Hearth & Home May 2017

Above: Tenore 240 by Element4 from European Home.

Political Blockade?

By Bill Sendelback

Through the first three quarters of 2016, sales of gas fireplaces moved at a walk; in the fourth quarter they started to trot; now they’re at a full gallop.

Everything seems to have fallen into place for the gas fireplace market. The economy is much improved. New home construction has come back strong. Natural gas prices are low, and natural gas as a hearth heating fuel continues to lead and gain market share over wood and pellets. But while most manufacturers tout strong gas fireplace sales, manufacturers’ shipment data doesn’t support that stand – until late in 2016.

Despite all the positive indicators, gas fireplace sales in the U.S. were down 14% through the third quarter of last year; in Canada, gas fireplaces were off 11%. Surprisingly, and in contrast, U.S. wood fireplace sales were up 3% while wood burners in Canada were down more than 9%.

Regency
City Series from Regency.

However, manufacturers are reporting stronger fourth quarter 2016 sales and continued strong sales in early 2017. So why were sales off through the third quarter?

“We can probably blame it on politics,” offers Jeni Forman, senior vice president of Retail Sales for Hearth & Home Technology (HHT). “People were concerned and preoccupied by the U.S. election, no matter which side they were on. So they seemed to have held onto their money. But now, with the election over, consumer confidence is at a 16-year high, and we’re seeing strong, pent-up demand and resulting sales.”

“Last year was a good, good sales year for us in gas fireplaces,” according to Nick Bauer, president of Empire Comfort Systems, “and this year is tracking higher than the same period for the last four years.” Empire Comfort historically has been strong in vent-free gas products, but now the company’s vent-free category is “struggling” while its direct-vent model sales are strong. “Vent free models usually are sold for heat, so when there is no winter, vent-free sales are hurting.”

Empire Comfort recently entered the higher price-points market. “We should have done this five years ago,” Bauer says. “Sales to the custom-home builder segment now are two or three times more than last year. We can’t keep up with production.”

Emphasizing that, Bauer points out that 60-in. linear, direct-vent models are now becoming standard, some with $5,000 retail prices. “That was a surprise,” he says. “We thought 40- and 42-in. models would be the big sellers. We’re continuing to round out our linear line with a 72-in. model and a 60-in. outdoor model because people are asking for them. We’ve had tremendous success with our outdoor fireplaces.”

TruFlame insert by Empire Comfort Systems.

New from Empire Comfort Systems is its 36-in. American Hearth brand Truflame catalytic direct-vent, a companion to last year’s 40-in. size. The catalytic feature allows big flames and big logs, yet a cleaner flame, says Bauer. Another new model is its 72-in. linear in its Boulevard series.

Empire Comfort Systems will celebrate its 85th year this August. “We’ve always been a heating company, but now we’re much more into aesthetics,” says Bauer.

European Home also had a “good” 2016 sales year, up 20% over 2015, according to Holly Markham, owner. “And we sense 2017 will be another good year. It feels like consumer confidence is up after the election, and consumers are now spending.” Vent-free models are selling “consistently well” for the company, after it “very slowly” got into vent-free in 2007 and 2008. “We think direct-vent is preferable, but vent-free is an option if you can’t run venting and the home is not really tightly sealed.”

What used to be available only in expensive custom fireplace models is now readily available in less expensive “stock” models, Markham says. “Whatever the customer wants, they can now get – more sizes, more styles, more facings, logs, media and other features. We’re getting more requests for larger units in different sizes.”

In 2016 European Home introduced its “multi burner” into its contemporary, direct-vent, Element4 models. The company’s new “quad burner” – which will be available in 2017 – is designed to allow the consumer to control heat output with a very wide range of Btu outputs. For example, its 240 model has an output ranging from just 25,000 to 84,000 Btus, and the company’s new E-Save button on its Element4 remote controls automatically adjusts the flames to run in cycles, up and down.

“This gives additional, more realistic flame movement, and by cycling the flame, it reduces gas usage by as much as 40%,” says Markham.

Everyone seems to be getting into gas fireplaces. Typical of newcomers to that market is Hearthstone Stoves, better known for its soapstone and cast-iron freestanding and insert wood and gas models. But about a year ago, Hearthstone introduced its Aurora full line of linear gas fireplaces, including direct-vent and vent-free models.

