Q&A Interview with Michael Baker, President & CEO, PFX

Previously you mentioned that acquiring select assets of Animal Supply Company would expand PFX’s reach into the Southeast market—a long-term goal for PFX. As a result of the acquisition, what are some of the opportunities that have unfolded for PFX?

Our sales team executed a very well planned blitz this summer where we visited over 500 neighborhood pet customers in the SE market. This provided a nice opportunity to introduce PFX through face-to-face connections, build trust, and lay the foundation for building the strong relationships that we are known for.

From a vendor-support perspective, we have been incredibly grateful for the partnership and enthusiasm shown by our vendor community throughout our Southeast expansion. We intentionally took a measured, thoughtful approach to launch with 70 vendors out of our Suwanee distribution center—recognizing that geographic expansion decisions are significant and deeply considered for our partners. The strong support we’ve received reinforces that our entry into the Southeast delivers value for both vendors and independent retailers.

We look forward to sharing several additional vendor announcements in the coming months as we continue to thoughtfully round out our brand portfolio in the region.

At the core of it all, human connection remains the heart of who we are at Pet Food Experts.

In our last interview, we discussed how the acquisition would add refrigerated pet food to your portfolio, thereby strengthening PFX’s cold-chain capabilities. How has adding refrigerated pet food opened doors for PFX to form new partnerships with manufacturers and strengthened your position in the distribution segment? How is PFX adapting to the growing demand for fresh and frozen pet food?

We are proud to serve as the exclusive distributor of Freshpet within our service areas, alongside Nelson Wholesale, which covers Texas and the four surrounding states. Adding refrigerated capabilities to our assortment has opened the door to servicing our industry’s three largest chains, Petco, PetSmart, and PSP. 

We have launched a test program with Tractor Supply and Freshpet, with the shared goal of expanding access to fresh nutrition for more pet parents. We’re also looking forward to partnering with Freshpet to grow their brand in select neighborhood pet locations giving pet parents more opportunity to choose to feed fresh.  

With regards to adapting to the new temperature; PFX didn’t have even one industrial refrigerator twelve months ago. Today, we have cold-storage capabilities in 11 distribution centers, including two newly-built facilities in Rhode Island and Pennsylvania. We know the frozen and fresh categories are outpacing all other product categories’ growth and we are carefully monitoring our cold-chain storage capacity across our network. In fact, we’ve already identified several major cold-chain capital projects, which will be a combination of new builds and expansions of existing freezers and reefers. All of us at PFX believe that our fresh and frozen vendors are producing some of the absolute best pet foods on the planet and we intend to be the clear leader in cold-chain distribution for all of our customers, big and small!

How will PFX continue to expand without losing its center? How will you continue to balance growth with maintaining the company’s culture of industry leading service levels and partnerships?

At the heart of everything we do is a commitment to doing what’s right for people—and, ultimately, for pets. Our goal isn’t simply to be the largest distributor in the market; it’s to be the easiest to work with, the most reliable partner, the provider of the strongest brand assortment, and the standard for service excellence across the industry. Having grown up in this industry, I recognize and embrace the challenge of scaling our business, but never forgetting where we came from. We are committed to maintaining our company culture internally and externally, as it is something I am extremely proud of. 

In the coming year, where are opportunities for PFX within technology, logistics and automation? How will each of these facets streamline day-to-day business operations?

The biggest shift for us is moving from just using data to letting that data work for us. We’re in the early stages of utilizing Artificial Intelligence (AI) and that’s going to impact two key areas:

Order Processing: Today, too much time is spent manually reviewing emails, the occasional fax, and non-standard order formats. We’re training AI to automatically read, validate, and queue orders without manual intervention. This shift allows our Customer Experience team to move beyond data entry and focus on solving complex issues and supporting our retail partners at a higher level.

Document Management: Locating a specific document from months ago can be challenging in any high-volume operation. AI is enabling us to automatically tag, categorize, and file every document that enters our system—making records instantly searchable and dramatically improving efficiency, accuracy, and compliance.

From a logistics standpoint, our primary focus in the coming year is expanding freezer and cooler capacity across the network, including the rollout of internet-connected digital temperature monitoring to ensure product integrity at every stage of the supply chain. 

