PARIS — Don Mulligan, executive VP and CFO of General Mills Inc., sat down with Deutsche Bank Research Analyst Robert Dickerson June 11 at the Deutsche Bank dbAccess Global Consumer Conference in Paris to answer questions about many aspects of the company, including its pet food division.

Dickerson opened a conversation about the company’s acquisition of Blue Buffalo and strategy to expand it into the mass retail channel (FDM). “You recently pre-released results for the fourth quarter, which were strong, right, much stronger than I think many had expected,” Dickerson commented.

Mulligan reply addressed the business strategy, performance and growth expectations of the Blue Buffalo brand.

“Blue Buffalo has about one-third of the market share of that category [wholesome natural] or that segment of the category, three times the next nearest competitor, and it was driving that disruption,” Mulligan explained.

With this kind of stake in the market, the ongoing focus for General Mills is to successfully transition the brand to the FDM channel, follow through on new product development and portfolio proliferation and support e-commerce sales.

Mulligan said, “We expect to continue to see growth in e-commerce, where Blue Buffalo is the leading brand, both in terms of share and searches for pet food brand. And then we expect to see explosive growth in FDM,” not solely from an increase in product sales, he explained, but through attracting new consumers.

Blue Buffalo distribution in the FDM channel is looking strong, Mulligan added, with distribution rates already higher than expected for the fiscal year. 

As far as new product development goes, Mulligan cited the release of its latest FDM product, Wilderness, and an ongoing effort to add more wet pet food and treat options to the brand’s portfolio.

“General Mills had inherent food technology capabilities to expand [wet food and treats] for Blue, and we've really only started on that journey… and that not only opens up more top line growth opportunity, those are higher-margin businesses or product offerings as well,” Mulligan said.

Household penetration is also growing for the Blue Buffalo brand.

“Our household penetration was high single digits when we bought Blue, it's increased since then,” Mulligan reported.

Mulligan concluded that until a sustainable top line has been established for the brand under General Mills’ management, the company will continue to focus on savings opportunities, and maintaining steady sales growth and margins.

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