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Hearth & Home March 2017

Enviro Elite Edition from Sherwood Industries.

Fireside Chats

By Richard Wright

It certainly wasn’t the best year, but manufacturers we interviewed weren’t complaining. They’re just happy to be moving the needle a bit, while they worry about coming Net Zero regulations that could gravely damage their business.

The seven manufacturers with whom we spoke all seemed content with their business in 2016, though they were far from ecstatic. They had made it through the engineering hassle of creating protective barriers (screens) for some of their products (which was not a simple task), were gearing up for the new NSPS in 2020, felt content that the DOE and HPBA were talking once again, and that the wild card was the Net Zero threat.

There are many positive factors on which to concentrate right now, not the least of which is the steady climb of new construction, and the strength in the remodeling market – two key drivers of hearth product sales.

For the last two years, however, weather has become a strong negative to sales. Climate change continues to have a crippling effect on sales of wood and pellet products, as warm weather begins earlier in the spring, and ends later in the fall. Just take a look at the retailer comments on page 120 of this issue.

One thing on which these manufacturers agree is that contemporary design is greatly in demand, as is the linear look of fireplaces. That’s a trend that has legs – it will be around for a long time because it’s a new look (still), a clean look, and an attractive look that makes a statement.

Want to know what kind of a hearth year it was in 2016? Just read the following words of seven knowledgeable manufacturers.

Quick Links

Vincent Boudreau Dave Ivey Anastasia Marcakis Niels Wittus
Stuart O’Connor Nick Bauer Stephen Schroeter  

Vincent Boudreau – CEO

Stûv America, Bromont, Quebec

Vincent Boudreau with the Stûv 1678-Z.

Ten years ago Vincent Boudreau introduced Stûv hearth products to the North American market; he began importing the product from Belgium to his base in Montreal. Today he is a co-owner of Stûv America with Gerard Pitance, who founded Stûv Belgium 35 years ago.

The company has purchased a building in Bromont, on the outskirts of Montreal, and the process of turning it into a hearth factory is underway. By mid-March, production will begin.

Hearth & Home: You must be very excited about manufacturing Stûv products in North America. That should make a great difference in your costs and in your ability to service your dealers.

Vincent Boudreau: “From the beginning, my main goal was to manufacture the Stûv here in America. There were many things to do before getting to the manufacturing project, and it took more time than I was expecting. But 10 years later we are exactly where I was expecting to be. I would have loved to have been here five years ago, but everything is good, timing is good and the relationship between Belgium and us is perfect.

“In 2013, we and Stûv Belgium developed a four-point plan to move the North American business forward. The first point was to provide more human resources by the addition of Francois Thiry from Belgium to our operation in Montreal. That gave me more time to deal in the market.

“The second point was to certify more products. In 2012 we had five products, and now we have 20 products. The third act of development was to reduce the price to dealers, and the fourth was to keep in stock as much inventory as possible to avoid any backorders.

“This past summer we entered a joint venture. The factory is owned by Stûv America, and Stûv America has two shareholders, which is me and Gérard Pitance, the founder of Stûv Belgium.

“Part of the plan of action of Stûv in Belgium is to develop a network of subsidiary companies. They presently have a United Kingdom distributor. There is also a Switzerland distributor, and now a North American distributor as well. The shareholding is all differently divided, but it is always a holding company and someone local to be part of the shareholding.

“We won’t be able to manufacture everything right away because that would be almost impossible. So it’s going to be over a period of time. We are expecting two to three years before we have the entire product catalog being manufactured in America.”

How many dealers do you have now in Canada, and then in the U.S?

Boudreau: “In Canada there are 50 and in the U.S. there are 20.”

Given the currency differential, you make more money selling across the border, correct?

Boudreau: “Yes, that’s right. If you look at our price list, right now we are selling our product in the U.S. 20% less than in Canada. So for us it’s not extra money. It’s a better cut for our dealers, and most of all for the end user.”

How well did you do in 2016 compared to 2015?

Boudreau: “We were up 32%.”

Were you able to fulfill orders on time?

Boudreau: “I would say 95% of the time we’ve been able to deliver. We have been very successful with our new Stûv 16, especially the one we introduced last year at the Expo. It’s the 16 cube, a zero-clearance fireplace. This is an exclusive product for North America; it doesn’t exist in Europe. So we have been able to offer a zero-clearance fireplace in the $3,500 to $4,500 range. That puts it at the higher level of the mid-class.

