By Graham Garrison
April 9, 2019
Kevin Speltz has seen quite a bit in his 38 years in the animal health business, and he believes the best is yet to come.
For Kevin Speltz, the work has always been about the team. When Speltz, president of Clipper Distributing Company, got wind of a party to celebrate his three decades with the company, he instead requested that it be modified to celebrate the company’s 30-year
anniversary, as well as its founders.
“Nobody does this stuff in a vacuum,” says Speltz, who has worked in animal health for 38 years overall. “It’s the team and the people you work with.”
Vet-Advantage recently spoke to Speltz about his team, the people he’s worked with in the industry, as well as what trends have had the biggest impact on animal health during his career.
Great people, great opportunities
Speltz has been involved in farming and animal health his entire life. The oldest of six siblings, he grew up in southeast Minnesota on a dairy farm, and balanced the rigors of chores with recreational activities involving horses, motorcycles and snowmobiles. “We worked hard and played hard,” he says. “We were always outside and active. We had one Sunday afternoon off per month since the cows had to be milked every day.”
Speltz received his Bachelor of Science degree from the University of Wisconsin-River Falls and later an MBA from Benedictine College in Atchison, Kansas. During college he drove a milk truck and worked weekends to help pay his tuition. After graduating from college with a degree in animal science and broad area agriculture, he went to work for Bill Eidson at Eidson Associates for two years as a dairy specialist in tech service. He then landed a job with Bob Hormann at Durvet for six years. Following his stint at Durvet, Speltz switched from the OTC side of the business to the veterinary side when he went to work for Wes Remington, who started Phoenix Pharmaceutical.
“I have been fortunate to work with so many great people over my career that have taken me under their wing to teach me,” he says. “To name just a few of the key people in distribution would be Bob Hormann with Durvet, Wes Remington with Phoenix Pharmaceutical, Tom Kruse from Iowa Vet, Dr. Robert Hummel from Lextron/Animal Health International, John Webster Jr. of Webster Vet, Dave and Steve Buck from AJ Buck, Dr. Robert Flickinger of Midwest Vet Supply and numerous sales managers and operation managers in those companies. There is not enough room in your magazine to name them all.”
Remington had founded several companies through the years, and had just sold one of those companies, Tech America, before starting Phoenix Pharmaceutical. At Tech America, Remington had worked to get the generic drug bill in process and approved for animal health.
Remington was a visionary, Speltz says. “The guy could see things happening before other people. He was great at positioning companies and products to take advantage of [market shifts].”
With Phoenix Pharmaceutical positioned as a distributor buying group, Remington started a sister company called Phoenix Scientific to manufacture generic drugs. “In ten years, Wes grew that to be the largest generic drug manufacturing facility in the industry,” Speltz says. “We sold it in 2002.”
After Phoenix Scientific was sold, Speltz, who was now running Phoenix Pharmaceutical, thought a name change was in order to clarify the companies’ different offerings. Thus Clipper Distributing was born.
Phoenix Pharmaceutical had predominately been large animal oriented with antibiotics and fluids products. But with feedlots getting larger and more veterinarians being hired on staff at the facilities, Clipper steered toward the companion animal side of the industry. “That’s when the heartworm products, flea and tick products started coming that really expanded the small animal business for veterinarians,” he says. “It brought in so much revenue. We transitioned to that market because we could see it growing.”
Doing things right “the first time”
Today, Clipper is a dynamic company operating at the master distributor level of the animal health industry. Clipper offers logistic solutions, marketing support, and direct consultation service to its customer base of over 50 manufacturers and all major animal health distributors in the United States.
“The success we’ve had is all due to the team in here,” says Speltz. “I would put our team of people up against anybody in the industry. In my mind, they’re that good.”
The second thing that’s helped Clipper over the years is the relationships with the distributors and manufacturers. There’s quality and professionalism in those relationships, he says. “We’re fortunate. We’ve got good chemistry. We like each other and work well together. We have a lot of fun doing this.”
From a logistics capability, Speltz says he and the Clipper team are very proud of their metrics. Clipper currently ships to over 70 distributor locations on a weekly basis, shipping millions of pounds annually with “an accuracy rating of over 99.97 percent; we strive to do things right the first time.”
However, Speltz says Clipper is much more than a logistics provider. “We utilize our own learning management system to communicate and train salespeople, telemarketing and distributor management on new products, promotions or other communications that we share with them. We supply field training support with our outside reps, inside telemarketing training support with our dedicated inside team, and marketing/promotions services in the product lines we specialize in.”
Clipper offers manufacturers of all sizes access to distribution and economies of scale that they could not accomplish as easily on their own, Speltz says. “We understand the issues and challenges faced by both manufacturers and distribution. We work with both entities to creatively solve problems to keep their business moving forward.”
Metrics are a big part of Clipper’s focus and business philosophy. “Our primary focus is to help distributors increase their gross profit dollars in addition to sales dollars,” Speltz says. “We use a proprietary, activity-based costing model that we developed in-house to help us determine the best opportunities to focus on with each distributor.
“We are fortunate to work with great companies and great people,” Speltz continues. “I enjoy waking up and going to work as I have the privilege of working with such a great team.”
Shaping the market
Speltz says the industry has grown and changed tremendously in the last 38 years. Among the major trends:
The rise of preventives. The heartworm, and flea and tick products have been a major driver of revenue and growth for clinics, he says. “Pet owners and their pets have been major beneficiaries of these products. Going from daily treatments to monthly treatments was a huge benefit that helped expand this market tremendously.”
Generic drugs. In 1987, Wes Remington funded and sponsored the generic drug bill for animal health. “Since approval in 1989, numerous drugs have come off patent. With the generic approval of these products, they have become more affordable, especially in the food production side,” Speltz says.
