Blue’s Initial Public Offering (IPO) is set to be the biggest deal and the biggest flop on Wall Street this July. The problem with Blue Buffalo is, they just can’t seem to stop bullshitting consumers and potential investors that their food is all that when the Buff is actually all fluff.
Blue Buffalo emphasizes in its advertising and in its SEC report that it doesn’t use chicken or poultry by-products, which are inedible poultry parts like eggshells or intestines processed into pet food.
But, those boastful claims came back to bite them in the ass when the company was forced to admit last month in a lawsuit with Purina that “a ‘substantial’ and ‘material’ portion of Blue Buffalo pet food sold to consumers contained poultry by-product meal.”
Blue’s niche was that they claimed their food was better than the plain-old, run-of-the-mill pet food brands like Purina on the market, but when Nestle-Purina had Blue Buffalo’s pet food tested – guess what they found.
It turns out – that their food was not niche or natural after all. And that, pissed-off not only Purina, but also all the pet parents who believed their marketing bull. So, Purina sued Blue Buffalo for false advertising and so did allot of pet parents.
Incredibly, right in the middle of this epic battle between Blue Buffalo and Purina, which played out in the glaring eye of the media, Blue Buffalo applies for a NASDAQ listing under the ticker BUFF.
Of the upcoming IPOs for July, BUFF is the largest deal. Its IPO deal size is over $500 million, which would immediately place BUFF in the large-cap category. The price range for a share of BUFF when it hits the market is $16 to $18.
But, investors probably won’t be buying into it, because word travels fast if your product isn’t what you advertise it to be. A market analyst blasts Blue, by saying:
…when BUFF lies to their customers and tries to conceal that their one unique selling proposition is a farce, they are likely to lose the customers that would otherwise have been lifetime customers.
In marketing, word-of-mouth is the largest influencer. Blue Buffalo is going to have to scramble fast to try to repair its rumpled image, before they can expect to grow, and not continue to lose, their customer base.
Blue Buffalo is all about image – not price or convenience, and if investors think consumers aren’t buying Blue’s bull, then it will affect their share price. One analyst predicts that Blue’s share price will tank, falling $17 to $8 by 2017.
The battle against negative word-of-mouth will be a torturous uphill climb for Blue Buffalo, because attempts to repair their image will have less effect over time, negative word-of-mouth will snowball.
And with customers suing Blue Buffalo left and right and using social media to voice their complaints directly to potential and current customers, Blue Buffalo hasn’t a hope in Hell of ever recovering their, once stellar, reputation.