“This is a product that has no style. It sounds funny, but it does not define any style. It is so clean-faced. It has a huge view of the fire and it can be finished with any type of architecture. I hate when people tag our product as modern or contemporary. It’s neither modern nor contemporary. The style is the style you want to give it, and that is very good. It will appeal to any type of clientele.”

Which is exactly what you preach – more fire, less stove.

Boudreau: “That’s exactly right, and that is where the market is going.”

Your main line is wood, and that product has been suffering for the past two years. Sales of wood products will always exist to a certain extent – for heat. But everyone is saying that right now it’s gas, gas, gas. In particular, it’s linear gas. I suspect you’ve noticed the same thing.

Boudreau: “Our gas products account for only 20% of our sales. I’ve realized that the gas industry is so well established that it is more difficult for us to get a place in the market with gas than it has been for wood. Stûv has gained credibility in the wood market. Now we are getting into the gas market and, to become a player in the gas industry, I believe we will have to do more than just showing a nice product with good quality.

“We will also have to have better prices. I believe that when we move into our new factory close to Montreal, it will bring our products to the same price level as the North American products. That will make a huge difference in our costs, and our pricing will become very appealing for our dealers.”

Does Stûv have any new products for 2017?

Boudreau: “Our new thing is the factory we’re making. I think our dealer network has understood our decision not to bring out new products in 2017. We want to get a strong return on our investment for our gas products before investing or getting the P10 pellet stove out in the market. This year we expect a good response on our gas product as the price that we are targeting for the gas product by manufacturing them in Canada is the price we are going to start selling it out of our actual stock right now.”

What regions of Canada were your strongest for sales?

Boudreau: “Definitely Quebec is the strongest. I think wood is good in Quebec Province, but number one is Quebec. I would say it is followed by Ontario and then British Columbia.”

Two years from now, what percent of your sales do you think will be gas?

Boudreau: “I would say 50/50. That’s my guess.”

You’re not exhibiting at the HPBExpo this year, but will you be walking the show?

Boudreau: “Oh, yes. We are not exhibiting in Atlanta for two reasons. The first is the investment we’re making in starting our own factory, and the second is that we want to reinforce the sales in our dealer network prior to opening up new dealers. That being said, if any dealer throughout North America contacts us to become a dealer, obviously we will open up that dealer and make them part of the Stûv family.”

What are some of the trends that you see right now in the hearth industry? Whether it’s product design or the way they are going to market or any trend that gets your attention.

Boudreau: “Wood products are definitely going toward a clean-face design. It’s funny that you said the market in wood is going down, while I see more new product coming out in the wood than in the gas. That might be due to the fact that the last two years have been occupied by solving the barrier problem.”

Contemporary products are seemingly everywhere now.

Boudreau: “Yes. It’s the fastest growing trend right now. Every category of product is going toward the clean face and contemporary, definitely. Every manufacturer is going in that direction.”

It’s changing fast, and I don’t think it’s going away. I’ve been asked, “Do you think the linear look is starting to decline?” My answer is, it’s just starting to grow.

Boudreau: “Yes.”

It’s becoming a category all its own.

Boudreau: “Yes, I agree.”

We’ll have the traditional stove or fireplace, the transitional stove or fireplace, then the contemporary stove or fireplace.

Boudreau: “Here’s something interesting. Gérard Pitance founded Stûv 35 years ago. Five years ago he was here and we were visiting retail stores together. After going in a few shops, he said, ‘It’s amazing. It’s like a flashback to when we started the company.’

“Today in Europe everything is contemporary, and all of the manufacturers in Europe are doing the same kind of product. It’s contemporary, but it’s clean face, and the industry is going toward that because it’s what the end users are requesting. So 10 years from now I would guess that 80% of the market will be contemporary and 20% will be traditional.”

What is your forecast for sales in 2017?

Boudreau: “We are expecting a growth of 50% this year to reach 1,200 units. We are still at the base of our potential really. Yes, we have 10 years in our background, but it’s like a startup. This year we are introducing the new factory. We have experienced the good and the bad and made some mistakes and realized very good things that we are all proud of.

“Now we are getting into a new game with the right product at the right time with the right prices and the right quality. I expect the future to be phenomenal.”

