Tails.com, the direct-to-consumer dog nutrition startup, looks set for major expansion after being acquired by Nestlé Purina PetCare.
The deal for an undisclosed amount saw Nestlé take a majority stake in the fast-growing Tails.com, which launched in 2014. It feeds more than 100,000 dogs in the UK, providing food tailored to each animal according to factors such as age, breed, size and level of activity.Its flexible subscription service delivers four million bespoke meals per month.
The digital-first operation, which expects to grow its sales significantly this year to be in excess of £20m, will continue to operate as a standalone entity led by co-founder and CEO James Davidson. The current management team and employees will remain shareholders and continue to run the business from its base in Richmond, London.
The process to take control of Tails.com was “hotly contested” by many potential investors, said Shaun Browne, an MD at Houlihan Lokey, which represented the DTC startup. Interest was driven by the business being at the heart of several key consumer trends, including personalised nutrition and premium products at affordable prices.
Tails.com had “genuine global potential”, Browne said. “Once you’ve got the model and technology that work, why not?” Nestlé had the scale and money to achieve international expansion and, as proven by the success of Nespresso, the supplier “gets the importance of direct-to-consumer”.
According to Nestlé, the acquisition came in response to the “rapid growth of personalised pet nutrition, as well as subscription services”. It offered “significant growth opportunities for both companies”.
Bernard Meunier, Nestlé Purina’s EMENA CEO, said the deal “underlines our focus on investing in high-growth categories and acting on consumer trends. Tails.com has a unique and winning business model that successfully combines individually customised recipes with a best-in-class pet owner experience, and all at competitive prices.”
Tails.com now had the capacity to expand “in the UK and beyond” said Davidson. “We will continue to run the business with the same entrepreneurial and customer-centric vision that has already brought us so much success.”
News of the deal comes with the Purina brand’s value sales stagnant at £542.7m on volumes down 6.4% as shoppers buy fewer petcare products in the mults [Nielsen 52 w/e 30 December 2017].