Question-and-Answer Session
Operator
(Operator Instructions). Our first question today will come from Rick Wise with Bear Stearns.
Rick Wise
Good morning, Jon, good morning, Merilee.
Jon Ayers
Good morning, Rick.
Merilee Raines
Good morning, Rick.
Rick Wise
Let's start maybe if you worked with a little more perspective and color on gross margins. Merilee you highlighted some of the factors involved and I'm guessing like the strong VetLab placements which I assume are low margin. I mean that's another factor that could have helped.
And Merilee you emphasized again in your comments that margin improvements are very achievable. Can you help us think to some other moving pieces and talk about, a little more clarity, whether gross margin improvements are rebounds or are going to come from? Thanks.
Merilee Raines
Sure Rick. As we look forward with gross margins, I think that some of the things that we've talked about are, we've got the dynamic of a razor blade business. We've had a lot of focus on instrument placements, our lower gross margins relatively than our other product lines.
And so as we get those placements what we've seen is greater consumable growth, we rate that guidance on consumable growth rates a number of times pretty consistently over the last couple of years. And those consumables are at a high margin and because as we've mentioned a number of times of the economics of our contractual commitments, both margins continue to get more attractive over time. So there is a piece there on the mix side with our IDEXX VetLab product offering.
In addition, the reference laboratory business, we've grown quite a bit there over the last few years. And a lot of that growth has come through acquisition of laboratories. Typically those laboratories we've seen are at lower gross margin than our longer-standing laboratories. So we need to work on operating efficiencies with those labs in particular.
But also when you look at our worldwide network, we see lots of opportunities for additional efficiencies, things like global purchasing, commitments and what not that we can drive best practices across laboratories. And importantly, a big driver in the reference lab business will be continuing volume leverage, as we get more and more growth in that business, we get nice drop-through.
Rick Wise
All right. Not to pick on this at all. But I was still struck by the fact, I mean, I think in every quarter, they are moving pieces and obviously capital placements have been strong for last few years. But I am still struck that it's the lowest, if I am looking at right, the lowest fourth quarter gross margins since 2004. Is there anything unusual that happened in this quarter? Is that the acquisition, is that the biggest factor making that happen?
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