Am I correct that Stûv Belgium does about 15,000 units a year in Europe?

Boudreau: “That’s correct, yes.”

So very shortly you’re going to fly past that number and then you get to buy them out, right?

Boudreau: (Laughs) “Exactly. But this is funny because, with the value of the dollar, we expect to be able to manufacture a product here in America for a lower cost than it is in Europe.”

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Dave Ivey – National Sales Manager

Kingsman Fireplaces, Winnipeg, Manitoba

Dave Ivey with the Marquis Infinite MQRB5143.

Dave Ivey joined Kingsman Fireplaces in January of 2016. Prior to that he was an installer, a dealer, worked for a distributor, then joined the Monessen, Majestic, Vermont Castings Group. He has yet to become a rep, or a trade journal editor.

Hearth & Home: How well did Kingsman do in 2016, in Canada and the U.S.?

Dave Ivey: “We were actually up in single digits in both markets. We hit our forecast in both markets. We didn’t blow it out of the water, but we had slight increases in both markets.”

How many dealers do you have now in Canada?

Ivey: “That’s actually a pretty tough question. In Canada it’s strictly through distribution, and in the States it’s dealer- direct as well as distribution, and we have about 100 dealers on our direct list.”

Is your mission in life right now to try to get more dealers in both countries?

Ivey: “Correct. The U.S. seems to be the growth area for us. I spent 12 years of my career in distribution, so to me that seems a better way to go.”

Which regions of the U.S. were the strongest producers for you?

Ivey: “The West, mostly the Northwest, and the Southwest had our biggest increases.”

That is a surprise. Is it all the contemporary products that you folks have?

Ivey: “Yes, our linear units do quite well in the western regions. The transitional design trend still seems to be quite strong, which is the mix of contemporary in a traditional setting, so a lot of our products fit well into that design trend.”

Which regions in Canada were the strongest?

Ivey: “In Canada both Ontario and BC saw double-digit growth.”

So you go where the money is?

Ivey: “Exactly.”

What’s going on with new construction in the U.S. and then Canada?

Ivey: “We cater more to the custom homebuilders than the track builders, and the high-end custom stuff isn’t normally affected by all the economic trends. We have seen increases in both our Canadian and U.S. builder business. Obviously the U.S. business is starting to rebound and we’re seeing more markets open up.”

How do you reach the higher-end custom home builder? Are you relying on your dealer network to do that?

Ivey: “We’ve been very successful at the interior design shows, so we get specified for a lot of product through architects and designers. The business comes direct to us and we pass it on to our distributors and/or our dealers.”

What about your outdoor products? I hear good things about the Outdoor Room trend continuing in both the U.S. and Canada. How well did you do with outdoor fireplaces and fire pits?

Ivey: “We’ve had such a good response to our outdoor line that we are just releasing a full line of burners, fireplaces and fire tables under the Barbara Jean brand. Our existing product will roll into this brand as well. That’s the name of Ed Reyher’s mother who is in her mid-80s and comes into the office every day.”

A few manufacturers I’ve spoken to recently said they were seeing multiple fireplaces go into Outdoor Rooms, where there might be an area over here for dining and it would have a fireplace; an area over there for relaxing, watching TV had another outdoor fireplace. Have you noticed anything like that?

Ivey: “I haven’t noticed that. I can easily see that coming. I would be curious to see what the sales figures for outdoor TVs are. You would think that if they had an outdoor TV they would probably want a fireplace close to it.”

It’s a shame that it took so long for manufacturers and retailers to pick up on that trend. The Outdoor Room trend has been around almost 20 years. The outdoor furniture industry latched onto it quickly and did a great job of taking their products upscale. The barbecue industry came in second when they created such upscale outdoor kitchens. The hearth guys dragged their feet, and most of them still do.

Ivey: “I agree with that.”

What about the currency differential? Are you noticing some of your retail dealers starting to hurt a bit?

Ivey: “They are starting to hurt. The dealers that get affected most are those in border communities or in Canadian cities that are close to the U.S. where people will readily shop across the border. It is too easy for somebody to go and get something from the U.S. But it has been good for us. In Canada it makes our products more competitive.”

Well maybe Donald Trump will help you out and put a big wall up across the U.S. – Canadian border (laughs).

Both the State of California and the City of Vancouver are involved with Net Zero programs. Most manufacturers I talk to are more than a little nervous about what that could mean for the hearth industry. How do you view what’s going on?

