Case Study: Pet Food Companies Prosper from Pet Humanization

Rongyu Lin

ENGW 3304 Sec 13

February 20, 2020

Executive Summary

The pet food industry acts as one of the most lucrative businesses in the US with the leading pet food company (Mars Petcare Inc.) earning a revenue of over $18 trillion per annum. The pet food industry thrives due to the rising demand for pets as alternative companions for humans. Besides, the humanization of pets, the practice of treating dogs like humans, tends to take the top stage as more people develop an interest in ensuring good health for their pets. Accordingly, this report examines Blue Buffalo as an exemplary pet food company that seeks to generate high-quality pet foods by utilizing fine quality natural ingredients and raw materials. The company specializes in the manufacture of food for dogs and cats to ensure that its clients realize their desired products. Luckily, there is a large and expanding market share for pet food in the US. Thus, this study provides critical information regarding the impacts of humanization of pets in the pet food industry.

Pet Food Companies Prosper From Pet Humanization

Introduction

The pet food industry serves as one of the most lucrative businesses in the current world due to the rising demand for pets as alternative companions for humans. Consequently, pet food companies realize huge revenues. For instance, the world’s leading pet food firm (Mars Petcare Inc.) earns revenue of over $18 trillion per annum (Petfoodindustry.com, n.d.). The company, Blue Buffalo, specializes in the manufacture of food for dogs and cats to ensure that its clients acquire their desired products. A rising global concern on the health and hygiene of pets facilitates the manufacture and sale of pet food of high nutritional value. Since many people find pets as suitable companions, they strive to ensure that they (pets) feed well and stay healthy. This case study examines Blue Buffalo pet food company to determine how humanization of pets affects its operations and eventual revenues.

Company Background

Blue Buffalo is a pet food company with its headquarters in Connecticut, USA. The company attains efficiency and better performance by specializing in the manufacture of food products for dogs and cats only (Brutschy et al., 2012). A family that was caring for their dog called Blue started the firm. The family used natural and quality ingredients to develop healthy and quality food for Blue when it was struggling with cancer (Bluebuffalo.com, 2020). Since its establishment in August 2003, Blue Buffalo has enjoyed significant growth and development by focusing on the generation of high-quality pet products through the use of natural ingredients. Accordingly, Blue Buffalo realized approximately US$1.43 billion in the financial year 2019 (petfoodindustry.com).

Besides, Blue Buffalo concentrates mainly on the American market. Accordingly, Blue Buffalo faces stiff competition from large international firms, including Mars Petcare Inc. and Nestle Purina Petcare and other small companies. As such, Blue Buffalo gains its competitive advantage by embracing a suitable approach to generating exceptionally quality pet foods made from high-quality ingredients, fruits, and whole meats to increase customer loyalty. Moreover, Blue Buffalo relies on the following five production lines to generate its products:

Blue Natural Veterinary Diet where dedicated veterinarians provide therapeutic diets for pets

Blue Freedom that deals with grain-free products

Blue Basics that focuses on the manufacture of foods for pets that are sensitive to some ingredients

Blue Wilderness that deals with grain-free, high-protein, and high-meat products

Blue Life Protection Formula that serves as the main product line, which handles a wide array of breed-specific and functional products and flavors (Duarte, 2019).

Overall, Blue Buffalo relies on a Blue Masterbrand to enhance recognition of its brands by the target market (Duarte, 2019). Accordingly, the company enjoys significant market for its new brands.

Blue Buffalo’s Operating Strategies

Blue Buffalo Manufactures and Sells High-Quality Products at High Prices

Blue Buffalo offers the best quality pet food to gain client loyalty and attract the highest number of customers whose aim is to ensure that their pets remain healthy. The firm sells some of its products at $4 per pound (Martin, 2011). The firm attains its goal and objectives by working under the slogan “Love them like family. Feed them like family.” Specifically, Blue Buffalo is inspired to provide pet foods of high nutritional value and quality to ensure that its clients attain ideal products for their pets. Moreover, Blue Buffalo offers several varieties and brands of pet food to suit the demands and needs of dogs and cats of varied dietary requirements, ages, and breeds. For instance, Crunch the wild, Blue Sizzlers, and Blue Divine Delights are among the company’s latest brands (Petsmart.com, 2020). Also, Blue Buffalo relies on some of the finest natural ingredients and raw materials to manufacture quality pet food. Besides, the organization depends on minerals and vitamins to enhance the quality and value of their products. Luckily, many clients are less sensitive to the price of pet foods because they are more concerned with quality of the products (pet foods) following the rising humanization of pets.

Blue Buffalo Focuses on Functional Pet Foods

Functional foods are fortified products containing lots of valuable components other than the essential nutrients like minerals and vitamins that encourage the wellbeing when consumed regularly (Hasler, 2002). Accordingly, Blue Buffalo incorporates probiotic microorganisms in their products to facilitate useful physiological processes that entail digestion and absorption of nutrients (Boileau, Stojanovic & Sunvold, 2006). Besides, functional pet foods help in reducing the risk of diseases and improving brain functions, thus ensuring that pets remain reliable companions to humans (Di Cerbo et al., 2017). Subsequently, many clients have opted to purchase functional foods for their pets as opposed to conventional foods because they want their pets to remain healthy.

Impact on Company Performance

Similarly, Blue Buffalo is enjoying huge revenues that have been increasing at double digits due to its strategic positioning in the marketplace (Duarte, 2019). The table below presents projected US pet food market size and Blue Buffalo’s revenues. A top-down approach is used to forecast Blue Buffalo’s revenues by focusing on its US market share and the overall projected pet food market in the US (Duarte, 2019).