Additionally, we have already launched a beautiful conveyor line in Denver, PA, to drastically increase output in our new 3PL parcel business. We will quickly optimize the design and function and then roll out more conveyors across our other DCs where the volume justifies the investment.  

What is driving a growing number of pet distributors to consolidate? How will consolidations streamline and improve partnerships with manufacturers and retailers?

Industry and business experts have been pointing out the excess capacity in pet distribution for well over a decade. In fact, Central Garden and Pet led the earliest distribution consolidation efforts in the 90s including acquiring one of my family’s businesses called Rumford Aquarium (wholesale) in 1996! Animal Supply Co and Phillips Pet Food and Supplies acquired over 30 smaller distributors into their networks and had the best of intentions, not once but twice, to combine forces, creating a truly national and scaled distribution platform. Needless to say, it is harder than it looks to consolidate systems, operational networks, and especially company cultures at any scale. As the cost of doing business continues to be a challenge for all distributors of any size, further consolidation will be necessary to provide retailers and vendors with a supply chain that is stable and financially strong. PFX has been extremely transparent about the integration challenges we faced last summer and are still working hard to finish what we started as we wrap up Phases II and III of Project Phoenix.

I’m as confident as ever that the decision to acquire select assets of ASC was the right strategic move for PFX and I couldn’t be more proud of my team. 

As a result of our ASC transaction, we now offer a large volume direct to consumer/direct to vet 3PL parcel service for Royal Canin, a Mars PetCare brand. This is an extremely valuable and scalable capability for PFX which we expect to be able to provide to many of our other vendor partners in the future. Empowering our existing vendors to offer their products to pet parents will hopefully result in fewer brands choosing large scale e-retailers thus protecting more controlled and sustainable prices. This will be an invaluable win for our brick and mortar retailers. 

What would you attribute to the pet industry’s steady growth and unflappable resiliency?

People love their pets. Period. They treat their pets like family, like their children. Though the breeds are getting smaller, dog ownership remains strong and the number of cats in homes is growing. The continued humanization of pets continues to drive consumers to neighborhood pet stores in search of the latest innovative products, including fresh and frozen food and treats, the fastest growing categories in our industry for the past several years and for the foreseeable future.

How are retailers doing their due diligence to deeply understand their shoppers’ demands, offer the products and services their consumers want, keep shelves stocked with practical solutions and offer dependable expertise and guidance?

Neighborhood pet retailers increasingly rely on PFX and key vendors as strategic advisors. One of the main value propositions all distributors offer is our TSMs collaborating on identifying SKU, formula, and/or category gaps in product assortment, as well as pricing, competitive landscape, including brand channel shifts. Additionally, product training and vendor sessions to elevate their staff’s product knowledge is a journey that never ends as there are always new innovative brands entering our market. Finally, leveraging our insights and experience with store resets, expansions, and relocations.

Retailers are investing real time in understanding what their customers want. Daily, in-store conversations that surface pet parents’ shifts in preferences can provide a nice competitive advantage. Investing the time and energy into staff training that encourages asking open-ended questions, diagnosing pets’ immediate needs, and offering tailored solutions will create loyal customers and repeat purchases. 

They’re curating their assortments based on proven demand and trusted guidance. Retailers are becoming far more intentional about what gets shelf space. Leaning on distributor data, vendor insights, and category reviews to pinpoint high-velocity items. 

With a growing number of  manufacturers, such as Mars and Farmina, and retailers, namely PSP and Pet Valu, opening their own distribution centers domestically and overseas, including Brazil, how will this practice impact traditional distributors like PFX? 

I can only speak to Farmina’s recent investment in a state of the art new manufacturing facility in NC, which also includes an area to house finished goods. Although it technically is a distribution center, it is built to house finished goods and will provide significantly shorter lead time to wholesale customers like Pet Food Experts. Most of our vendors, especially the ones who manufacture their own foods, have a distribution center directly adjacent to their production facility (aka kitchen). This new facility will really help us and our retailers keep up with the growing demand for Farmina. 

As our customers choose to invest in distribution capabilities of their own, the one place we feel like we will always be able to help the industry is the cold chain, which is the most complex and expensive facet of the pet industry supply chain.