While operating famous food brands such as Haagen Dazs and Wanchai wharf, the multinational food giant General Mills is expanding its business territory in China to a new category – pet food.
The snack generation noticed that Jeff harmening, Global CEO of general mills, talked about the latest progress of its pet food business, mainly blue buffalo (Chinese Name: blue food), as well as its current water testing actions and growth opportunities in the Chinese market when attending the global consumer conference of Deutsche Bank.
Today, a series of product lines of GM’s blue food, mainly baby blue, are “shining brightly” on tmall’s overseas cross-border platform, successively winning the first place in the 38 goddess Festival and the first place in the 618 pre-sale of this year’s subdivided circuit.
Xiaoshidai learned that at present, blue food is only sold through e-commerce channels in the Chinese market. “The e-commerce data indicators of blue food, including conversion rate, customer unit price and repurchase rate, are far beyond the industry average of the imported high-end pet staple food segment.” General Mills China today said to the snack generation.
Let’s take a look.
As the “pillar” in the pet food business of general mills, blue buffalo was pocketed four years ago. Xiaoshidai introduced that in 2018, General Mills acquired blue buffalo pet products, a US listed company, at a price of about US $8billion (about RMB 53.5 billion), marking its official entry into the pet food industry.
Now, several years later, harmening is very satisfied with the result of this big acquisition.
“Blue Buffalo has been really successful in the past four years. Our household penetration has roughly doubled in the U.S. market and is now about 20 percent.” He said. According to the financial report read by snack generation, in fiscal year 2021 (may 2020-may 2021), the revenue of General Mills pet business (mainly blue buffalo brand) was $1.73 billion.
After blue Buffalo, General Mills continued to sell in the field of pet food.
According to the latest financial report, in the third quarter of fiscal year 2022 ended February 27, the net sales of the pet Department increased by 30% to $568million, thanks to its recent acquisition of the pet snack brand previously owned by Tyson pet products. Net sales in the first nine months of fy2022 increased by 28% to US $1.65 billion. The pet business accounts for about 19.5% of the company’s net sales.
“What I am most satisfied with about the acquisition of blue buffalo is that we have proved that we can grow beyond the growth brought about by distribution – when we acquired it a few years ago, people thought that as you expanded your distribution, you would grow naturally, but after that (growth) stopped; it turned out not to be so.” He said.
Harmening points out that there are several reasons for this. “First, the humanization trend is indeed the main trend of global pet food, and the positioning of blue buffalo is very good. In addition, we have proved that we have the ability to innovate. For example, we have changed our cat food business in the United States through the (newly released) tastefuls brand. I think our growth rate reached 75% last quarter, and the only reason why the growth rate was not faster was that our production capacity was a little insufficient at that time.”
“So we have proven our ability to drive blue buffalo growth.” He believes that there is still a lot of room for the brand to continue to grow in the United States, “because this is a large category with a scale of $35billion to $40billion, and almost half of the global (pet food) market is in the United States, we can continue to promote the organic growth of (blue buffalo and other pet food in the United States).”
In the view of general mills, doing well in the U.S. market after the acquisition also gives it the confidence to expand blue buffalo to other markets in the world.
“If we can’t prove that we can do blue buffalo well in the United States, no one will really care about what we can do outside the United States. However, if we have proved this, we can look beyond the United States to achieve broader development.” Harmening said.
Testing water in China
For general mills, which intends to expand its pet food international business, China is naturally a stop that can not be missed, because it is the second largest pet food market in the world after the United States.
“Now, we are testing the water in China, which is the second largest pet food market in the world. Our testing is still relatively small (scope and scale). It will not make a meaningful contribution to this year’s performance, but we are encouraged by what we have learned in the Chinese market.” Harmening said at the meeting.
This high-end natural pet food brand with annual sales of more than 10billion in the United States has gradually explored the Chinese market since last year.
资料显示，2021年10月，创立于2002年的Blue Buffalo在进博会上实现了中国“首秀”。10月29日，Blue Buffalo正式布局中国市场，并与上海辰以三信息科技有限公司达成贸易合作，由辰以三作为其中国区代理商；同时，官方还正式确认其中文商标为“蓝馔”（注：古文中寓有“皇家的美食”之意），此前Blue Buffalo在中国市场被俗称为“蓝爵”。
This also means that China has become the first overseas market of blue buffalo outside North America.
