in Australia. The two still hold a 45% stake in the company.
Records from ASIC reveal that Petstock generated approximately $700 million in sales and $54 million in profit prior to tax in the 2021/22 financial year.
The investment in Petspiration will give Woolworths a foothold in the pet food industry and allow it to tap into a growing market. According to a survey by Animal Medicines Australia, the number of households with pets has increased by 5 percent since the start of the pandemic. Pet ownership has been particularly strong among millennials, who now make up the majority of pet owners in Australia.
The new business will also provide tailored advice and support services to pet owners, including pet nutrition advice, pet behaviour advice, and pet health advice.
Woolworths will be hoping that the investment in Petspiration will pay off, as pet food is a lucrative market.