Ivey: “I’ve been involved in a couple of Net Zero projects in Ontario. What I really see as more of an issue is efficiencies. It seems everyone wants things with higher efficiency, but at the same time nobody wants heat anymore. That’s a bit of a dilemma. A gas fireplace by nature is inefficient because you’re using part of the fuel to get a flame effect.

“If you look at a furnace it’s a very blue flame because they mix a lot of air with it and they are not concerned about the flame length. We in the gas hearth industry choke out the air to get a nice lovely orange flame, which is extremely inefficient.

“It seems that the efficiency program, the EnerChoice program that has been successful in BC where they take the top most efficient fireplaces and say, ‘Okay, anything in that top 25% is EnerChoice,’ and the gas utility gives a rebate back. I’m seeing that start to move into the States. I think Portland has adopted something like that and I’m seeing other provinces look at it.

“That’s got me more worried than even the Net Zero program. How do we keep efficiencies high and still give the public what they want, which is linear fireplaces, but without heat? That worries me.”

That sounds like a major engineering problem, doesn’t it?

Ivey: “Oh, it does. It definitely does. I think some of the builders are going to struggle. I know one of the projects I was involved in, they couldn’t build the house because it didn’t comply.”

Most of the national builders are putting up Net Zero compliant homes from California to Connecticut. According to one, the key in keeping costs down is to wrap the house tightly, insulate properly, and that way reduce the number of solar panels needed.

Ivey: “So you’re seeing some success with people out there building and complying with the Net Zero?”

Yes, and in all probability anybody who wants a fireplace will just have to give up something else. Do you remember a short time back when the governor of Utah banned wood-burning in about three counties around Salt Lake City? Citizens came out in droves and said, “No. You’re not taking our wood stoves away.”

The governor backed off. But there were so many people at the hearings that the building would be full and there would be lines going down the stairs and out into the parking lot. So I think we’re about to find out whether people really want a fireplace.

Ivey: “Let’s hope they do.”

Outside of the few trends we’ve talked about, are there any trends, whether it’s product design or the Millennials or anything that you think is worth talking about right now?

Ivey: “Well, the question keeps coming, is the linear craze over? And I’m still seeing a demand for the linears, and more of the wrap-around linears, and the glass-on-glass linears. The linear market remains strong.”

Well, I for one think the linear has a long, long life ahead. As a matter of fact I wouldn’t be surprised if it took its place next to traditional fireplaces, and transitional fireplaces, as a somewhat permanent member of that troika. What do you have new for 2017?

Ivey: “We’ve got the Barbara Jean outdoor collection that we’ve talked about. We’ll be releasing a 47-in. model of our popular Bentleys. We currently have 39- and 42-in. models. We’re doing a re-work on our linears. In our Infinite line we’re working on some peninsula style linears and looking at doing something with heat dumps.”

What’s your sales forecast for the company in 2017?

Ivey: “I’m seeing marginal increases in both Canada and the U.S. again.”

What haven’t I asked that you would like to get out?

Ivey: “We talked briefly the other day about one of the things that attracted me to this company is that it’s a family-owned business. Ed Reyher puts his name on every fireplace, and that integrity is really important to me. He builds things to last and our warranty work is less than a quarter of one percent of sales. Having lived through recalls and nightmares with other companies, it’s refreshing to work for a gentleman whose name is on every fireplace that goes out the door.”

That’s a lovely way of doing it, isn’t it?

Ivey: “It is. There’s no pressure to say, ‘We’ve got to be the Uber company and continue growing.’ He is fiercely loyal to his customers; it’s just been a refreshing move for me.”

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Anastasia Marcakis – Sales Manager

Supreme Fireplaces, Montreal, Quebec

Anastasia Marcakis with the Galaxy fireplace from Supreme Fireplaces.

As company founder Emmanuel Marcakis takes a much-needed rest, siblings Anastasia, Katherine and Alexander continue the company’s tradition of creating unique wood-burning products.

Hearth & Home: How well did you do in the U.S. in 2016 in comparison with 2015?

Anastasia Marcakis: “We experienced a slight increase, but it was not as dramatic as the year prior. We had about a five percent increase in both the U.S. and Canada.”

Which of your products was the best seller in 2016?

