Blue Buffalo to build warehouse in Kansas, create 103 jobs

General Mills’ pet division had an annual revenue of US$2,300,000,000 in 2022.

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General Mills’ Blue Buffalo plans to build a 730,000-square-foot warehouse in southern Olathe, Kansas, USA, reported the Johnson County Post. The Olathe City Council approved an incentive package for the new facility. The incentives include approximately US$71.5 million in industrial revenue bonds, exemption from sales taxes, and a 10-year, 50% property tax abatement. The Blue Buffalo warehouse is expected to bring 103 jobs to the region with starting salaries higher than US$51,000. Those salaries are set to increase to US$64,000 by the tenth year of operation.

Blue Buffalo volume sales resumed growth in early 2024

Blue Buffalo’s Life Protection formulation has resumed sales-volume growth in the United States this year, Jeff Harmening, chairman and CEO of General Mills said during the Consumer Analyst Group of New York (CAGNY) conference on Feb. 20 in Boca Raton, Florida, USA. In late 2023, volume sales had been declining by mid-single-digits for the recipe. However, throughout the beginning of 2024, the amount of the product sold increased by high-single-digits.

“The Blue Buffalo brand remains strong and our refresh ad campaign is capitalizing on the opportunity to more effectively communicate with parents on the benefits of superior ingredients found in our life Protection Formula line,” he said.

This growth in Blue Buffalo’s Life Protection recipe may be part of a larger wave of growth for General Mills’ pet foods, now that some challenges have receded. During the COVID-19 pandemic and in its aftermath, many pet food producers had trouble getting ingredients and other supplies, as well as moving their finished product from factories to consumers.

“Supply chain disruptions over the past few years have had a broad impact on the ability to service customers driving cost productivity, as well as our ability to deliver meaningful scale and our innovation,” Harmening said. “In fiscal 2024, we have increased our level of innovation versus last year, we expect to be a larger contributor to our growth as we move forward.”

About General Mills

General Mills is a North American manufacturer and marketer of consumer foods and pet food, according to Petfood Industry’s top companies database. General Mills entered the pet food market in 2018 with the acquisition of Blue Buffalo. Blue Buffalo is manufactured in the U.S. through a hybrid network of owned and contracted facilities. The company's dry formulas include LifeSource Bits, a blend of nutrients and antioxidants. General Mills’ pet division had an annual revenue of US$2,300,000,000 in 2022.

General Mills sales drop, but profits up in Q2 FY24

Net sales for General Mills’ pet segment, which includes Blue Buffalo, were down 4% to US$569 million, in the second quarter of fiscal year 2024. This decline was driven by lower pound volume but was partially offset by favorable net price realization and mix. Organic net sales for General Mill’s pet segment also dropped 4%. Net sales in the quarter were down mid-single digits for dry pet food, down double digits for wet pet food, and up double digits for pet treats compared to the prior year.

However, segment operating profit of US$102 million was up 18%, driven primarily by favorable net price realization and mix and cost savings, partially offset by lower volume, higher other supply chain costs and higher expenses.

General Mills’ pet division’s net sales performance lagged all-channel retail sales results by roughly 2 points, despite the comparison to the year-ago quarter that included a significant retailer inventory reduction. Relative to fiscal 2022, second-quarter net sales were down mid-single digits and all-channel retail sales were up mid-single digits.

“In the second quarter of fiscal 2024, we approved a restructuring action to enhance the go-to-market commercial strategy and associated organizational structure of our pet segment,” General Mills executives wrote in their Q2 FY24 earnings statement press release. “We expect to incur approximately US$22 million of restructuring charges and project-related expenses related to this action, of which approximately US$4 million will be cash.”

Through six months ending Nov. 26, General Mills’ pet segment net sales were down 2% to US$1.1 billion. Organic net sales were also down 2%. Segment operating profit was up 2% to US$214 million, driven primarily by favorable net price realization and mix and cost savings, partially offset by higher other supply chain costs, lower volume, input cost inflation, higher expenses and supply chain deleverage.

General Mills entered pet supplement space with Fera Pets acquisition

In November 2023, General Mills acquired Fera Pets, Inc., a vet-founded pet supplement company, bringing new health-focused offerings to General Mills’ pet portfolio. This pet product company acquisition represents General Mills’ first step into the pet supplement category and first acquisition by its newly launched growth equity fund.

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