Woof
US food company DelMonte had scarcely managed to tighten the pet food oligopoly with the purchase of Meow Mix and other brands when it struck again. The new target was the Milk-Bone dog biscuit line, acquired from Kraft Foods (Altria) for around $580 million.
This move gets Kraft out of the pet food business, where it had only a marginal presence. According to a story in Brandweek ("Del Monte Wags Its Tail Over Milk-Bone", 3/16/06),
The Milk-Bone brand alone posted about $180 million in net revenue last year, Kraft said, which is also selling off non-core brands to focus more on brands like Oreos and Kraft cheese. Still, Milk-Bone languished under Kraft, without focus and innovation at a time of double-digit growth for the pet category. Del Monte plans to pump up Milk-Bone with marketing and new products.
In the eternal gin-rummy game of oligopolies, the deal makes sense for both companies. Kraft discard s an isolated card, gets some cash, and DelMonte picks up an established but under-marketed addition to its own growing pet product line.
