Blue Buffalo’s Life Protection formulation continued to grow in sales volume in the United States this year, Jeff Harmening, chairman and CEO of General Mills, said at the Consumer Analyst Group of New York (CAGNY) conference on Feb. 20 in Boca Raton, Florida, USA. As of late 2023, sales volume is down by mid-single-digits for the recipe. However, throughout the beginning of 2024, the cost of goods sold increased by high-single-digits.
“The Blue Buffalo the brand remains strong and our refreshed ad campaign seizes the opportunity to more effectively communicate with parents about the benefits of the powerful ingredients found in our Life Protection line,” he said.
This growth in Blue Buffalo’s The Life Protection recipe could be part of a larger wave of growth for General Mills pet foods, now that some challenges have receded. During the COVID-19 pandemic and its aftermath, many pet food producers have had trouble obtaining ingredients and other supplies, as well as moving their finished product from factories to consumers.
“Supply chain disruptions over the past several years have had a wide-ranging impact on our ability to service customers that drive cost productivity, as well as our ability to deliver significant scale and our innovation,” Harmening said. . “In fiscal 2024, we have increased our level of innovation compared to last year, which we expect to be a greater contributor to our growth as we move forward.”
About General Mills
General Mills is a North American manufacturer and marketer of consumer foods and pet food, according to the Petfood Industry’s leading company database. General Mills entered the pet food market in 2018 with the acquisition of Blue Buffalo. Blue Buffalo is produced in the US through a hybrid network of owned and contracted facilities. The company’s dry formulas include LifeSource Bits, a blend of nutrients and antioxidants.
General Mills sales fall, but profit rises in Q2 FY24
Net sales for General Mills’ pet segment, which includes Blue Buffalo, was down 4% to US$569 million, in the second quarter of fiscal year 2024. This decline was driven by lower pound volume but was partially offset by favorable net price realization and mix. Also down 4%. Net sales in the quarter were down in the mid-single digits for dry pet food, down double digits for wet pet food, and up double digits for pet treats compared to last year.
However, segment operating income increased 18% to US$102 million, primarily driven by favorable net price and mix realization and cost savings, partially offset by lower volume, higher other expenses in supply chain and higher costs.
General Mills’ pet division’s net sales performance lagged retail sales results across all channels by about 2 points, despite a comparison to the previous quarter that included a significant reduction in the retailer’s inventory. For fiscal 2022, second quarter net sales decreased in the mid-single digits and all retail sales increased in the mid-single digits.
“During the second quarter of fiscal 2024, we approved a restructuring action to enhance the commercial go-to-market strategy and related organizational structure of our pet segment,” General Mills executives wrote in their statement to Q2 FY24 earnings statement. “We expect to incur approximately US$22 million of restructuring charges and project-related costs related to this action, of which approximately US$4 million will be in cash.”
Through the six months ending Nov. 26, net sales of General Mills’ pet segment fell 2% to US$1.1 billion. Organic net sales also decreased by 2%. Segment operating income increased 2% to US$214 million, primarily driven by favorable net price realization and mix and cost savings, partially offset by higher other supply chain costs, lower volumes, input cost inflation, higher costs and supply chain deleverage.
General Mills entered the pet supplement space with the Fera Pets acquisition
In November 2023, General Mills acquired Fera Pets, Inc., a veterinarian-founded pet supplement company, bringing new health-focused offerings to General Mills’ pet portfolio. The acquisition of this pet product company represents General Mills’ first foray into the pet supplement category and the first acquisition of its newly launched growth equity fund.
