USA – American multinational manufacturer of consumer foods General Mills is planning to increase co-packer production of dry food and treats in an effort to respond to rising demand for pet foods.
Recent financial reports saw that the owner of the Blue Buffalo pet food brand recorded a 19% rise in pet food sales to reach US$579.9 million in Q1 2023, up from US$488 million in the same quarter last fiscal year.
Company representatives stated that this growth was primarily driven by favorable net price realization and mix, in General Mills’ FY23Q1 earnings statement.
The company’s pet food and treats segment saw operating profit growth to US$123.1 million, up 7% from US$115.2 million, primarily driven by favorable net price realization and mix, and cost savings, partially offset by input cost inflation and higher SG&A expenses.
“While demand for Blue Buffalo remains strong, we continue to be challenged by capacity constraints on the business, which is limiting our ability to deliver competitive customer service and drive further volume growth,” Kofi Bruce, chief financial officer for General Mills, said in prepared statements.
During the first quarter of fiscal year 2022, General Mills acquired Tyson Foods’ pet treats business for US$1.2 billion in cash.
“We gained share in wet pet food in the first quarter, but capacity limitations did not allow us to keep pace with the category in dry food and treats. We anticipate bringing on additional co-packer capacity on the treats business in the back half of fiscal 2023.”
Bruce noted that for the company’s dry food section, General Mills will continue to work to increase the output of our current lines and plans to add significant additional capacity to our internal network, starting in fiscal 2024.
Earlier in July, General Mills reported US$610 million in fourth-quarter net sales for its pet segment in the fiscal year 2022, an increase of 37%.
This growth was driven by favorable net price realization and mix, along with pound-volume growth, according to a press release from General Mills.
For the full year, General Mills’ pet segment net sales increased 30% to US$2.3 billion. Net price realization and mix added to net sales growth, including a favorable mix from the pet treat acquisition and the impact of SRM actions put in place in response to input cost inflation.
Organic net sales were up 18% while segment operating profit increased 13% to US$471 million, driven primarily by favorable net price realization and mix and higher volume, including benefits from the pet treats acquisition, partially offset by higher input costs and higher SG&A expenses.
During the first quarter of the fiscal year 2022, General Mills acquired Tyson Foods’ pet treats business for US$1.2 billion in cash.
The deal included the Nudges, Top Chews, and True Chews brands. Net sales in Q4 FY22 included a benefit from Tyson Foods’ pet treats acquisition.