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 now marketing select treat and food products in its entry-level LPF brand line at 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.
According to David Sprinkle, research director for market intelligence source Packaged Facts, “Blue’s entry into the mass space will be a game changer in the clicks vs. bricks and the superpremium vs. premium battles that are now framing pet food category growth.”
On the pet specialty side, it 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 in response to Blue’s “defection,” according to Packaged Facts. From the perspective of mass-market competition, it could lead to less shelf space devoted to premium brands such as Nature’s Recipe, Newman’s Own, and Nutrish, Packaged Facts adds.
This move will inevitably shift consumer perception about the exclusivity of the Blue Buffalo brand, according to Packaged Facts. However, because new brands across CPG categories are always raising the stakes, such a “leaning in” toward the mainstream by a superpremium leader is the norm rather than an exception. Within the pet food category in the U.S., for example, this trail has been blazed by Procter & Gamble’s extension of Iams into the mass market in 2000.
It’s a competitive strategy Packaged Facts’ pet analysts have anticipated and that largely makes sense for Blue Buffalo. In the age of Internet sales of pet products, traditional retail distinctions between mass market and pet specialty become blurred. In addition, despite the 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 the pet superstore channel has 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 boasted 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 lineup is certainly a coup for supercenters Target and Meijer (with Walmart conspicuous in its absence) and for Kroger and Publix, notes Sprinkle, adding that additional grocery leaders such as Wegmans are likely to join this club.