“With the market and demographics shifting to gas, we needed a balance of products to keep our company balanced,” says Dave Kuhfahl, president. Hearthstone has dropped its pellet products, and although the company offers gas stoves and inserts, Kuhfahl knew the company could not rely so heavily on wood.

Aurora from HearthStone.

“This new Aurora line is selling very well, and I’m glad we moved into gas fireplaces,” Kuhfahl says. “Our Aurora sales this year have already surpassed the sales of all of last year.” Aimed at the retrofit and custom-home markets, Hearthstone’s Aurora gas models are priced from medium to high end; they also include contemporary insert and freestanding models. Aurora gas fireplaces include 12-in. deep models, see-thrus, wall-mounted models and a power-vented Gemini model that can be installed and vented almost anywhere. Each of the four basic Aurora fireplace models is offered in a variety of sizes.

Gas fireplace sales in 2016 were “really solid, both in the new construction and remodeling markets,” according to HHT’s Jeni Forman, “and with building permits up, remodeling up and low unemployment, we’re expecting continued sales growth. This year looks very, very solid.”

Linear styling continues to be a growth area for HHT, especially in higher-end models with higher average prices, adds Forman. “And we’re seeing more traditional models that may have used regular gas logs now being fitted with modern media such as glass and even driftwood logs, a trend bridging traditional with modern.” Forman also sees more linear models being offered as an option in new home construction, “certainly in custom homes.”

While in the past HHT strongly promoted direct-vent over vent-free, with its acquisition of the Vermont Castings Group the company inherited the Monessen brand, a strong marketer of vent-free models.

“Vent-free is new for us, but the Monessen brand has strong vent-free sales,” Forman explains. “We’re finding the product development cycle for vent-free to be much different from direct-vent. You can refresh your direct-vent offering every three to five years, but with vent-free you have to update and make enhancements annually.”

IntelliFire Touch remote from Hearth & Home Technologies.

New from HHT is its IntelliFire Touch remote with a functional touch screen on the company’s very high-end Heatilator, Heat & Glo and Majestic models. Most of HHT’s gas fireplace products will offer this feature by the end of 2017. HHT also is seeing strong interest in heat management as an option, the ability to dump or redirect unwanted heat. “This allows things such as a TV to be placed directly above the fireplace and has become very important in new construction,” adds Forman.

Gas fireplaces continue to grow as a percentage of sales for Innovative Hearth Products (IHP). “Unlike a decade ago when gas fireplaces were just a part of your line, now they are considered the major product,” according to Glenn Thomson, executive vice president of Sales and Marketing. During the new home construction slowdown of 2009 to 2012, fireplaces became only an option in a new home, says Thomson. “But now that has recovered with a similar fireplace incident rate as in the past before the slowdown.”

The market is seeing continued interest in non-traditional, linear gas fireplaces with more contemporary ember bed media, adds Thomson. “Today’s buyers don’t want their parents’ fireplaces – they want something different.” For IHP, sales of smaller, contemporary models continue to grow. “Larger sizes mean more Btus,” he says, “and some homes can’t take that much heat. The majority of customers are buying gas fireplaces for ambiance. Heat is secondary.”

Rather than introducing new models at this time, IHP is “tweaking” its vent-free models and developing outdoor linear models.

Electric fireplaces were Napoleon Fireplaces top growth category in 2016, but gas fireplaces were close behind, says John Czerwonka, vice president of Hearth Sales. “We were pleased with a very good 2016, but we’re even more optimistic about 2017 after strong sales early this year.”

Napoleon’s gas fireplace sales were flat the first half of 2016, with some customers over inventoried, says Czerwonka, but sales improved in the third quarter, ending the year with a strong fourth quarter. In 2015, Napoleon’s gas fireplaces were 30% of its sales; wood burners were 70%. But in 2016, that changed dramatically; now gas models are 70% and wood burners 30%.

“Wood became an environmental issue, and state regulations have shifted more builders to gas,” he says. “Plus in the last five to seven years, homes have become a lot tighter with fewer air exchanges, causing more in-house smoke with wood.The gas market has really taken market share, particularly in the U.S.”

Vector 38 See Thru by Napoleon Fireplaces.

Napoleon is balancing its gas fireplace lines to market a “broad offering of good-better-best and high-end custom products,” says Czerwonka. The company has added 42- and 46-in. sizes to its linear Ascent Series. Its new Luxuria Series includes the LVX74, which won this year’s Vesta Gas Products and Best-of-Show – Hearth Products honors while featuring its patented, cold glass technology.

