by Daniel Granderson
August 9, 2017
Blue Buffalo, as a pet specialty and online leader in the superpremium pet food space, has rocked the channel divide by expanding distribution of its Blue Life Protection Formula (LPF) product line to select mass-market retailers, as announced to its retail partners in August 2017. Describing the move as the “natural evolution” of its marketing strategy, Blue Buffalo is offering select pet food and treat products in its entry-level LPF brand line through Target, Meijer, Kroger, and Publix. The Wilderness, Basics, Freedom and Earth’s Essentials lines will be sold exclusively through the pet specialty channel.
Blue's entry into Target and other mass-market retailers will inevitably change consumer perception about the brand's exclusivity. However, given product life cycles and competition from rival pet product brands that keep raising the superpremium stakes, superpremium leader Blue Buffalo's entry into the mainstream is not unprecedented. In the pet food industry, Procter & Gamble’s extended it Iams brand into the mass market in 2000. As pet market analyst David Lummis speculated in Packaged Facts’ U.S. Pet Market Outlook 2013-2014, “one of the historically pet specialty exclusive natural brands will soon cross the somewhat risky bridge into mass, with Nutro, Natura, and Blue all likely contenders.”
Blue Buffalo's "leaning in" to mass-market retail will be a game changer in e-commerce vs. brick-and-mortar & superpremium vs. premium battles framing pet food industry growth. In pet speciatly, Blue Buffalo's “defection” could lead independent pet retailers (who can look askance even at distribution through the pet superstore chains) to devote less shelf space to the brand. Rival natural-positioned superpremium brands may benefit, as might Colgate-Palmolive’s Hill’s Science Diet, which has long declined to followed Iams into the mass market. Within the mass market, Blue’s entry could steal shelf space from upmarket specialty brands such as Nature’s Recipe, Newman’s Own, and Nutrish.
E-commerce and online pet product sales are blurring traditional retail distinctions between mass market and pet specialty, especially among Millennials. Despite yearly dollar gains in the pet specialty market, the channel has seen troubling volume sales, as reported in Packaged Facts’ U.S. Pet Market Outlook, 2017-2018. Blue Buffalo has acknowledged that its pet superstore sales have slowed, primarily due to reduced traffic. As of late last year, Blue Buffalo conducted 60% of its business in PetSmart and Petco, down from 73% in 2014. Conversely, as observed in the company’s 2016 annual report, Blue Buffalo experienced “significant growth” in sales through eCommerce sites such as Amazon and Chewy.com, making the company “increasingly dependent on such retailers.”
Adding Blue Buffalo to their pet food line-up is certainly a coup for supercenters Target and Meijer (with Walmart conspicuous, so far, in its absence) and for Kroger and Publix. We expect additional grocery leaders such as Wegmans to join this club. The top-line implication: e-commerce is dramatically re-shaping the pet products industry landscape.
-- By Shannon Brown, pet market analyst
Provide the following details to subscribe.