NEW YORK — General Mills is “thrilled” with Blue Buffalo’s performance said Jeffrey L. Harmening, chairman and chief executive officer. Speaking to analysts during a May 29 presentation at the Sanford C. Bernstein Strategic Decisions Conference in New York, Harmening gave a brief update on Blue Buffalo and its fourth quarter and full year results.  

For the fiscal year that closed at the end of April, net sales for Blue Buffalo, as well as the segment’s operating profit, were up 11% for the year. “We promised double-digit growth, and we're pleased to say that we're able to deliver that,” Harmening said. During the fourth quarter, Blue Buffalo grew sales at 38% and operating profit at 82%.

General Mills predicts continued growth ahead for Blue Buffalo. In addition to meeting sales targets, the pet food brand surpassed its distribution goal of 65% and reached 68% distribution as of the end of April. Harmening said there is no reason the company can’t eventually get to 80% distribution. According to General Mills, Blue Buffalo is currently the #1 brand in e-commerce and the #1 wholesale natural brand in the food, drug and mass channel and pet specialty.

Although not all distribution channels are growing, the results are what General Mills expected. When asked about the risk in going across channels, Harmening said they have found that strong brands such as Blue Buffalo travel well across different channels. “Blue Buffalo is #1 in pet specialty channel. It's #1 on e-commerce. And our e-commerce business is growing at double digits this year, which is what we expected. Our pet specialty business is declining double digits, which is unfortunate, … but it's declining in line with what we expected it to. And our food, drug and mass business is growing at triple digits, which is also what we expected,” Harmening explained. 

On the human food side, e-commerce is roughly 3% of sales in the US for General Mills and not expected to exceed 10% over the next 5 yrs., but Harmening said pet food is tailor-made for e-commerce especially subscription-based services and the company has seen that channel grow 20% this year and expects that to accelerate.

Harmening believes innovation will help fuel growth of the Blue Buffalo brand. “One of the things we're most excited about is matching General Mills' innovation capability with the pet capability of Blue Buffalo.” Harmening said. “I think we'll start to show in fiscal '20 we can innovate in pet, and I think we'll show that again in fiscal '21.”


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