Here at General Mills, pets are humans too.
A key component of General Mills’ plan to expand its Blue Buffalo pet food line is humanization. The company sees an opportunity for an extra $2 billion in Blue Buffalo retail sales over time, according to chairman and CEO Jeffrey L. Harmening, during a presentation at the Consumer Analyst Group of New York conference held in Boca Raton on February 21–24.
The General Mills Pet Segment, which was acquired five years ago, had sales of $2.3 billion in its fiscal year 2022, which concluded on May 29, 2022.
Mr. Harmening stated, “We’ve more than doubled our household penetration and increased our distribution in the US by four times, helping contribute to compound annual net sales growth of 15%.” “We think that Blue Buffalo is extremely well positioned for continued growth, building on this strong foundation.”
The company is concentrating on three initiatives to seize that opportunity: advancing the naturalisation of cat feeding, leveraging the company’s position in natural treatment, and continuing to lead the humanization of dog feeding.
“With renovation and innovation news, including significant news launching in the second half of this fiscal year,” Mr Harmening stated, “we’re building on this leadership position.” Our main line of Wilderness dry dog food products now has 20% more meat. We’re increasing our funding in response to this news because we know that pet parents prioritise attributes with a high protein content.
A new fresh product to be sold under the Blue Buffalo brand and the introduction of a premium blend in the pet specialty channel are two upcoming product advancements.
Regarding the fresh product, Mr. Harmening stated, “These vegetable products deliver remarkable experience with great tasting, home-style chicken and beef recipes, packaged in a convenient, deli-style resealable tubs.” “We’re hoping to learn more about how pet parents respond to the product, packaging, convenience, and value of this differentiated fresh offering with this 200-store test in the food, drug, and mass channel.”
According to Mr. Harmening, the company is drawing inspiration for its pet treats, such as Benebars and Nudges, from human cuisine.The business views cat food’s natural placement as a growth opportunity.
“With only 23% of cat food retail sales containing a natural claim compared to 51% in dog food, this segment has lagged dog feeding and the journey towards naturalisation,” Mr. Harmening stated. “Cat parents tell us they are very interested in natural products, but the main obstacle to their development has been the lack of natural offerings that deliver on taste.”
According to General Mills, US retail pet food sales are expected to reach $44 billion in total. The corporation estimates that there is an extra $30 billion of opportunities in international markets.
“These global markets, including China, where pet food retail sales totaled roughly $8 billion and have been growing at a 20% rate in the last five years, are seeing the same trends towards humanization drive growth,” Mr. Harmening said.General Mills started selling Blue Buffalo online and importing the product from the US to test it in China.
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“We’ve been encouraged by the results thus far and have learned a great deal about how the brand position fits within the Chinese pet food category,” Mr. Harmening stated. “We intend to extend our offering in China and start testing in other international markets in fiscal ’24, building on that positive test.” Even though there is still a lot to learn, we are hopeful that expanding internationally can provide our global pet food platform with an exciting new avenue for growth.
The company is facing more pressing supply chain issues even though it anticipates a long expansion runway. Sales in the Pet Segment increased by 8% to $1.2 billion in the first half of the fiscal 2023, which concluded on November 27, 2022, but operating profit decreased by 15% to $210 million. The drop in operating profit was attributed to lower volume, capacity constraints, and higher input costs.
“I’m happy to report that customer orders have accelerated nicely so far in Q3, and we remain on track to deliver double-digit organic net sales growth in the third quarter and for the second half of fiscal ’23 with a back half segment, considering the capacity challenges and retailer inventory headwinds we experienced in the second quarter.”operating profit margin ahead of our Q2 results,” Mr. Harmening said.