General Mills, which has taken the "superbrand" route in the pet business, has ushered in a new story.
Recently, General Mills, a global food and ingredient giant, officially announced that as part of its Accelerate strategy, General Mills recently successfully acquired Edgard & Cooper, a premium pet food brand headquartered in Kortrijk, Belgium.
According to General Mills, Edgard & Cooper posted retail sales of more than €100 million (about $107 million) in 2023 and is expected to continue to grow in the 13 European markets it serves.
The "Accelerate" strategy is the core strategy of General Mills, which was officially launched three years ago, and mainly includes building a brand, innovating, unleashing scale and being a force for good. And according to Jeffrey L. Harmening, chairman and CEO of General Mills Corporation, Jeff Hamoning previously said that the pet food business will play an important role in the "acceleration" strategy.
At that time, Blue Buffalo, a super pet food brand under General Mills, gave General Mills great market confidence with its sustained high growth. According to sources, since General Mills completed the acquisition of General Mills for $8 billion in 2018, the Blue Buffalo brand has maintained a rapid growth trend and has become a rare super brand in the pet food industry.
At present, the annual operating income of the Lanzhishan brand is about 2 billion US dollars, and the market share in the United States is about 7%. Jeff Harmening, chairman and CEO of General Mills, even described it as "the growth of the company in the coming years will be led by it."
In 2021, General Mills announced that it intends to acquire pet snack brands such as Nudges, True Chews, and Top Chews from Tyson Pet Treats for $1.2 billion, further complementing the competitiveness of the pet business. (Note: The transaction received a $225 million tax incentive, which equates to an actual purchase price of $975 million.) At that time, Tyson's annual net sales of these businesses had totaled more than $240 million.
On November 9, 2023, General Mills also announced the acquisition of Fera Pets, a veterinarian-founded pet supplement company, using its newly launched growth equity fund, to bring new health-focused products to General Mills' pet portfolio.
But both the pet treats business acquired from Tyson and the newly acquired pet nutrition business may be expanding the growth of the Blue Buffalo brand and its product portfolio. As the global pet market continues to expand and the growth of the Blue Buffalo brand has slowed in recent years, General Mills also needs to consider a new growth curve.
According to General Mills' latest financial report, in the nine months ended March 20, General Mills' pet division had total net sales of $1.8 billion in the first three quarters, down 2% year-on-year, while operating profit rose 10% to $342 million. But this increase in operating profit, which is based on higher product prices, may not be sustainable.
Pet Industry Watch previously said that this may be because Blue Buffalo's product line structure has always been very simple, and its focus on the development of high-end natural food products has made it widely recognized. However, due to the globalization trend of the continuous rise of the status of pet families, pet brands focusing on high-end, natural, healthy and other concepts continue to emerge, so that part of the market share has been lost.
On the other hand, Blue Buffalo does not launch new products quickly, and it takes an average of 3~4 years to launch a new product line. Although it will subdivide the product line according to the lifecycle, taste and preference of different pets in each product line in order to better meet the personalized and differentiated needs of customers, in the pet food track where product updates and iterations are accelerating and innovative black technologies are constantly landing, product innovation and iteration speed may also be one of the factors leading to the decline in sales.
To this end, General Mills is also actively responding through various strategies. In 2023, General Mills first revealed plans to test and develop Blue Buffalo's new line of fresh pet food, refurbishing and innovating its Wilderness Dry Dog Food product line. Subsequently, the planning of increasing the size of China's pet market was regarded as one of the key parts of the promotion, and during the CIIE in November 2023, Blue Buffalo was officially announced to enter the Chinese market through all channels, and brought more product line layouts.
The acquisition of Edgard & Cooper may also represent the opening of a new branch of General Mills in the development of the "super brand" of the pet business. In the future, General Mills may also move towards a multi-brand matrix similar to the umbrella merger of giants such as Mars and Nestle.
According to public information, Edgard & Cooper was founded in 2016 and mainly promotes dry and wet pet food made with fresh meat. In 2021, Edgard & Cooper transitioned to a sustainable, low-carbon approach and launched its first plant-based dog food range.
What's more interesting is that, similar to giants such as Lilan, Zoetis, and Pinpu, General Mills is also divesting other businesses while strengthening the layout of the pet business. According to a report by Reuters on April 28, citing people familiar with the matter, General Mills is exploring the sale of its North American yogurt business, including the Yoplait brand, in a deal that could be worth more than US$2 billion (about 15 billion yuan).
According to sources, General Mills has abandoned Yoplait's European operations and sees the remaining yoghurt assets as non-core assets of its current strategy. Currently, General Mills is working with JPMorgan Chase to assess interest from potential buyers, who could include rival snack food makers and private equity firms.
For now, the pet business may become one of General Mills' strategic priorities for the next decade and many years to come. In this regard, the pet industry observation will also continue to pay attention. For those who are interested in this topic, please leave a message in the comment area below to discuss, or add a small editor to communicate on WeChat.