Other new linear lines include the Vector Series and the Acies Series. “Acies is Latin for ‘linear,’” says Czerwonka. The company’s new linear offerings feature the good-better-best marketing with each series in the lineup offering the features of the less expensive series below it, plus new features for that step-up series.

Napoleon is featuring its “four pillars of construction,” offering traditional, transitional, rustic and modern styling to fit the needs of any consumer.

Maestro Collection by DaVinci.

Regency Fireplaces also started 2016 with flat gas fireplace sales but had a strong year-end finish on the strength of new product introductions, according to Glen Spinelli, president.

“Sales really took off when it finally got cold,” he says. “And 2017 started out fabulously, up 20% over the same period in 2016. We’re not in the builder box business, but on the strength of medium to high-end remodeling and new custom construction, we’re optimistic about a strong sales year, probably up six to 10%.”

Traditional models have regularly topped Regency sales versus contemporary models, 65% to 35%. But with new contemporary models, that mix is now 60% traditional to 40% contemporary.

Regency has only been active in the heater market, but with its new City Series of contemporary, linear gas fireplaces, it has introduced new decorative models. “We know that decorative models are lower Btus and not as efficient, but the consumer is saying maybe they don’t need all that heat in a gas fireplace,” says Spinelli. The company’s new City Series is utilizing the chase to put heat into the room, while using two glass barriers to have “no heat” on the wall or the glass front.

The City Series, introduced late last year, has been expanded to now include 72-in., single-sided, see-through, three-sided and corner models. And Regency has introduced a real heater to its gas fireplace line, its U900, made in its Australian operation.

Travis Industries had a “really good” 2016 in gas fireplaces, according to Perry Ranes, director of Sales. “Gas products in general are really strong for us,” he says, “and according to third quarter reports, we’re gaining market share.” This year started off strong for Travis, with sales up through the company’s early-buy period. “People are optimistic, and we’re seeing a lot of ‘rip and replace,’ or remodeling business, particularly in older homes.

“Linear styling is getting stronger and stronger, especially with new home builders,” says Ranes. “However, everybody is talking linear, but we’re still strongly selling the bread-and-butter traditional models.”

The DaVinci line is selling very well and continues to grow, says Ranes. “It’s amazing how many are now being installed,” he says. Travis’ new The Maestro Collection in the DaVinci line was a Vesta Awards finalist in the Gas Products category, and winner in the Art of Fire category. New from Travis is its 4215 model, a 42-in. linear gas fireplace in its new Econo Series of more economical gas fireplaces.A 72-in. model will be introduced later this year.

Valor Fireplaces saw a similar sales trend in 2016. “After a soft fall, we ended up with a good, solid sales year, up about 10%,” says Paul Miles, director of Sales. “The West in both the U.S. and Canada was strong, while the East was weak. But we’ve had a good sales bump since Christmas. And 2017 is off to a great start, at a better pace than last year.”

While contemporary and clean-faced, larger, linear gas models are doing well for Valor, the company continues to see a market for its smaller models. “We tend to see stronger sales with our newer stuff, and that tends to be cleaner, more modern styling.”

LX2 3-sided with cool wall technology with HeatShift from Valor Fireplaces.

New from Valor by this summer will be its LX2, a linear gas fireplace with Valor’s HeatShift feature, technology that uses convection to duct heat off the top of the unit into that room or another room. To be available in three-sided or two-sided models, left or right, the LX2 does not dump heat but redirects the heat, keeping the top of the fireplace 80% cooler for safer installation of a TV above the fireplace.

Headquartered in the Vancouver, British Columbia, area, Miles expressed growing concern about the City of Vancouver’s “zero net carbon” mandate that threatens to eliminate natural gas usage, and hence hearth products, from the city. Seeking to eliminate any carbon footprint by 2030, as of May 1, 2017, new high-rise buildings must reduce their carbon footprint by 50%. The second phase will affect multifamily homes, and the final phase will affect new, single-family homes – both phases to be introduced at unspecified times but certainly by 2030.

“The city is trying to deny that it’s banning natural gas by saying ‘renewable’ natural gas is acceptable,” says Miles. “But so-called renewable natural gas represents less than 1% of all natural gas. The bad news is that there is a coalition of cities throughout North America that is considering the same thought process.”

In the meantime, the market for gas fireplaces continues to grow, and 2017 could well be a banner sales year.

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