Blue Buffalo’s wet pet food business is “performing well,” while treats are an area that the brand hopes to improve upon in the food, drug, mass (FDM) channel, General Mills officials reported during the company’s Q3 2021 earnings conference call on March 24.
Blue Buffalo hit double-digit net sales growth for both dog and cat food for General Mills’ third quarter, underlining how the Blue brand continues to be a “win” with pet owners across sub-segments, officials said in the company’s quarterly earnings statement.
The company’s pet segment overall reported net sales of $436 million for its third quarter ended Feb. 28, up 14 percent from the year-ago period. The uptick was from positive contributions from volume growth partially offset by unfavorable net price realization and mix, including launch investments for the new Tastefuls product line, according to officials.
Blue’s recently launched Tastefuls line is a portfolio of wet cat food available in three cuts: pâté, flaked entrées and tender morsels. Wet pet food is performing particularly well for the brand, Bethany Quam, group president of the pet segment, said during the earnings conference call, while noting recent feeding trends.
“What we really have seen is that pet parents throughout this pandemic have really wanted to continue to offer their pets different forms,” Quam said. “So we have seen mixing between kibble, and then wet food from cans—our wet business performing incredibly well as well as fresh. [Fresh is] still a very small part of the category, but the trend is pet parents continuing to mix different kinds of food. So we will continue to look at all those different areas and continue to take the Blue Buffalo master brand where we think pet parents want to see it.”
The pet segment operating profit increased 9 percent to $102 million, primarily driven by higher volume, partially offset by unfavorable net price realization and mix, higher input costs and higher selling, and general and administration (SG&A) expenses, according to officials.
Year-to-date, the pet segment’s net sales increased 13 percent to $1.29 billion, driven primarily by positive contributions from volume growth.
“The Blue brand continued to gain market share in measured channels in the first nine months of the year,” officials said.
Segment operating profit increased 22 percent to $312 million, primarily driven by higher volume and benefits from holistic margin management (HMM) cost savings, partially offset by input cost inflation, higher media investment, and unfavorable net price realization and mix.
While officials reported market share gains in measured channels, Blue’s move to the FDM channel has been “a bit disappointing” to investors, particularly as it relates to the brand’s treat business.
During the earnings conference call, Quam acknowledged that the brand “needs to do more work” in the treats segment and revealed that the company expects to launch new treat innovations.
“As you get exposed into the food, drug, mass channel, there [are] more treats that are sold in that channel,” Quam said. “Blue Buffalo definitely resonates with pet parents in terms of treating. You’ll see here in the fourth quarter that we are launching a new innovation behind bones, and so that is the opportunity for pet parents … to feed a bone alternative, crunchy biscuit that meets the true Blue promise. And so, we are continuing to do well in the treats category, but we know we can do better.”
Quam added that the company is focusing is merchandising options for retailers.
“We also are starting to do some different types of marketing behind treatable moments,” Quam added. “And so, we are pushing on all areas to continue to drive that business. It’s a huge category. We’ve got growth. We would like to have a higher share of it.”
Overall, the Minneapolis-based company reported net sales of $4.5 billion for its third quarter, up 8 percent from the year-ago period. Year-to-date, net sales came in at $13.6 billion, up 8 percent from the year-ago period.
For more of PPN's coverage on Blue Buffalo, read: