This article was published in the November 2023 issue of Pet Food Processing. Read it and other articles from this issue in our November digital edition.
Ruben Martinez knows his business. If you ask him, he might say it’s all he knows. But that certainly isn’t a bad thing. It’s that knowledge base that stems from his 38 years in the veterinary dermatology and nutritional supplement business that’s led the company he founded, Custom Veterinary Services, to its growth and success.
Custom Veterinary Services (CVS) is a contract manufacturer of nutritional supplements, medicated dermatological pet supplies and grooming products based in Miami. While the roots of the company go back to 2005, a capital investment and partnership with Align Capital in 2021 helped take the company to the next level with a new production facility, expanded product lines, and strategic direction for the future.
The Martinez family — (from left) Ruben (RT), Madelaine, Ruben and Rene — work side by side in the daily operations at Custom Veterinary Services.
|Ruben, founder and president of CVS, started working in the industry for Dermatologics for Veterinary Medicine (DVM) in 1986. The company was considered one of the pioneers of veterinary dermatology, first producing dermatological products and later producing soft chew supplements. Ruben worked for DVM for 20 years, soaking up as much knowledge about the industry and the segment as possible.
“That’s where I learned the trade,” he said.
In 1992, the company was sold to IVAX Pharmaceuticals, a larger human pharmaceutical company, which years later moved its operations to St. Joseph, Mo., after its purchase of Phoenix Scientific’s animal health division. It was at this time that Ruben chose to keep his family in Miami and go out on his own.
After working on the consulting side for a couple of years, Ruben moved into manufacturing in 2007.
“I wasn’t able to get my customers the product they wanted on time, so in 2007, I started manufacturing in order to meet their needs,” he said.
Starting with a small 5,000-square-foot product bay and 1,000 square feet of office space, Ruben began producing what he knew best — dermatological products. About a year later, he added soft chew supplements to his product offerings. Within two years of starting production, he doubled his manufacturing space to 10,000 square feet, and in another couple years, doubled it once again to 20,000.
By this time, the business was operated by the full Martinez family. Ruben’s wife Madelaine, and two sons, Ruben (RT) and Rene, all took on various roles including accounting, human resources, product development and operations.
“It’s been a family business from day one — everyone has contributed in a significant way,” Ruben said.
“It’s been a family business from day one — everyone has contributed in a significant way,” Ruben said. “It is a special thing to be able to build a business alongside your wife and kids, and I was blessed to have that privilege. My oldest son RT has been at my side from the very beginning when we just had one kettle and one computer. I could not have done it without him. We love our kids; they have always been the source of our inspiration.”
By 2014, with space maxed out in their existing facility and business booming, thanks mostly to one large customer, the company decided to expand. So, Ruben bought another building, gutted it, and set up new production in May 2016.
Then the business took an unfortunate turn. The company lost its largest customer — and with it 60% of its overall sales. But instead of letting this setback take the company down, Ruben and his family used this opportunity to make some changes that eventually led to more customers, more products and more sales.
“Looking back, I think it was the best thing that ever happened to us,” Ruben said. “Losing that one customer forced us to make some changes… we made it up in one year and ended up with a healthier business.”
Rene, vice president of business development, and RT, director of supply chain, contributed pivotal ideas for how to evolve the business to bring in a more diverse set of customers, including additional product offerings, updated marketing materials and a newly designed, customer-facing website.
“We ended up diversifying and strengthening the business for the long run,” Rene said.
Capital connections
“After we moved into our new facility, the business took off from there — and we haven’t looked back once,” Ruben said. “From 2016 until 2020, and COVID, we were just trekking along in a steady way, continuing to grow. When COVID hit, everything just exploded.”
The demand for pet food, treats and supplements went through the roof in 2020, as pet ownership increased during the pandemic and awareness of pet health rose.
Soft chew supplements are packaged in jars and pouches in the packaging room.
|“Like a lot of manufacturers, we weren’t able to keep up with demand,” Ruben said.
In an effort to satisfy that demand and continue to grow the business, the Martinez family made a group decision to take on a private equity investor in order to provide capital for their next necessary facility expansion.
“The Martinez family started a search for an investment partner in Q4 of 2020,” explained Worth Turner, current chief executive officer of CVS. “They wanted to find a capital partner to help them facilitate the next phase of their growth and expansion. They were not looking to simply ‘sell’ the business — Ruben is still the largest individual shareholder at the company. In fact, all four family members are still very active in the business.”
