No bones about it, Big Food companies are diversifying their portfolios and looking to play in other markets. Today’s announcement that General Mills acquired Blue Buffalo Pet Products for an all-cash $8 billion deal strengthens the company’s footprint in the natural sector.
General Mills is the third-largest natural and organic food producer in the U.S. with leading brands including Annie's, Lärabar, Liberté, Cascadian Farm, Muir Glen, and EPIC. The transaction accelerates General Mills’ portfolio reshaping strategy and establishes it as the leader in the wholesome natural per food category, which is the fastest-growing portion of the overall $30 billion U.S. pet food market.
Blue Buffalo is the leader in the wholesome natural category with double-digit growth over each of the last three years. The wholesome natural market represents approximately 10 percent of the pet food market in volume and approximately 20 percent in value.
“The addition of BLUE to our family of well-loved brands provides General Mills with the leading position in the large and growing Wholesome Natural pet food category and represents a significant milestone as we reshape our portfolio to drive additional growth and value creation for our shareholders,” said General Mills Chairman and Chief Executive Officer Jeff Harmening.
Harmening continued: “In pet food, as in human food, consumers are seeking more natural and premium products and we have tremendous respect for how attentive Blue Buffalo has been to the needs of their consumers, pet parents and pets, as they have built their brand. As we have done with Annie's, Lärabar and EPIC, we expect to help Blue Buffalo by leveraging our extensive supply chain, R&D and sales & marketing resources.”
Upon completion of the deal, General Mills will operate Blue Buffalo as a new Pet operating segment alongside its four current operating segments: North American Retail, Convenience Stores & Foodservice, Europe & Australia, and Asia & Latin America. General Mills plans to maintain Blue Buffalo’s Connecticut, headquarters and its Missouri and Indiana manufacturing and R&D facilities. Blue Buffalo’s CEO Billy Bishop will continue to lead the business and report to Jeff Harmening.