Consolidation. “I have worked with almost 60 distributors, most of which were first- or second-generation family owned businesses. Over the years we have seen consolidation at all levels of the industry. Now the three largest distributors are multibillion-dollar companies, publicly traded on the stock market, and have significant market share individually and collectively.”
Diversity. The number of women in the industry has grown dramatically, Speltz says. “Thirty-eight years ago this industry was essentially all male,” he says. “Now, 80 percent plus graduating veterinarians are female. Women are now working in all areas of the business. This trend has been very positive for our industry.”
Nutraceuticals. These have grown into a major segment of the business. “Products now have studies and science behind them rather than testimonials,” Speltz says. “These studies have helped this sector grow and provide veterinarians alternative treatment options.”
Emergency and specialty veterinary clinics. Emergency clinics and specialists have proliferated over the last 20 years. “This has given pet owners so many more options than they used to have. Veterinary care is now available 24 hours per day in many areas of the country.”
Great things are happening
In today’s culture, Speltz says we are being bombarded by negative headlines and events from all types of media. Negativity is what sells and attracts attention. “There is less civility and respect for others now compared to the past.”
We are accustomed to so many people complaining and looking at the negative side of issues, Speltz says, that we rarely hear anyone talk about the good or positive side of life. “Great things are happening every day in our local towns and communities, we just do not talk or hear about them enough.”
Great things are happening in animal health, as evidence by the industry’s rapid growth. When you look at the human-animal bond, and the emotional responses that pets generate in people, it is easy to see why this market is so attractive to outside companies, Speltz says. “It is very attractive to other companies. Private equity and a number of companies believe our industry is more recession resistant compared to so many other industries. Companies, banks and Wall Street are looking for opportunities to invest in our space.”
Demographics are driving changes. Millennials look at pets as their practice children. “They are willing to spend more money on their animals than any other generation. They expect the same level of care that they get from human medicine. Millennials will drive change as companies develop additional services and products to earn their business.”
Speltz says he expects the speed of change will continue to increase. “Where there is chaos, there is opportunity. We have to accept and embrace change as a major driver of our business.”
“Large animal production industry feeds so many in the world today,” he continues. “With the projected population growth, we will need to continue to increase our protein and crop productivity on a per acre basis. The world is depending on us to make this happen as we have the technology and the drive to make it happen.”
With the expanding population comes the need for more pets and the need to keep them healthy and living longer. Speltz says that when you see a child or a senior adult smile as they hug their favorite animal that is no longer sick or injured, how can you not feel a satisfaction that you helped make this happen?
“We are in a great industry,” he says. “I encourage you to look at all of the good, positive things that each person adds to the growth and success of animal health.”
Successful distributor sales reps share some key attributes, says Kevin Speltz, president of Clipper Distributing. “They are dedicated to doing what is best for their customers. They work harder than anyone realizes. They are constantly learning and improving their technical knowledge and their skills.”
Speltz says he has worked with hundreds of outside reps and inside reps/telemarketers over the years. “When you watch how the best reps do their job, it is like watching a professional actor or athlete,” he says. “They make every task look easy and effortless. They have so much information memorized that you wonder if they have a photographic memory. They have a wealth of knowledge about so many products, equipment and instruments, that are used in all areas of veterinary medicine.”
Speltz says one great example of a successful rep is former AJ Buck and Son rep Sid Trump. “He would go into the office every Sunday evening for 3-4 hours to take orders from his veterinarians as they had time to talk on Sunday night rather than during the week when they were busy working,” he says. “When I traveled with Sid, we were on the road by 6 a.m. We made calls until 9 or 10 p.m., often going to the homes of the veterinarians when their office was closed.” To save time, Speltz says Sid would cook meals in tinfoil on the manifold of his car so he didn’t have to stop at a restaurant.
Twenty plus years ago, Mastitis tubes migrated to the OTC channel from the vet channel, profit margins and commissions dropped dramatically. However, in one year, Sid was able to replace over $1 million of Mastitis tubes with $1 million plus of more profitable items like vaccines, antibiotics, etc. “Sid simply asked his clinics to give their Mastitis business to his competitors and in return Sid asked that certain products be ordered from him.” Many of his accounts agreed to do this as they felt they were being fair by spreading the business around to other distributors.
“There are so many great reps that have these type of success stories that I have had the privilege of working with, they make this business fun and memorable,” Speltz says.
Healthy manufacturer-distributor relationships
Today, Speltz says we are seeing more product line extensions from manufacturers, rather than new product offerings, due to reductions in their R&D budgets and the regulatory challenges for new product approvals. “Combined with more competition, more product duplication, private labels, selling prices and margins are decreasing,” he says. “As profitability drops, then relationships between manufacturers and distribution become strained as both sides get frustrated with each other.”
However, when both entities work together and make firm commitments to each other, good results tend to happen, Speltz says.
“When a manufacturer comes out with a great new product, they work closely with distribution on strategy, goals and sales strategies to launch and grow the new product. When sales goals are met, distribution tends to be well rewarded, especially the first year or two.”
Speltz says that in the last 10 to 15 years, distributors have moved to become full service suppliers that carry all product lines to serve their accounts. With many distributors having the same product offerings, it is inevitable that prices and margins will decline.
“In the future I believe we will revert back to partnering up with select companies. Manufacturers will again choose to do business with select distributors rather than all of them, or distributors will decline to carry the product line of some manufacturers. When we return to this model, I believe it will be healthier for distribution, as they will be able to show their manufacturer partners how effective they can move market share when properly motivated to do so.”