GIS - General Mills could pose a threat to FreshPet analysts advise

General Mills’ ( NYSE: GIS ) growing interest in fresh pet food could pose a significant threat to industry incumbents like Freshpet ( NASDAQ: FRPT ), according to analysts assessing the company’s trajectory in 2023.

For example, Stifel told clients on Wednesday that General Mills ( GIS ) brand Blue Buffalo is likely seeking to roll out a product in the near future, noting the company’s move to trademark “Fresh Fridge-to-Bowl Dog Food” in a recent filing.

“We view the potential introduction as a modest negative for Freshpet, but also think it could accelerate refrigerated pet food category adoption, which our analysis indicates is a significant opportunity,” Stifel analyst Mark Astrachan said.

Mizuho analyst John Baumgartner also indicated his belief that the Blue Buffalo brand can be a leader in pet food in an initiation note on Wednesday. The economics of the business is also extremely attractive, in his view.

“Owners are “humanizing” pet purchases, through products with superior quality and natural ingredients, consistent with trends in food for human consumption,” he advised. “Reinforcing the Veblen nature, our surveys find that despite worsening inflation over the past year, spending on pets has been least impacted among a range of discretionary purchases.”

That said, Stifel analyst Christopher Growe provided a counterpoint to his colleague, building upon the caveat that General Mills’ ( GIS ) entry to the industry may not be as disruptive as many initially believe.

“We note that the distribution of a fresh product, even in light of General Mills’ strong presence in refrigerated foods, would be difficult and expensive against the strong refrigerated network and distribution for Freshpet,” he warned. “We believe this element of a fresh product launch could make it difficult for Blue Buffalo to gain scale and compete in this category segment.”

Read more on UBS’ recent upgrade of General Mills .

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