Marcakis: “The Fusion, our new fireplace insert. We did really well with it. It’s among the largest inserts available. It has a 2.4 EPA cu. ft. firebox so it is really big in size and it comes with all the unique features such as the built-in barbecue grill, and a patented automatic air control. We also have a patent on our circulating chamber and our secondary air control; what’s nice about it is the surrounds are available in different sizes.

“One of the unique features of this unit is that it’s approved to be installed with a five in. liner. I don’t think there is any other insert in the industry that is approved for five in.”

Bring us up to speed on where the sale of wood-burning appliances is in Montreal. Has it changed at all?

Marcakis: “The regulations are slowly changing. As of 2018, everyone has to comply with the new EPA regulations, meaning that anyone who wants to continue burning wood on the island of Montreal needs to have an appliance that is EPA approved at 2.0 grams per hour or less. So that’s where we are right now.”

Well, that’s better than where it was before.

Marcakis: “It is better than where it was before, and it’s encouraging customers to shop for a new insert or a new appliance. It’s better than having a complete and total ban on wood fireplaces. What’s nice is that not a lot of manufacturers have options to offer, but we do, so that really puts us at a competitive advantage. Especially in Montreal, there is a huge demand for fireplace inserts.”

What percent of your business is in Canada?

Marcakis: “It’s about 65% in Canada and the remaining is in the U.S.”

That’s because we’re all smart people in New England; we buy good products.

Marcakis: “It could also be because we go dealer-direct in New England, and the proximity of our markets makes it easier for the dealers to buy directly from us and for us to ship products to them, but there is a demand for high efficiency wood products. There is a strong demand in those areas and it is just an easier market for us to reach.”

How many dealers do you have in Canada, and then how many in the U.S.?

Marcakis: “We have about 95 displaying dealers in Canada, and about another 80 in the U.S. Displaying dealers are those that buy our products regularly, and display our products in their showrooms. We obviously have other dealers that will buy, but are not active dealers.”

It sounds like you have great growth opportunities, particularly in the U.S.

Marcakis: “For sure. Now that the EPA standards have changed, it has really cut a lot of the competition and we’re still here. We’re still developing unique, innovative products and, most importantly, products that meet those standards in 2020. It takes time, but we definitely are growing. So there is a lot of opportunity.”

What effect has the currency differential had on your business?

Marcakis: “It has definitely impacted us in a positive way, but it doesn’t change anything in terms of sales. It has not increased or decreased sales. But the currency exchange makes our U.S. sales more favorable. It gives us a better margin and sometimes allows us to offer promotions that normally we would not be able to offer.”

A number of your Canadian dealers must sell patio furniture, and that is where the negative could be. They could be getting hurt if they’re buying from U.S. manufacturers. By the time it gets to Canada it is so expensive that consumers may not want to buy it.

Marcakis: “For sure. That applies the same for hearth products as well, not just patio products. Definitely the difference in currency has made it more expensive to buy products from the U.S. for our Canadian dealers and that is a comment that we actually get a lot, even for hearth products.”

Thinking of the dealer networks in both the U.S. and in Canada, are you noticing that many of these businesses are struggling financially? I ask because over the past few years, the price of fossil fuels has been relatively low, the climate temperature very warm, and both pellet and wood appliances generally have not done well.

Marcakis: “For sure. And the negative media talk about wood-burning heaters polluting does not help either. There has been a decreased demand for wood like last year compared to other years. Now that the EPA is coming out with new regulations it is scaring consumers and that affects the demand for wood products.”

Do you go dealer-direct in most areas?

Marcakis: “Yes, we go dealer-direct in the majority of our markets. However, we also use distributors in certain areas.”

How many employees do you have now?

Marcakis: “We currently have 23 employees working for us full-time. We invest a lot in modern equipment that helps us increase productivity and decrease labor costs.”

What are some of the trends that you see in the hearth industry today?

Marcakis: “I think buyers are looking for simplicity and for clean and contemporary designs. Many times we have consumers who want to reduce the appearance of louvers and bulky trends and try to keep it as clean as possible, really putting the focus on the fire and the firebox and the beauty of the flame and the beauty of a wood-burning product.”

Have you noticed any other trends?

Marcakis: “They like a lot of versatility. Consumers like to have different options available to them so they feel they are not just limited to a couple of choices. Being able to offer versatile designs is really important in today’s market.”

