Quantcast
Edit ModuleShow Tags
Edit ModuleShow Tags

Keeping an Eye on Consolidation

Mergers and acquisitions at every level of the pet industry are inevitable, so it’s best to just stay abreast of the changes and adapt accordingly.


Published:

“The pet industry is recession proof.” “You can’t lose money dealing with pets!” “People will cut their own spending before spending less on Fido!”

I’m sure you have all heard those lines tossed about, and if you look at all the acquisitions and mergers in our industry, you might come to believe it. When I started my business, I had one primary distributor. That distributor had about 80 percent of what I carried in my store. A few years later, there were four primary distributors serving my store, each with about 20 percent of what I sold. In a few more years, most of those distributors had been purchased by other distributors. I’m down to two distributors serving my store, and they are the two distributors that seem to be buying up everyone.

For the most part, these distributor mergers and consolidations have little effect on my business. I can still get the product that I sell, but I might not have the luxury of getting a brand from two different distributors because of exclusive territories. I also don’t know everybody in the office anymore. Those distributors have call centers in other states and lots of departments. The days of walking into the distributor’s office to say hello to the owner are probably gone.

What’s important for us micro independents to keep in mind is that we need to stay up front with our distributors and manufacturers. Typically, micro independents are “influencers;” they tend to influence the pet market beyond the area that their store is in. For example, many micro independents will appear on local media as a pet expert. They also will be part of local pet events and contribute to the pet community in their geographic areas more than a large chain or big-box store might. When manufacturers know a micro independent is influencing the market, they are more likely to support that micro in ways that extend beyond what their “spreadsheet of sales” might dictate.

A lot of the products a distributor handles do not have an area sales rep, or they have a sales rep who visits only once or twice a year. There is no way this representative can fully understand your business from just one or two visits and looking at your sales. In the old days, the distributor really was your spokesperson to the manufacturers. They could help manipulate deals, advertising dollars and more. The problem with bigger consolidated distributors is more territory, less reps and more automation, which means less personalization for the micros.

The hunt for more of these golden pet dollars has led to consolidation in other segments of the overall pet industry as well. How many pet foods have changed hands in the past 10 years? Procter & Gamble Co. bought Natura Pet to add a holistic component to its massive pet food line, and then turned around and sold all of its pet line to Mars. It appears Mars wants all the dollars, because it just didn’t stop with foods. It also bought VCA Animal Hospitals, and with that purchase, it became the largest owner of veterinary hospitals in North America.

One might think that’s about it for major industry moves—distributors, pet food manufacturers and veterinary care. What else could be happening? Well, you forgot about the ingredient suppliers. Archer Daniels Midland (ADM), an ingredient supplier, is acquiring Crosswind Industries, a manufacturer of pet food and treat products. ADM sells to 70 percent of all pet food companies in North America, so now it can also make the food it has the ingredients for. Performance Pet, a canning facility, was acquired by Farmers Union Industries, a feed/grease/byproducts company. Interesting mix there.

Acquisition and consolidation isn’t just for the major industry players; it affects brick-and-mortar as well. Jack’s Pet in the Midwest was purchased by Pet Valu, and there was talk that the company would open up another 100 locations in the Midwest. Pet Valu is already huge with something like 500 stores in North America. You don’t have to have 100 stores to acquire more, just take a look at Bentley’s Pet Stuff. It has acquired at least half a dozen locations and opened many more. Bentley’s is unique because it did get some help and guidance from the investment TV show “The Profit” to the tune of more than a million dollars.

These are just some of the mergers that have crossed my news feeds in the past couple years. I’m sure there have been many more because everybody wants some of that “recession-proof money.”

Mergers/acquisitions/takeovers are probably always going to be a part of this industry and really present another opportunity to make loyal customers. I talk about the different changes in brands on my social media and in my store. I want people to know a company they have been loyal to might not be the same company anymore. I want people to know when a food has switched manufacturing locations. I let them know if I think it’s a good or bad thing. More important, I let customers know that they don’t have to worry about these changes in our industry because they are buying at my store. I am staying on top of these changes, and if I think the change will affect the safety or quality of a product, I won’t carry it anymore.

Edit ModuleShow Tags
Edit ModuleShow Tags
Edit ModuleShow Tags
Edit ModuleShow Tags
Edit ModuleShow Tags
Edit ModuleShow Tags
Edit ModuleShow Tags
Edit ModuleShow Tags
Edit ModuleShow Tags