L Catterton makes second China pet food investment

The private equity firm described the deal as another step in its broad pet food strategy in China, an industry where it sees rapid growth underpinned by trends such as rising disposable incomes and the humanisation of pets. The premium and super-premium segments are driving this growth and those have been the focus of L Catterton’s investments to date.

Last year, it backed Shanghai Enova Pet Products, owner of the premium pet food brand Pure & Natural. The company claims to have leveraged scientific research and cutting-edge technology over the years to develop innovative and premium pet food under patented formulas.

Partner Pet, which was founded in 2016, is a leader in freeze-dried pet food and is looking to gain market share in kibble-plus. These two segments – and the wet food format segment – are expected to account for about half the Chinese pet food market by 2025, up from about one-quarter in 2020 and less than one-sixth in 2018, according to a statement.

Partner Pet looks to deliver products that are palatable and have balanced nutritional profiles. It was one of the first domestic players to push into biologically appropriate raw food and it is entering the wet food segment as well.

The company claims the strongest customer conversion and repurchase rates among all Chinese pet food producers, and these have contributed to a 12x increase in sales over the past three years. Its products are available in 20,000 stores nationwide and efforts are being made to develop the direct-to-consumer channel through a Tmall flagship store and platforms like JD.com, Taobao, and TikTok.

L Catterton will support growth in part by leveraging its experience in the pet food space globally. Current and past investments include Butternut Box, Canidae, Inspired Pet Nutrition, Instinct, JustFoodForDogs, Lily’s Kitchen, Old Mother Hubbard, Petlove, and Pure & Natural.

“China’s pet food market has demonstrated resilient growth over the past few years and its expansion is expected to continue unabated, as consumers increasingly seek nutritious food for their animal companions regardless of economic oscillations,” said Scott Chen, an Asia-based managing partner at the firm.

“Equipped with prolific new product development capabilities, Partner Pet has attracted consumers with its high-quality offerings and its ascent reflects its ability to harvest true demand and win customer loyalty.”

L Catterton, a consumer sector specialist, is currently deploying its third Asian fund, which closed on USD 1.45bn in late 2019. Last year, it raised USD 360m for a continuation vehicle comprising structured minority interests in investments held by the fund. A portion of the proceeds was earmarked to be recycled into new investments.

In November 2022, the firm announced a first close on its debut renminbi-denominated fund, which has an overall target of CNY 2bn (USD 275m). The fund is focused on earlier-stage investments than its US dollar counterpart.

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• Topics
• Greater China
• Expansion
• Consumer
• L Catterton
• Growth capital