After a plethora of meetings, interviews and due diligence, Custom Veterinary Services chose Align Capital as its investment partner and finalized its partnership in March 2021. During the course of selecting Align, Turner came on board as the company’s CEO, as well as the second largest individual investor in the company.
“Align introduced me to CVS and I was planning to join just as an investor, but as I got to know Ruben and the family better, I knew that I wanted to be more involved in the company’s development,” Turner said. “It was a mutual decision and partnership from the very beginning. I feel very lucky to have the opportunity to partner with the incredible investors at Align, the loyal, hardworking employees at CVS and, importantly, the Martinez family.
“I saw a business with an incredible foundation and a resolute focus on quality, integrity, and the success of the customer,” he added. “The company believes, as I do, that the role of a contract manufacturer is to be an extension of the brand.”
Custom Veterinary Services’ employees commit to sharing the company’s Core Values: “We do what we say. We get better every day. We work and win together. We are relentless about customer success.”
|Soon after the partnership was inked, the company started looking for its next production location because expansion was imperative — it had long outgrown its 55,000-square-foot legacy location. Align partnered with the team to source a new 150,000-square-foot site in Hialeah, Fla., just a few miles northwest of Miami. As the first tenant in the newly constructed space, CVS was able to custom design the layout and infrastructure of the production facility. The lease was signed in July 2021, warehousing moved in by late 2022, operations began in February 2023, and the company was fully transitioned to the new location by April 2023.
“They [the Martinez family and CVS] were well positioned with their reputation and we just needed to supplement it with some resources,” Turner said. “With Align’s unwavering support, we were able to invest in a new facility, build-out a whole new team, add some new automated equipment and a new software system.”
The company, which had to lay off a number of employees after losing its primary customer in 2014, expanded from 50 employees in 2016 to around 130 in 2021. Now, it employs more than 225 people who hail from 14 different countries.
As members of the Custom Veterinary Services team, those 225 employees all share the same core values: “We do what we say. We get better every day. We work and win together. We are relentless about customer success.”
Customizable co-manufacturer
One of the keys to the next phase of growth at CVS was building customer partnerships.
“When we sat down in 2021 and started looking closely at the business, we all agreed not to try to be everything to everybody, but rather focus on being the right partner to our customers,” Turner explained. “As we went through that process, we knew we had to focus on our core customers. We had to transition some that we weren’t the best fit for or weren’t the best fit for us. And now our focus is really on growing our partners.”
“We are probably one of the only manufacturers who doesn’t have its own brand,” Rene added. “We’re building our company for our customers and our pets as the beneficiaries.”
Not having a single CVS brand makes the company unique in the industry, and uniquely able to focus on the customer’s needs without having to worry about internal brand competition and redirecting resources to in-house needs.
“We are transparent with all our customers in our formulations, materials, timelines and pricing — and we are focused on serving our customers,” said Worth Turner, CEO of Custom Veterinary Services.
“We are transparent with all our customers in our formulations, materials, timelines and pricing — and we are focused on serving our customers,” Turner said. “We chose not to compete with our partner brands… We focus on what we know and invest heavily in getting better at those core capabilities.”
CVS offers its customers customizable product solutions. Whether it’s a new soft chew, nutritional powder or liquid topper on the supplement side — or a range of topical solutions on the dermatological side — the company’s business development and R&D teams work with new and existing customers on developing products that directly meet their needs.
“The customization is a big selling point for us,” Rene said. “We’re not just selling mimic, off-the-shelf products. We’re going to customize it to what they want to put on the market.”
Ruben added, “The key to growth for any business is you need to have innovation — without it you won’t get double-digit growth. That’s how our business has really grown, by building on existing relationships and creating new, innovative products for all our customers.”
Some customers enter the partnership equipped with a product idea and the R&D team works to develop the final stages of the formulation. Other times, the process starts from scratch with a brainstorming session and CVS guides the innovation from start to finish.
“We’re working with the brands to make products that are very customized,” Rene said. “We work with them on the active ingredients to cure ailments. We also work with them on the inactive ingredients — the flavors, shapes and packaging.”
After developing a product prototype, samples are made in-house and tested. Following final approval, production can begin. From the first conversation to production could take between three to nine months depending on the level of customization needed.
Custom Veterinary Services’ soft chews can be extruded into a range of shapes including dog bones and hearts.
|“We don’t charge for our R&D, but we invest a lot of time in it,” Turner said. “R&D is a big dollar line item for us, because we see it as a differentiator and absolutely critical for our customers’ success.”
As a result, CVS chooses its partners carefully.
