Lawsuit alleges false advertising
ST. LOUIS, Missouri; WILTON, Connecticut; RANCHO SANTA FE, California––Purina, long the leading pet food industry sponsor of animal shelter aid programs, on May 6, 2014 sued Blue Buffalo Company Ltd., sponsor of the Home 4 the Holidays adoption program, over alleged false advertising. Blue Buffalo countersued on May 14, 2014.
Alleged Purina, filing the case with the U.S. Federal District Court in St. Louis, “Blue Buffalo’s promotion, advertising and packaging repeatedly and unequivocally state that its pet food products contain ‘NO Chicken/Poultry By-Product Meals.’ Testing conducted by an independent laboratory revealed that several of Blue Buffalo’s top-selling ‘Life Protection’ pet food products actually contain substantial amounts of poultry by-product meal.
“Independent testing also shows that Blue Buffalo “LifeSource Bits” contain poultry by-product meal and corn,” Purina charged. “In addition, several Blue Buffalo products promoted as ‘grain-free’ actually contain rice hulls.”
Purina recalled that the National Advertising Division of the Council of Better Business Bureaus on March 25, 2014 “found Blue Buffalo’s advertisements to be misleading and disparaging against competitors’ products,” and earlier “found Blue Buffalo’s advertising deceptive in a 2008 decision that recommended its superiority claims be modified and its ‘NO Animal By-Products’ claims be discontinued when referencing pet food products that actually do contain animal by-products, such as fish meal, lamb meal, and/or liver.”
The National Advertising Division verdicts came in response to complaints by Hill’s Science Diet, the Colgate-Palmolive subsidiary that is the world’s third largest pet food producer, after Purina and Mars Inc.
Responded Blue Buffalo founder and chair Bill Bishop, “We categorically deny all of these false allegations and will aggressively defend the integrity of our brand and our products. It is an easy thing to make unsubstantiated claims, put them in a lawsuit and then publish them all over the web to disparage and defame a company. It is quite another thing to prove those allegations.”
Bishop reiterated that “Blue Buffalo does not use chicken by-product meal or poultry by-product meal in any of our products, does not use ground corn in any of our products, [and] does not use artificial preservatives in any of our products.”
Said Bishop, “We will prove these and other matters in the court with good reliable evidence, and we look forward to disproving the voodoo science that Nestle Purina relied on to support their outrageous allegations.”
The Blue Buffalo countersuit called the Nestle Purina lawsuit “a sophisticated and carefully orchestrated advertising campaign that falsely attacks Blue Buffalo’s honesty and the quality of its products.”
“Materially higher prices”
Noted Fox network business reporter Adam Samson, “Blue Buffalo commands materially higher prices than mainstream brands as a result of its premium posturing. For example, on Petco’s website, 31.1 pounds of Purina ONE Smartblend Chicken & Rice Formula Dog Food ran $34.99 (discounted from $39.99), while 30 pounds of Blue Buffalo Chicken & Brown Rice Adult Dog Food cost $59.99.”
Blue Buffalo debuted in 2003 with start-up funding reportedly provided by the private equity firm Invus Group LLC.
Rumors flew in mid-2012 that the fast-growing Blue Buffalo might soon be bought by Purina, a subsidiary of the Swiss-based Nestlé food conglomerate. Former Nestlé Nutrition deputy executive vice president Kurt Schmidt on November 19, 2012 was introduced as Blue Buffalo chief executive officer.
Speculation that Blue Buffalo might be acquired by Purina continued––but Blue Buffalo had other options and suitors.
“Outside chance that business could be sold”
Assessed Richard Collings of The Deal on October 28, 2013, “Blue Buffalo Co. Ltd. is likely headed for an initial purchase offering [of public shares] in 2014, with an outside chance that the premium pet food business could be sold.”
A source Collings identified only as a “person with knowledge of the company” told him that “Initially the possibility of an IPO came up more to generate interest in an auction, rather than as an end in itself.”
However, Collings wrote, “as the company’s revenues head north of $600 million this year––and may be between $700 million and $800 million, sources say––an IPO could make more sense. In a public debut, Blue Buffalo could fetch a valuation up to two times revenues, or around $1.2 billion to $1.6 billion, more lucrative than what it might achieve in a sale.”
In addition to Nestlé, Collings anticipated possible interest in acquiring Blue Buffalo from Mars Inc., Colgate-Palmolive, Procter & Gamble, and Del Monte Foods. Mars already owns the Royal Canin and Nutro pet food brands, while Procter & Gamble owns Iams and Eukanuba.
“International and financial bidders might also take a gander at the business,” Collings speculated.
Home 4 the Holidays
Home 4 the Holidays, an October-through-December shelter animal adoption program directed by the Helen Woodward Animal Center in Rancho Santa Fe, California, was for 13 years sponsored by Iams. Blue Buffalo took over for 2013. Total adoptions under the program slipped from a record 1.3 million worldwide to just under 1.1 million, but Blue Buffalo was apparently not discouraged.
“We are delighted to announce that Blue Buffalo will again partner with us for the 2014/2015 Home 4 the Holidays campaign,” Helen Woodward Animal Center president Mike Arms recently announced.
While Home 4 the Holidays has introduced Blue Buffalo to the animal sheltering community, catching up to the prominence of Purina in animal shelters would be a tall order.
Current Purina shelter support projects include Pets for People, an adoption promotion campaign with about 7,000 participating animal welfare organizations; the Purina Pet Adoption Program, helping about 150 shelters to rehome animals to senior citizens; Rally to Rescue, claiming to help small rescue groups rehome about half a million dogs and cats per year; the pet therapy program Pet Partners; and the Purina ONE Shelter Pet Program, which provides pet food to about 15 shelter partners. The partner shelters in turn distribute pet food to other shelters in their regions, particularly in response to disasters.
Purina also sponsors several local initiatives, including the St. Louis Petlover Coalition and the Winter Rescue & Straw Drop Program managed by the Michigan Humane Society.