2017 2018E 2019E 2020E 2021E 2022E 2023E 2024E

US Pet Food Market ($M) 31,084 32,448 33,902 35,379 36,897 38,476 40,087 41,819

Blue Buffalo Revenues ($M) 1,275 1,431 1,594 1,371 1,856 1,985 2,084 2,151

YOY Growth 10.9% 12.3% 11.4% 8.6% 7.2% 7.0% 5.0% 3.2%

(Duarte, 2019).

As a lucrative industry, the pet food business attracts massive revenues as illustrated in the table below. The World’s Top 10 Pet Food Companies

Company Country Annual Revenue

Mars Petcare, Inc.United States $18,085,000,000

Nestlé Purina PetCareUnited States $13,200,000,000

J.M. SmuckerUnited States $2,900,000,000

Hill’s Pet NutritionUnited States $2,318,000,000

Diamond Pet FoodsUnited States $1,500,000,000

General Mills (Blue Buffalo)United States $1,300,000,000

Spectrum Brands / United Pet GroupUnited States $820,500,000

Unicharm Corp.Japan $752,650,000

DeuererGermany $721,100,000

Heristo AG Germany $700,000,000

(Petfoodindustry.com, n.d.)

Conclusion

The pet food industry serves as one of the most lucrative industries in the world. The leading pet food firm in the world enjoys over $18 trillion revenue yearly. The growing humanization of pets encourages generation of high-quality products that promote wellbeing of pets. Accordingly, pet food firms like Blue Buffalo thrive by specializing in the manufacture of quality pet foods for specific types of pets. Blue Buffalo uses quality raw materials and natural ingredients to manufacture high-quality pet foods that promote good health and wellbeing of pets. Besides, Blue Buffalo generates functional foods that are highly valued because they attract lots of benefits that include the Prevention of diseases, and better absorption of nutrients by pets. Luckily, many customers are ready and willing to invest heavily in purchasing pet foods of the best quality because they value their pets that serve as appropriate companions in the current era. Fortunately, Blue Buffalo and other pet food companies have a promising future because the large US pet food market continues to grow. Humanization of pets has significant influence on operations of pet food companies and promotes attainment of huge revenues.

References

Bluebuffalo.com. (2020). The Blue Story – It’s all about family. Retrieved 12 February 2020, from https://bluebuffalo.com/why-choose-blue/blue-story/Boileau, T., Stojanovic, M., & Sunvold, G. (2006). U.S. Patent Application No. 11/366,234.

Brutschy, A., Tran, N. L., Baiboun, N., Frison, M., Pini, G., Roli, A., … & Birattari, M. (2012). Costs and benefits of behavioral specialization. Robotics and autonomous systems, 60(11), 1408-1420.

Di Cerbo, A., Morales-Medina, J. C., Palmieri, B., Pezzuto, F., Cocco, R., Flores, G., & Iannitti, T. (2017). Functional foods in pet nutrition: Focus on dogs and cats. Research in veterinary science, 112, 161-166.

Duarte, R. (2019). Blue buffalo-organic pet food (Doctoral dissertation).

Hasler, C. M. (2002). Functional foods: benefits, concerns and challenges—a position paper from the American Council on Science and Health. The Journal of nutrition, 132(12), 3772-3781.

Martin, A. (2011). ‘For the Dogs’ Has a Whole New Meaning. Retrieved 12 February 2020, from https://www.nytimes.com/2011/06/05/business/05pets.html

Petfoodindustry.com. (n.d.) Top Pet Food Companies Current Data. Retrieved from

https://www.petfoodindustry.com/directories/211-top-pet-food-companies-current-data)

Petsmart.com. (2020). Blue Buffalo. Retrieved 12 February 2020, from https://www.petsmart.com/featured-brands/blue-buffalo/dog-and-cat/#

Dear Rongyu,

I enjoyed reading your case study. I liked how you frame the story, it flows very nicely. In your introduction you effectively describe to the reader what the company does, and the market characteristics. This is very important because it allows the reader to understand the context. You also display the data in a reader-friendly way to the audience.

Your argument is well supported. However, while reading your case, I could only perceive one positive side of the story. You effectively describe how the humanization of pets increases a company’s profits. However, it would be good for the reader to also find a negative result of this, or to show also how new industries (beyond pet food) are emerging from this new trend. In regards to the data, I think that it needs some description after showing (a point in time in which the data is more meaningful, or a finding), rather than just placing it.

I look forward to reading your final draft, good luck!

Best,

Andrea Portilla

Dear Rongyu,

Overall, I think you pick a topic that I would really like to know more about. The data you collected is really good, and it helps bring out your points about the success of Blue Buffalo. I like the flow of your case, and because you are focusing on the success of mostly one company I would consider re-evaluating your research question and mention Blue Buffalo and how this company is making great profits from more people getting pets for companionship vs other companies.

My main suggestion would be looking at your analysis, I like the style you have going with the sub-headings; however, I think you could go more into depth about Blue Buffalo company and its background. If I were you, I would talk a little about the history of this company and how throughout the years their revenues have increased due to more people having pets. On the other hand, I think it would be interesting to focus a sub heading on the company marketing strategy and what have they done to become the number one choice of pet owners.

I think you have a good paper so far, I would just focus on organizing your findings and giving your paper a little more focus on the strategy behind Blue Buffalo to make profits from the growing pet ownership. If you like, I think it would be fantastic if you also look into the psychology of why more people are getting pets even though it is an extra cost for everyone.

Good luck with your final draft,

Andrea Arana