Blue Buffalo Trades Some Mystique for Mass-Market Sales

Blue Buffalo Trades Some Mystique for Mass-Market Sales

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 continue to be sold exclusively through the pet specialty channel.

Blue’s move will inevitably shift consumer perception about the exclusivity of the brand.  However, given product life cycles and competition from rival new brands that keep raising the superpremium stakes, such a “leaning in” toward the mainstream by a superpremium leader is hardly unprecedented. Within the pet food category, for example, this trail has been blazed by  Procter & Gamble’s extension of Iams 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.”

Even so, Blue’s entry into the mass space will be a game changer in the clicks vs. bricks and the superpremium vs. premium battles that now frame pet food category growth.  On the pet specialty side, 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.

In the age of Internet and mobile sales of pet products, traditional retail distinctions between mass market and pet specialty have become blurred and less salient, especially among Millennials. In addition, despite yearly dollar gains in pet specialty, the channel has seen troubling trends in volume sales, as reported in Packaged Facts’ U.S. Pet Market Outlook, 2017-2018.  Blue Buffalo has acknowledged that its pet superstore sales have seen a slowdown, primarily due to reduced traffic. As of late last year, the company does about 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, however: the Internet is fueling a dramatic reshaping the pet product retailing landscape.

-- By Shannon Brown, pet market analyst