“We have to make sure that anyone who comes into our lab is someone we really believe in,” Turner said.
“Our customers aren’t looking for just a toll manufacturer, they want someone to push innovation, to push speed, and flexibility,” RT said. “They want a partner who can solve problems for them, who can get products to market and keep them fulfilled — someone who offers customizable innovation.”
Plant expansion
Expanding from a 55,000-square-foot facility to 150,000 square feet of space provided the infrastructure needed for the company’s current capacity, in addition to space for potential growth down the line. The new plant features 30,000 square feet for processing, 30,000 square feet for packaging, 75,000 square feet for warehousing, and 15,000 square feet of office, laboratory and ancillary space.
“We built this facility to be the best long-term home for our customer partners,” Rene said.
In the receiving warehouse, all materials are quarantined upon arrival and tested for quality and product verification. Ingredients then move into either the liquid manufacturing room — in which shampoos, sprays, wipes and lotions are made on six production lines — or the food manufacturing room where the supplement products are produced. The company produces cold extruded soft chews, powders and liquid nutritional toppers on the food production side.
To make the soft chews, ingredients are combined and mixed to make a dough, then extruded into shapes.
“We can pretty much make any shape with the extruder — bones, squares, triangles, hearts,” Ruben said.
CVS uses a cold extrusion process for its soft chews. Cold extrusion involves manufacturing and extruding without the addition of high heat. While many manufacturing processes use extreme heat as a kill step in their production, heat often kills the nutritional value of beneficial ingredients in the product.
After the dough is mixed, it is extruded into various shapes and conveyed onto trays for drying.
|“We utilize a cold process to preserve the maximum efficacy of our beneficial ingredients and ensure all benefits are conveyed to our pets,” Turner said. “Further, the cold process significantly reduces the carbon footprint of the manufacturing process. It requires a tremendous amount of additional work for us in our process controls, testing and food safety efforts, but in the end, we view that effort as worth it to preserve the maximum efficacy of our beneficial ingredients and reduce our overall environmental impact.”
After extrusion, products are tested in the lab to ensure they meet required water activity, texture, viscosity and organoleptic quality standards.
Product that passes quality inspection moves on to packaging. There are various packaging lines that fulfill customer orders into customized jars and pouches of different sizes and colors. While CVS does not handle marketing and branding for its customers, its regulatory department will review product labels to help ensure they meet FDA, NASC and AAFCO guidelines.
At this moment, 15,000 square feet of the facility is unused, which allows for future innovation and the potential for the production of additional formats and formulations.
“We have ambitions to add more. We set this facility up to do that,” Turner said. “But it comes back to making sure we’re the best partner possible for our customers and the biggest part of that is innovation — let’s find out where our customers need more support, and we’ll meet those needs.”
Future growth and innovation
With its private equity partnership solidified and expanded production facility up and running, CVS is poised for additional growth in both the supplement and dermatological segments. However, the company isn’t pounding the pavement looking for more customers — it relies mostly on word of mouth for added business.
“No one wears a sales hat at the company,” Turner said. “Rene manages business development for the company, which is 90% made up of developing relationships, partnerships and innovations with our current and core customers. Most of the business that comes our way is through referrals.”
Rene added, “We work on building our reputation so that new customers come to us.”
Part of that reputation is delivering innovation to existing and potential customers.
After the supplements go through the cold extrusion process, they are organized in single layers on trays before moving into the drying room. Product rests in the drying room before moving on to packaging.
|“Our responsibility is to approach every day, every decision and every investment as partners with our brands — what do they want and need to be successful?” Turner said. “At the end of the day, they need quality, innovation, transparency, speed and efficiency.
“And that means always looking for flexible, collaborative and creative solutions to any issues that come up,” he added. “We win when we work transparently with our customers. We lose when we don’t. It is that simple. We are not perfect, but we are committed always to getting better.”
As the supplement space further develops and expands, so does CVS’s potential for new business. Supplements that address different need states in pets — such as allergy, immunity, digestion, cognition and mobility — are more prevalent today. There is also potential for different product formats beyond the existing chews, powders and toppers currently available.
Turner predicts that supplement innovation will evolve through ingredients, solutions and formats.
“We think there are big innovations coming in all three areas,” he said.
“We are strong believers that we are still in the early innings of supplement development for the pet community,” Turner added. “The supplement offerings in the pet space started with only a handful of product types but, like the human space, it is quickly expanding into other offerings and formats. We believe that long-term there will be full aisles of supplement offerings and that the innovation cycle is just beginning in earnest.”
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