Both California and the City of Vancouver have proposed Net Zero regulations where new homes must produce as much energy as they use. Does that concern you greatly?

Marcakis: “It is definitely not good. Different municipalities are creating different regulations that prohibit customers from using their wood-burning appliances. That creates a lot of negative press. If the consumer isn’t educated enough to understand there are Greener options in terms of wood-burning products, they will just go to another alternative or another source of heating.

“It’s unfortunate that wood is getting such a bad reputation when, in fact, our industry is working really hard in developing products that are clean-burning and good for the environment.”

Tell us about the new products you will have in Atlanta this year.

Marcakis:“We will be showing our new insert, which is a smaller version of the Fusion, the insert that we came out with in 2016. This one is EPA-tested and approved at 1.9 grams per hour, and it does not have a catalytic combustor inside. It also has all the unique features that the Fusion has, including the built-in barbecue grill and a vented air control.

“We’re also coming out with a smaller zero-clearance fireplace. Our intention is to create a parallel line to our existing products, with additional designs and accessories offered with the product.”

What is your forecast for Supreme in 2017?

Marcakis: “I think we’re hoping to see a slight increase in sales again, because we have increased our product line and are offering different products to our dealers. But I don’t think the demand for wood will be very strong this year. We’re being hopeful and positive; we have not slowed down one bit.”

What have I not asked that you would like to get out?

Marcakis: “Well, why would a dealer want to buy from us versus a competitor, or versus any other leading manufacturer in the industry? We really take pride in what we do. Obviously a lot of our competitors do too, but we really like to create a personal approach with our dealers.

“A dealer will never feel like it’s an imposition to call us to ask for something. We want them to feel they can call us and ask us for anything. We want to have a relationship with our dealers where they feel comfortable calling in and asking us questions, sharing their comments, and knowing they have the support from us for everything.

“That’s not just when things go well, but if they are having a situation or some concern they can always call us here and they have our 100% support. We want to work with our dealers because we understand it’s a partnership. It doesn’t just go one way. We want to give them all the support they need in order to properly sell our products and do well with our products.”

Now, Supreme became known for its see-through products. How well are they selling these days?

Marcakis: “The see-through fireplaces do really well. The Duet and the Vision are really unique products because they are the only see-through fireplace and see-through stove that are EPA-approved; they meet the current NSPS standards. That makes us totally different and unique in the industry. No one else has EPA-tested and certified see-through wood products.”

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Niels Wittus – President

Wittus – Fire by Design, Pound Ridge, New York

Niels Wittus on the Shaker stove designed by Italian Antonio Citerio.

It’s not easy being first. That was the case 40 years ago when Niels and Alyce Wittus opened a retail store in New York selling contemporary stoves and fireplaces imported from Europe. Today, the contemporary trend has finally caught up with the hearth industry, and Niels and Alyce can certainly take a lot of credit for that.

Ed. Note: The following conversation took place while Niels and Alyce were sipping margaritas on the French side of the island of St. Martin.

Hearth & Home: Please tell us how well your business did in 2016 in comparison to the prior year.

Niels Wittus: “We were basically flat, but profitability improved a bit.”

Was that due somewhat to the warmer temperatures throughout the fall?

Wittus: “I suppose so, but we can attribute this to a lot of things such as the economy, and the election. The lower natural gas prices affected everybody.”

Which regions of the U.S. were the strongest for you?

Wittus: “We tend to always follow the blue states. That has always been our bread and butter – the East Coast, the West Coast and the Midwest, in that order.”

What about Canada?

Wittus: “Pretty much the same. We’ve been in the Toronto/Ontario region more heavily with dealers, so that whole eastern part of Canada has been good, as well as the western coast of Canada. We really have not spent a lot of time developing that market. We’ve been busy with the U.S. market where we had a few different sales reps come on in the last couple of years.

“We have a new group now with a West Coast office and an East Coast office, and we’ll see how they do. It takes a few years to really develop some good dealers, good sales. We have to build up the awareness, the branding, the loyalty, all that stuff.”

I understand. What percent of your business is each of the following categories: wood, gas and pellet?

Wittus: “As best as we can follow it, about 68% is wood, 30% gas and almost no pellet, 2% pellet.”

Now, you’re in a pretty good area for pellets, the New England area and the Mid-Atlantic are the stronghold of pellet appliance sales. But it just wasn’t a pellet year?

