Two weeks ago, I wrote about Blue Buffalo’s continued expansion into the mass market channel under its parent company, General Mills, and the ramifications this might have for the overall pet food market. One of the questions I posed was, does the departure of a significant player like Blue Buffalo from the pet specialty channel (which it may be all but abandoning) open up opportunity and pet specialty retail space for other brands, at least in the short term?

Just two days after the blog post appeared in our e-newsletter, something like that happened: Champion Petfoods announced a “strategic partnership” with Petco, placing its Acana and Orijen brands in Petco stores across the U.S. This is noteworthy for two reasons. First, until this development, Champion’s products were available only in independent pet retailers, at least in terms of brick-and-mortar stores. (Acana and Orijen products have been available online, including on large platforms such as Amazon, for some time, according to a company spokesperson.) Second, this is a fairly public extension of Petco’s initiative to stock only pet foods with no artificial ingredients.

Petco and Champion both emphasizing nutrition

For Champion, the two reasons seem closely related, at least based on responses by Frank Burdzy, president and CEO, in an interview with Mark Kalaygian, publishing director and editor in chief of Pet Business. “We also think this move is very important to us in terms of focusing on pet nutrition. As you’ve read in Petco’s announcement, they have been very clear about their commitment to refine their view of what is animal nutrition, both from a food perspective and an advice perspective,” Burdzy told Kalaygian. “So, we believe this is a real good opportunity and very consistent with our philosophy on how we provide biologically appropriate pet foods to the market.”

It's unclear whether Petco approached Champion or vice versa; my guess is it was the former, based on Burdzy’s comments and the response I received to a question I posed to the company, which seemed to indicate Petco made the first move. And that makes sense, given that it pushed out at least 15 brands or product lines that don’t meet its new criteria for ingredients. Meanwhile, Champion’s nutritional philosophy is based on its BAFRINO mission (biologically appropriate; fresh, regional ingredients; never outsourced), which Burdzy reinforced in his interview with Kalaygian.

In fact, he invoked it to emphasize that the move into Petco’s chain stores would not alter its philosophy or formulation of its products. Apparently, the company is already experiencing some backlash on social media from pet owners afraid it will change its products or lower its quality – a seemingly common concern when a specialty pet food company or brand makes a big move like this. (Though normally, this type of backlash arises when a specialty company is acquired by a much larger one. Just imagine the social media posts and comments if rumors about Nestlé Purina trying to buy Champion come true!)

How will independent pet retailers react?

Possibly of larger concern to Champion right now – and the main subject of Kalaygian’s interview – is potential backlash from independent pet retailers. Before I saw that interview, I asked Champion how it was positioning the partnership with Petco in terms of its long-standing relationship with independents and received this response, attributed to Burdzy:

“Champion’s business was established and built in the pet specialty channel. It is a key part of our heritage and legacy. While we believe the move to Petco will help introduce the Orijen and Acana brands and their nutritional integrity to more pet lovers, we remain committed to supporting our current pet specialty retailers. We care about our existing retail community and are making significant investments in marketing and awareness initiatives to increase store traffic, and in continued food innovation in order to provide pet specialty retailers with a truly differentiated product for their customers.”

Kalaygian’s interview delved much deeper into all the potentially thorny issues and concerns Champion is now likely to face. To summarize the main points he raised and Burdzy’s responses:

  • Because overall awareness of Champion’s brands is low, said Burdzy (citing the company’s research), he believes the move into Petco will increase that awareness, thus actually also helping independent pet stores that carry the brands – a “rising tide lifts all boats” scenario.
  • Similarly, Champion has invested in telling its story since the second half of 2018, Burdzy added, which should help drive awareness and potentially sales for all retailers offering the brands.
  • Burdzy confirmed that Champion will keep its pricing firm and fair for all parties – no preferential pricing for Petco or anyone else – and that it would have and enforce aggressive MAP (minimum advertised price) policies.
  • The company will not develop separate brands or product lines for Petco or independent pet retailers; all retailers carrying its products will have the same Acana and/or Orijen foods, Burdzy said.
  • Finally, he confirmed that Champion will stay true to the pet specialty channel, with no moves into mass market.

Causing big waves

Will all those assurances be enough to assuage concerns from independent pet retailers? Time will tell. I have difficulty believing that many of them will swallow the “rising tide lifts all boats” reasoning that Burdzy offered.

No matter what, Champion’s move is yet another that’s causing big waves in a churning pet food market, especially for pet specialty. After all, we’re still in only the first month of 2019, and so much has already happened.

In fact, Petco made other news the same week as the Champion partnership came out. In a somewhat counterintuitive move, considering how much e-commerce is booming, the retailer announced that it was shuttering its big online play, Drs. Foster and Smith. Perhaps it found the platform couldn’t compete with the likes of Amazon and Chewy.com, or perhaps it’s part of Petco’s strategy to go all in on its new in-store nutrition program. Or both. It’s still a lot of change.

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dphillips@wattglobal.com