+Kota, the second largest pet food retail chain in Mexico, requested a bankruptcy-conciliatory procedure with the Mexican authorities early this year, according to Expansión business magazine.

+Kota still holds second place in the market, behind Petco. Before Petco’s entry into Mexico in 2015, +Kota was the only big chain in the market, with more than 300 branches across the country. It specializes in premium pet food products; its suppliers include Royal Canin and Purina Proplan.

Recent problems contributing to financial position?

The retail chain has experienced a few setbacks in the recent years. For example, press sources state that a few suppliers to the company sued +Kota for payment default in 2019. 

+Kota also faced a harsh media campaign in 2015 when a YouTube video became viral, showing an employee apparently mistreating a small dog at one of the chain’s stores. After that unfortunate event, the company stopped selling live pets to the public.

Despite the current bankruptcy trial, the company will continue operating, as the Mexican legal procedure is at a conciliatory stage, meaning +Kota is allowed to continue selling products to increase its cash position, according to Expansión. Yet, +Kota will need to restructure its business and improve its insolvency stance to continue participating in the market and pay its suppliers on time. 

+Kota’s fall sharpened with the pandemic

According to a report by Triplethree International, the company’s issues are not new: It started its downsizing process before 2019. Between 2019 and 2021, the company dropped from 300 to 181 stores in Mexico.

The fierce competition from Petco, thousands of independent pet shops and online sites, such as Amazon and Mercado Libre, precipitated the fall of +Kota in the past few years. Then the pandemic likely accelerated its drop as the company did not overcome the temporary lockdown of retail outlets, despite their announced migration to telephone and online sales.

Iván Franco is the founder of Triplethree International and has collaborated on hundreds of research projects for several consumer goods industries. He was granted the Global Consultant of the Year award by Euromonitor International and authored the book 17 Market Strategies for Growth (in Spanish).

Source: https://www.petfoodindustry.com/articles/11375-mexican-pet-food-retailer-kota-files-for-bankruptcy

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