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In Business This Week: Headliner: FIDO
THE FUR IS FLYING IN THE PET-FOOD WARS
Dogs and cats across America are salivating. Heinz announced on Feb. 6 that it would pay $725 million for Quaker Oats' North American pet-food business, bringing Quaker's Kibbles 'n Bits and Pup-Peroni brands into the kennel with its 9 Lives and Meaty Bone brands.
The rationale: Dobermans win more fights than chihuahuas. Heinz will gain the critical mass it needs to compete against industry top dogs Ralston Purina and Nestle. But the scrap could be ugly. Now, the three big companies will each hold over 20% of the market, and analysts fear a price war for market share.
At the same time, the big brands, which sell mostly to supermarkets, are losing sales to the pet-food set's nimble greyhounds--Iams, Science Diet, and other premium brands that distribute through veterinary offices and specialty stores. Even lowly mutts are cashing in: Sales of private-label brands, such as Wal-Mart Stores' Ol' Roy are surging at discounters and warehouse clubs. Cheaper eats, it seems, for Fido.EDITED BY KEITH H. HAMMONDS By Greg Burns