Finding value in your distribution partner – full circle
A few weeks ago, we reported on the decision of Elanco to restructure their operations, with a shift in resources from farm animal to pet health operations. As part of this restructuring a reduction of 420 jobs is envisioned.
Less than two years ago, a similar shift occurred at Boehringer Ingelheim Animal Health.
These changes in focus from leading veterinary pharmaceutical manufacturers, may result in several possible opportunities for companies serving the markets, where focus and resources are being removed.
One direct result is loss of voice to the ultimate user of the product.
Enter the livestock distributor partner.
Distribution in the livestock segment has had to navigate major challenges during the past decade, from major manufacturers going direct to end consumer, the pandemic and the entry of an array of generic products, putting pressure on margins.
How did they manage to survive, and in many cases, thrive during this period? By changing with the times and doing some basic things really well. Distribution companies expanded through increased footprint by acquiring historic competitors, improving sales force efficacy and starting or significantly expanding private label offerings. This strategy, did in some cases set them up as a competitor to a manufacturer.
We are now entering a period where livestock distribution partners will be required to get product to the end customer again. The livestock product manufacturers who provide a successful business proposition to their distribution partner, may yet be the group to grow and be successful, especially when the cattle and swine cycles improve.
Lourens Havenga
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