This color is called 'Fawn' in the Kelpie breed and Lilac in the Border Collie breed.
The fawn color is often times mistaken to be blue or even cream. When in doubt,
look at the NOSE color. The fawn will have a rosey-brown with a slight grayish tint
colored nose. The blue will have a gray to dark gray [almost black] nose.
The fawn color is a result of the brown ("b/b") pigment being affected by a dilution
("d/d") gene. The dilution gene is found on the "D" Locus. When the "D" allele is in
the homozygous form, "d/d", it dilutes eumelanin (black) pigment to a grayish or
bluish color. It also lightens and dulls phaeomelanin (reds and yellows) to a flat or
silvery shade of yellow to red color.
Skin pigment will also be a lighter color and the iris's may be a lighter brown, amber,
gold or gray.
The coloration is achieved by breeding together dogs that carry the dilution gene
either in it's homozygous or heterozygous form; ("D/d" or "d/d") and the chocolate
gene ("B/b" or "b/b") either in it's homozygous or heterozygous form. The resulting
offspring's genotype for fawn would be b/b d/d (brown + dilution).
Black to black, or black to chocolate, or chocolate to chocolate, or a black to blue,
or blue to chocolate (with or without tan points) can produce fawn colored offspring
--- IF the genes pair correctly and IF they are both carrying the recessive form of
the "B" and "D" gene (which is "b" and "d" respectively).
The fawn color is the result of two recessive genes, therefore; the pup could be
affected with Color Dilution Alopecia (a skin condition). Not all are, but many do
have some form of a skin/coat condition.