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Not So Hot

Specialty grill market cooling as manufacturers move offshore

"It's a lot harder to make a buck on a grill these days," said Jeff Lunsford, president of The Hearth & Grill Shop in Nashville, Tenn.

"There's a lot more competition on portable propane grills," Lunsford said. "The people who buy portable grills from us want a little something different, want us to put it together and deliver it. All they want is to throw the meat on there."

The specialty grill market definitely is in flux these days. Although grill shipments rose 2.5% in 2004 to 14.5 million units, according to the Hearth, Patio & Barbecue Association, most of the increase can be found at the lowest end of the price spectrum.

"Even the local grocery store had stainless steel grills last year," said Gary Bertassi, owner of Griller's Hall of Flame in Indian Orchard, Mass. "There's too much competition from the Internet and big box stores. You have to either hang tough or perfect your marketing."

One of the biggest stories of the past 12 months was the October purchase of Dynamic Cooking Systems by New Zealand-based Fisher & Paykel Appliances Holdings Limited. Retailers contacted to comment on the transition were neutral at best about how the company has been handling the Huntington Beach, Calif.-based manufacturer of kitchen and outdoor cooking appliances.

"I've sold 10 DCS grills in the past two months, but anybody can handle this time of year," said Andy Ligon, manager of Custom Fireplace, Patio & BBQ in Dublin, Calif. "We'll see if they can handle March, April and May."

Ligon said that lead times have been poor and that he never knows when a grill will show up, which doesn't play well with customers.

"DCS is our main line; they have the nicest grill out there," Ligon says. "We'll wait and see what happens."

Bayou City Inc., a pool, spa, patio and grill store in Spring, Texas, probably will not keep the line, said Brent Gary, sales manager. "We started weaning away from them last year," Gary said. "They're so danged expensive retail-wide. Put a Fire Magic side by side, and it is cheaper and has a better warranty."

Gary had thought a significant price cut shortly after DCS changed hands would help, but the announcement was followed 45 days later by a price increase instead. Gary said he gets one-third better margin on Fire Magic grills than he does on DCS.

"It will be interesting to see what happens to the DCS outdoor line," Gary said. "My gut feeling is that if they're still out there, they won't have near the market share they enjoy now."

A Southern California specialty grill retailer, who requested anonymity because he wants to retain the line, described the sale to Fisher & Paykel as "a disaster."

"I guess it's related to the fact that we're not a big dealer," he said. "We just fell through the cracks."

Several orders, placed before the acquisition, were canceled without notice — leaving customers without product. And despite good past relations with DCS, the retailer said his payment terms were changed from net 30 to cash in advance.

"They just don't have their act together," the retailer said. "We certainly had a good relationship with (DCS) previously. There were never any issues, and to be treated this way was disconcerting."

The other big acquisition news last year had to be the bankruptcy of Ducane Gas Grills and its purchase by Palatine, Ill.-based Weber-Stephen Products. Distributors were not surprised, but they were taken aback nonetheless by the company's decision to bypass two-step distribution and sell directly to retailers. Even though Weber is distributed through mass merchants and hardware stores, specialty retailers also stock the company's grills because of its well-known and well-regarded name among consumers.

Most specialty retailers appear to be sticking with Ducane. "It's great news for consumers," Bertassi said. "The (Ducane) 1605 grill that I sold for $899 now sells for between $549 and $599, and the 5005 (model) that sold for $1,200-plus now sells for $799 with the same margins."

Specialty retailers can capitalize on Weber's reduction of the Ducane lifetime warranty, which will result in supplemental part sales, Bertassi noted. "What do I care if they minimize margins? I'm making money on parts," he said.

Jeff Cunningham, president of Cunningham Gas Products with two stores in the Houston area, was a Ducane distributor until Weber's decision to halt two-step distribution.

"We cleared out the warehouse, moving a year's worth of merchandise at prices between wholesale and retail and made a potful of money," Cunningham said. "We made a positive out of a negative."

Cunningham does not carry Weber products and notes that the general grill sales trend is downward. The retailer is focusing on gas lights, which have been growing at a double-digit pace.

On the distributor side, Cunningham has hired a sales trainer to help his retailers approach customers, make the presentation and close the sale during half-day seminars. "A retailer will have $5,000 to $8,000 grills on the floor, and when a customer walks in, the retailer won't even get up off a stool and approach the customer," Cunningham said. "We want to equip our dealers with the tools they need to create value."

The announcement that the W.C. Bradley Co., maker of Char-Broil grills, was shifting production overseas caused barely a ripple in the specialty marketplace because most specialty retailers don't stock the product.

But they do fear more higher-end manufacturers might follow that trend. "I'm not buying foreign grills," Lunsford said. "I'm sticking with American made and promoting it. For 2005, we're going more toward outdoor living areas with cabinet-style grills and built-ins."

Bertassi also is staying American, but he wondered how long it can last. "Six or eight years ago, the Chinese stuff was (junk), but now it looks better and better," he said. "If Weber goes to China, we're all lost."

Available in 24- and 36-inch widths and on carts or drop-in units, the Patio Gourmet Elite from Hearth & Home Technologies' Heat & Glo Lifestyle Collection has a convection cooking system that evenly distributes heat over the entire grill surface, cooking food thoroughly and eliminating hot and cold spots.

New to Weber's Genesis Gas Grill Collection is an enclosed cart with stainless steel doors and handles, as well as an increase in height by two inches on the Silver and Gold lines.

Lodge Manufacturing's Logic Sportsman's Grill is a charcoal hibachi-style grill ideal for tailgating or camping — featuring a draft door that regulates heat.

RH Peterson's Fire Magic Charcoal Smoker Barbecue offers a two-in-one grill, featuring stainless steel construction and an oven-lid thermometer, allowing chefs to adjust the temperature while cooking.

Cal Spas' G-2000 is upgraded with two cable ready, flat panel TVs that retract into the Gourmet 2000 Grill's countertop to form wooden cutting boards, a DVD player and CD/stereo system.

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