Blue Buffalo Losing Pet Specialty Market Share
Given that Blue Buffalo signaled that it was prioritizing growth in the food, drug and mass (FDM) channel and ecommerce ahead of the brand's pet specialty partners five months ago, it should come as no surprise that parent company General Mills reported a decline in the brand's pet specialty market share during a recent presentation about the company's second-quarter earnings.
Despite Blue Buffalo's claim to be the pet specialty's No. 1 food brand, more and more independent pet stores are phasing the brand out, resulting in a double-digit drop in the company's sales within the channel. In addition, despite reporting overall retail sales growth in the high single digits, the brand experienced a 7 percent drop in net sales in the second quarter, compared to the same period last year. While the company chalks this up to a "difficult comparison" to a period in which Blue Buffalo's move into FDM generated 25 percent net sales growth, could at least some of it be the result of the company's shift in channel focus?
Regardless, the real question is does Blue Buffalo even care that its position within pet specialty is eroding?
The fact that this channel was barely mentioned during the recent presentation has to make you wonder. Sure, there have been promises of continued commitment to pet stores, including "exclusive innovation" for this channel, but it is hard to view this as much more than lip service when the company is so clearly focused on other retailers. In fact, much of the Blue Buffalo segment of the presentation focused on the brand's successes in FDM, where 9 percent sales growth and an increase in market share during the first half of FY2019 had the company declaring itself the channel's fastest growing pet brand. Similar success was also reported in online retail, where Blue Buffalo claims to be the No. 1 pet food brand and enjoyed 30 percent sales growth.
Of course, all this success was reflected in the priorities laid out for the second half of Blue Buffalo's FY2019, which include expanding the product assortment and doubling its distribution within the FDM channel, but nothing noteworthy about pet stores. Interestingly, it was even intimated that additional products that were once exclusive to pet specialty could be expanded into FDM.
But does that really surprise anyone at this point?