Central Garden laments supply-chain woes, sees low demand, high costs

By Devika Patel

Knoxville, Tenn., June 17 – Central Garden & Pet Co. is struggling with supply chain issues and higher costs while also experiencing lower consumer demand.

This comes on the heels of two years of record growth. The Covid-19 pandemic was a boon for the company, since consumers bought more pets, which needed to be fed, and urban residents moved to the suburbs and needed to manage their new yards.

Despite the boom in business, Central Garden has been hard hit with supply chain disruptions.

“The last few years from a supply chain standpoint have been really, really tough,” chief financial officer Niko Lahanas said at the Oppenheimer 22nd Annual Consumer Growth & E-Commerce Conference on Tuesday.

“We’re fortunate in that only about 8% of our cost of goods comes from China, so when China shuts down, we definitely feel it but it isn’t catastrophic for our business.

“We’ve had pockets that are being really affected by, for instance, what's going on in Ukraine right now, specifically around wild bird food.

“A lot of grains come out of Ukraine.

“Also, a lot of fertilizer comes out of Ukraine, so we’ve seen prices really rise and that's affected the business quite a bit.

“Our businesses that do procure from China have been hit from a pricing standpoint, cost standpoint, but also just from a lead time standpoint.

“It just takes longer to get product over here,”

Consumer demand has also declined when compared to the last two years.

“Overall consumer demand hasn’t been what it’s been in the last year or two, so we’re able to catch up a little bit,” Lahanas said.

“We’re seeing that kind of demand slowdown a little bit, which in some ways is great because we were really having trouble keeping up with the good demand.

“We’re hoping that with demand decreasing, maybe costs start to come in line a little bit going forward,” he said.

The supplier of lawn, garden and pet products is based in Walnut Creek, Calif.

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