Wittus: “Don’t forget, we’re in a different type of business than most of the other pellet stove companies. I know other companies have done quite well. But we have funny-looking, modern, expensive pellet stoves and they are very different than the other units. That partly explains our low volume of pellet sales, and again the low gas prices have really affected us.

“We sell warm furniture. For 90% of the people who buy our products, it’s secondary, ambience-driven, warm furniture. So our wood sales have continued to be strong.”

That’s good. Not everyone can say that.

Wittus: “No, but our products are sold and geared toward a different type of audience. It’s not for the people that, unfortunately, have no other choice but to find alternative heating.”

How many dealers do you have right now in the U.S.?

Wittus: “We have about 190 in the U.S., and out of those maybe 100 buy from us on a regular basis and the others are dealers that we’ve known for years and they all buy a few here and a few there, but they are not necessarily displaying dealers.”

What about Canada?

Wittus: “We have about 15 to 20 dealers. Our new sales reps have quite a few they are working on, so we’ll see about that. We’re hoping to bring on another 50 in the next couple of years. Up to this point, we’ve primarily stayed in the U.S. Now we have people up there that are working hard for us developing the market, and they really understand the branding of what we’re all about. So out of the few hundred dealers that they sell to, maybe 50 or 40 of them will become a Wittus dealer.”

Do you sell directly to members of the design community such as architects and designers, or do you have them go through a local dealer?

Wittus: “We do both. It depends on our dealers. If we have a displaying dealer in a particular area we refer them to that dealer. The architects and designers have always been a big part of sales orders. Many of our sales go to projects with multiple units that have been backed up by a design group. So we do sell to some of those directly, but it’s mostly through our dealers.”

Are you able to tell what percent of your total business goes to architects or designers?

Wittus: “Most of our advertising dollars are directed toward that community; we really advertise heavily in the architect and designer magazines. But just a rough number is about 36% of our sales go directly to or can be attributed to, the design community.”

Do you sell over the Internet at all?

Wittus: “We don’t. We don’t have prices on our website. If someone is interested in buying a product from us they have to speak to us or e-mail us and we have Patty in my office who handles all of those leads direct them to a dealer. If there is no dealer in that area, we will sell a product to them. But we are not an Internet company.”

Looking at your site it seems that you are very heavy on stoves compared to fireplaces. What percent of your business do stoves represent?

Wittus: “About 60% are stoves; contemporary stoves we call them. Most of the people who buy from us pick out products because of the way they look first. Heating or what it does is secondary, not the other way around.”

My guess is that the woman makes most of those decisions, right?

Wittus: “Of course, whether it be fireplaces or any other decision, at least in my house.”

Over the past few years, one of the growth areas in the hearth industry has been linear fireplaces, gas fireplaces. A lot of them are big and, if you want one a mile long, you can have it. Are large linear fireplaces a trend in Europe as well?

Wittus: “Yes, I would say so.”

I looked at your site and you seem to have a few linears, but it seems that is not an area you’re stressing in your store, is it?

Wittus: “Well, it is. In fact, today when we talk linear it is our high-efficiency, contemporary linear fireplaces in wood. If you look at our site we have something called zero clearance type fireplaces, and we have the Phoenix Green range from Belgium that we’ve been selling for a long time. That has been one of our best sellers in the last couple of years. It has really been good for us and that market will continue to grow.

“We certainly have seen a decline in our stove sales, and our zero clearance linear fireplace sales in wood are increasing. We’re adding several new manufacturers this year to our repertoire.”

You and Alyce have spent 40 years trying to educate and convince the U.S. and Canadian markets that contemporary design is wonderful and they should really consider it. Well, it appears that it has reached the mainstream. Contemporary design is no longer a fringe element. It’s a driving force.

Wittus: “Yes.”

That must make you feel that you have accomplished something really huge.

Wittus: “Yes, I do in a way, but it certainly isn’t just us. There are a number of companies now that understand how to reach that other audience that is not looking for a little black stove. They want something totally different. They want a design element, and there is a huge number of people in that group.

“Unfortunately, I think these tough EPA standards are really hurting a lot of companies, including my own. We’re struggling to keep up with these new EPA requirements. They are expensive, and we don’t sell thousands of stoves so it is a very expensive proposition for us. But fireplaces will continue to be a huge seller for us and will continue to grow.