When talking about channel development, Chen Yi and the three relevant principals said last year that the three major production plants of the blue food series products have successively obtained the white list entry qualification of the customs pet food factory, and the products will be sold first through the cross-border bonded mode, and then settled in the blue buffalo tmall global overseas flagship store, blue buffalo Tiktok flagship store, etc., while cooperating with online stores that support cross-border sales.
According to previous media reports, last October, blue buffalo’s LPF life protection formula was the first to be introduced into the Chinese market. It is reported that the life protection series is the product series with the longest listing time and the highest sales volume of blue buffalo in the United States.
Today, xiaoshidai saw on the overseas flagship store of blue buffalo tmall that the brand has introduced more than 10 imported products, covering the rations of young cats / dogs, adult cats / dogs and elderly cats / dogs. Interestingly, the top five in the store are all cat food.
According to the page, the top seller is chicken no grain Kitten Food, which is highly praised by consumers. The latest message from the “excrement shoveling officer” on June 15 said: “I have done some homework and decided to buy Lanjue (i.e
In the Chinese market, bluefood is introducing more products in succession.
The snack generation noticed that yesterday, the official wechat of blue buffalo announced that the new field spirit series of blue buffalo would be launched soon. At the same time, the brand also launched a consumer interaction activity, and the whole network recruited the “cute master experience officer” of the first Chen Yi San & LAN restaurant to try new products. In addition, recently, the brand has actively participated in the 618 online shopping festival in China on a number of social and e-commerce platforms.
Led by the blue food, pet food began to become one of the next starting points of General Mills China.
The main driving forces for the growth of this category are that excrement shoveling officials are willing to spend money on “like family” pet food, and pet food is becoming more and more like human food, or high-end and refined. The snack generation noticed that harmening pointed out at the meeting that the humanization trend in pet food is a global trend, so blue buffalo also has great potential in other markets around the world.
This is also reflected in the products and selling points of LAN Yao.
For example, the snack generation noticed that in February this year, Lanyao reported in a public tweet that the small particles LifeSource bits added to its favorite food ™， It is a mixture of vitamins, minerals and antioxidants. LAN Yao said that there has been a lot of popular science on the benefits of antioxidation to the human body. People gradually realize the importance of antioxidation and will pay more attention to it in their diet. In fact, “animals are the same”, so pets, like humans, also need to supplement antioxidants to enhance immunity and fight against the aging process of the body.
“Throughout the global market, the humanization trend (in pet food) is the same. In every market we focus on, the humanization trend is very obvious.” Harmening said at the meeting that the scale of high-end categories may vary depending on the wealth of “excrement shoveling officials” in different countries.
“So the only question is, how big can we do business in different markets, how fast can we grow? And we should ensure the opportunities we invest in them.” He said that in the global pet food field, general mills still has a lot of room for growth. “In the medium and long term, we still have a long way to go in the pet food business.”
Interestingly, specifically in China, harmening also pointed out that the market volume of cat food is larger.
“China is a market with more cats, so pet food is more cat centered. Considering the number of people living in apartments (Note: This refers to a small living space) and that cats are more suitable for living in apartments than dogs, this phenomenon is very reasonable. But even in China, the humanization trend of cats and dogs is the same.” He said.
A report issued in 2021 by the food agency also pointed out that the market will be more likely to be driven by the “cat economy” due to the increasingly strict management regulations on raising and walking dogs in cities, which makes it easier to raise pet cats.
For the general mills, which have been selling ice cream and frozen food in China for many years, it is not easy to attack the pet food market. It will face a number of strong competitors. According to the IMT data read by snack generation, in 2020, according to the market share calculated by sales share, the “big three” in China’s dog food and cat food market are Mars (14.7%), Nestle (4.5%) and Huaxing pet food (3.3%).
But overall, this is still a good segment of the circuit.
“From the perspective of macro environment, the prospect of this market is promising. Firstly, with the decline of fertility and the growth of the elderly population, more and more people hope to seek companionship by raising pets. Secondly, at present, the per capita consumption of China’s (dog food and cat food) retail market is only $2.652, about 3.1% of that of the United States, indicating its huge growth potential.” Inminster said in the report.
The above report also pointed out that in the post epidemic era, people are increasingly willing to keep pets, especially for the younger and older generations, which has stimulated the vigorous development of the pet food market.
It is predicted that the total retail sales of dog food and cat food will reach 62.1 billion yuan in 2026, with an average annual compound growth rate of 13.9% in the five years from 2021 to 2026. The total sales volume of dog food and cat food retail market will reach 1952000 tons in 2026, with an average annual compound growth rate of 10.8% from 2021 to 2026.