Central Garden & Pet redefines path forward as consumables take center stage

Central Garden & Pet Company’s Chief Financial Officer (CFO) has outlined a roadmap for the company’s future evolution.

Participating in the virtual Oppenheimer 25th Consumer Growth and E-Commerce Conference, Brad Smith emphasizes the need to take more calculated risks and apply that mindset to differentiate the firm’s offerings.

Consumables

Central’s pet segment, comprising 80% of consumables, has held up well, particularly in dog and cat products. However, durables are more challenging than consumables: once 35% of pet segment sales at the pandemic’s peak, they’re now sliding toward 10-15%.

“I would say consumables have been very resilient, particularly around companion animal, dog and cat,” Smith states.

“Household demand for new pets, replacement pets, is down a little bit, slightly below pre-pandemic levels in dogs, but slightly above pre-pandemic levels in cats. But there seems to be a stabilization and demand that we’re seeing on the dog front.”

While the garden segment suffered from wet and cold weekend weather in Q3 2024, one surprising bright spot is the wild bird range, which had a record year with tangible growth, especially among hobbyist consumers across demographics.

Challenges ahead

Tariffs have compounded the challenges, but the company has been proactive in restructuring its sourcing, redesigning SKUs, and pivoting to countries like Cambodia and Vietnam.

Smith notes that the company is “reasonably optimistic” that there could be a return to some amount of growth in dog ownership going forward.

“We tend to be primarily a branded business and tend to play in what I would call the good and better category,” he explains.

“So not in the super-premium categories, which has enabled us with the right level of commercial investment to continue to compete, particularly in this environment where private label would naturally start to become more appealing to consumers.”

M&A plans

Mergers and acquisitions are the primary focus of the company’s capital, with a keen eye on pet consumables, particularly chews, edibles and supplements. However, the timing remains unclear, particularly due to market and economic uncertainty.

“We’re very focused on pet consumables and you know there’s a number of companies that are interesting to us and larger companies as well as some potential strategic bolt-ons, but for the most part, sellers tend to be on the sidelines right now waiting for economics to turn around and uncertainty to die down in the hopes that they can get a better multiple,” Smith concludes.

Central has expanded in recent years through various acquisitions, including the premium dog treat company TDBBS in 2023.