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Three Generations of Growth

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When Blaine Phillips graduated from a Florida college in 1981, he came back north to Pennsylvania to work in the family feed store founded by his grandfather.

He wasn’t just the third generation to enter the business. He represented another spur for the business’s growth. His father, LaVern, after all, had opened a second store soon after he joined the company in 1956.

But by the 1980s, further growth in the agricultural market was unlikely, at least in the Lehigh Valley where Phillips Feed & Service was based. The region’s farmers were selling land to developers, and suburban communities sprang up where cattle once grazed. Newcomers were pouring in from the suburbs of New York and Philadelphia.

The key to growth, however, was already on the shelves. Phillips Feed sold pet food in addition to cattle and livestock feed, and Blaine Phillips saw an opportunity for manufacturers to sell in more stores than they already were.

“That’s kind of what propelled us into that,” Phillips said.

So, in 1984, with nine employees and 2,000 square feet of warehouse space, Phillips Feed launched into the distribution business, serving retailers in a 25-mile radius.

It wasn’t an easy go. Pet supply distributors had first emerged in the 1960s and 1970s, so the competition was stiff. “We had to fight and struggle to get vendors to support us, because they already had a well-established network,” Phillips said.

But the company did find vendors willing to give it a chance. And Phillips and its employees were willing to put in the work needed to make the relationships succeed.

“We like to build things, and take some chances and risks along the way,” Phillips said.

Thirty years later, Phillips Feed & Service is now Phillips Pet Food & Supplies. And its staff has mushroomed into an employee base of roughly 1,500, serving markets around the country.

“Am I surprised where it is today? The answer is yes,” said Phillips. “When you’re in it day in and day out, you kind of lose track of how the evolution occurred. I’m really proud of the team, and what we’ve accomplished.”

Roots in agriculture

The evolution began in 1938, when Ralph O. Phillips opened Phillips Feed & Service, a grist mill in rural Germansville, Pa., about 15 miles
northeast of Allentown.

Phillips had worked in the mill before buying it, and knew the ins and outs of the business. He served the region’s farmers with feed, fertilizers and seed. Deliveries were made by horse and buggy.

When his son, LaVern, joined the business in 1956, he knew it would have to grow to support two generations. So in 1959, LaVern Phillips opened a second retail store, in Bath, about 20 miles east of Germansville.

The retail business eventually grew to include four stores. But the real growth came when the company switched focus.

Seeing an opportunity

Blaine Phillips joined the company
in 1981, after earning a bachelor’s degree in business administration from Fort Lauderdale College. He already had an education in the feed business, answering phones, driving trucks, and doing whatever else was needed.

One thing that was needed was a new direction. The agricultural business was declining in the 1980s as farmland gave way to suburbs. But those suburbs housed more than two-car garages. They also sheltered a growing pet population, and those cats and dogs did not escape the notice of Phillips Feed.

The company stocked pet food, and could see what products sold—and what could sell even more. Thus was born the idea to break into distribution.

“Phillips has always been one that’s been willing to say, ‘I’m going to try this and I think we can be successful at it,’” Phillips said.

Phillips started with a handful of trucks and one product line, comprising 30 to 40 SKUs, or stock keeping units. Monthly volume averaged about $5,000, Phillips said.

The agricultural side of the business continued through the late 1980s. In 1991, however, Phillips decided to concentrate on pet food distribution.

“That was one of the first turning points, to really focus on this,” Phillips said.

A move south

The 1990s were an era of expansion for Phillips Pet Food, but not one without pain.

It started in the early 1990s with some small acquisitions to build out the company’s presence in eastern Pennsylvania. Then came an even bigger opportunity, one more than 1,000 miles south of Phillips Pet Food’s Pennsylvania headquarters.

A distributor in Lakeland, Fla., was up for sale. A vendor approached the Phillips family about taking it over, Blaine Phillips said. The vendor knew he had gone to college in Florida, and might be interested.

“They were right,” Phillips said.

While intrigued by the offer, the company was concerned about finding the right people to run the remote location, Phillips said. “There’s no way you can manage a facility from Pennsylvania when it’s in Florida,” Phillips said, noting the company eventually hired a man named Rex Richards, who remains with Phillips Pet Food today.

The Florida operation was up and running within 60 days of when Phillips first learned of the opportunity, Phillips said. But it was more than a geographic leap. It also laid the basis for future growth.

“It was really a commitment … that we made that if we’re going to grow this business, we have to really be committed to go out and hire people that are going to be talented and can really strengthen
the bench of the organization,” Phillips said, noting employees have been a vital ingredient in the company’s success.

The company’s next move took a little longer to get right.

In the late 1990s, Phillips Pet Food hoped to break into the Atlanta market. But it turned out to be an overly ambitious step that nearly broke the company, Phillips acknowledged.

Indeed, by 2000, the company was on the verge of bankruptcy and had to pull back on its expansion plans, Phillips said. Employees, vendors and customers stuck it out, and the company eventually gained some breathing room

“There’s a lot of good things that come out of growth and expansion, but you have to be careful of pitfalls,” Phillips said.

The company eventually returned to the southeast in 2006 after opening a distribution facility in Spartanburg, S.C., then the company’s third warehouse.

Full steam ahead

In the late 2000s, growth accelerated. The company pulled off successive acquisitions starting in 2008 that, six years later, have positioned it as a national distributor.

Super-Dog Pet Food Co., based in Leola, Pa., was among those acquisitions. But when it was acquired in 2010, it brought more than territory. Super-Dog’s CEO, Fred Schober, joined Phillips Pet Food as COO.

Phillips Pet Food now counts 13 full-service warehouses, as well as additional facilities, delivering products in 35 states. In 2013, the company added a new niche, aquatics, after purchasing Royal Pet Supplies, which had operations in Florida and New York.

While Phillips Pet Food has evolved over the last 76 years, so has the pet food industry. It has grown into a $58 billion market with thousands of brands and products on store shelves. One of the most significant changes, Phillips said, is the tendency among pet owners to humanize their animal companions.

Many people now think of themselves as pet parents, not just pet owners. And like parents everywhere, they want only the best for their children.

Distribution, meanwhile, remains relatively fragmented, Phillips said.

Among the company’s goals is developing the ability to offer the same product set in all its locations, Phillips said. “Our customers want a simplified distribution channel.”

The industry isn’t quite there yet, he said. But, he added, Phillips Pet Food is well-positioned for its continued evolution.

“It really is a team that kind of says ‘OK, we’re ready for the next challenge,’ and away we go,” Phillips said.

-Joel Berg

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