“I do think it’s a little unfair that smaller manufacturers like us, and there are many other companies like us, are being forced to invest as much money for testing for EPA as the larger companies that sell thousands and thousands of stoves and potentially pollute so much more. They really should have limits. If you’re a small manufacturer, maybe under one thousand stoves or so, there should be some kind of leeway for us to stay in business. If this continues it could put us out of business.”

What trends, if any, do you see affecting the hearth industry?

Wittus: “That is a million dollar question. If I had an hourglass and could see some great things it would be wonderful. I think the contemporary market will continue to increase and soar. The younger people going out today don’t want what their grandparents had or their parents had. They want something that is more exciting and different. So I think you can look at other industries, such as the automobile industry, and see what they are doing in terms of new designs. It’s more of a futuristic look, and more modern. I think that will follow with furniture and stoves.”

What is your forecast for your business in 2017?

Wittus: “We’re very excited. We’ve already seen the month of January being extremely strong. We’re always working on projects, and some of them are larger projects. We may have worked on those in 2016 and they are now just coming to fruition. I have a feeling that this is going to be a good year for us. I’m very positive.”

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Stuart O’Connor – Vice President

Sherwood Industries/Enviro, Victoria, British Columbia

Stuart O’Connor sitting in front of the Q3.

Five or so years ago, Sherwood Industries/Enviro was primarily a pellet stove company when it began a corporate pivot. Today, approximately 61% of its business is in gas, and growing.

Hearth & Home: How well did you do in 2016?

Stuart O’Connor: “Sales were down 16% compared to 2015, which was a very good year for us.”

Can you break that down by the fuels you have: wood, pellet, gas?

O’Connor: “Our wood business was down 16%, our pellet business was down 32%, but the good news is our gas business was up 23%.”

Which regions of the U.S. were the strongest for you in 2016?

O’Connor: “By far the West Coast. Our West Coast customers in Canada and the U.S. had a great year. Where we lost was on the East Coast, which was very soft.”

What percent of your business is gas now?

O’Connor: “Overall, our gas business accounts for 61% of our sales, which for us is the highest level we have ever seen. When we compare our website stats through Google Analytics, we have really seen a shift in consumers looking at us for gas, and not just for pellet products. We’re continuing to heavily invest in this category, and sales are trending in that direction for us.”

You made a very successful turnaround in your company, didn’t you? At one point you were primarily pellet and you basically did a spin at the right time and went into gas.

O’Connor: “Yes, we heavily invested in the gas because we see its growth and stability. The pellet business was very frustrating. One year we would have a crazy amazing year and couldn’t make enough pellet stoves, and then a year later we couldn’t give them away. Trying to run a business around that was very challenging.

“About six years ago we refocused our R&D Department so that now it’s just gas, gas, gas. It is all we are really focusing on right now. If we hadn’t pivoted so many years ago and changed to being more focused on gas, I don’t know if we would be here today because we couldn’t survive just on the pellet numbers.”

That’s why I take my hat off to you. You did a turn on a dime and you went from one technology to the next and you did it very well. When I was on your site earlier today looking at your products, I noticed your large linear gas fireplace; it’s a beauty.

O’Connor: “Yes, it’s interesting. With the linear we were a bit nervous because we were coming late to the gas market and we were one of the last manufacturers to come out with a linear. We put a lot of energy and effort into designing a really good linear. We really focused on the flame appearance because we found in looking at a bunch of other linears that the flames were never really that impressive.

“We focused on logs and flames and we’ve been very happy with our linear; actually it’s doing much better than we thought it would. In markets in Quebec we’ve done very, very well with our linear. We’re told that when people see our linear burn they are impressed. Consumers are buying it because of the flames.

“My wife and I watch a lot of renovation shows, and look at design magazines. When consumers think of fireplaces, they seem to think linear more than they ever did before. So that category appears to be growing. I think we’ve timed it well in that aspect.”

The linear is still something new. It’s fresh. Probably the vast majority of people in North America have never seen a linear fireplace burning. Many people today want more than just something that heats.They want something that looks beautiful and makes a statement in their home. That’s what the linear really does well.

O’Connor: “That was the challenge. When we designed our first prototype one of the thoughts was to make it look good, but without a lot of heat. We actually went to a larger vent size just so we could get some of the heat out of the unit, and then we also had a heat distribution kit, which takes heat out of the unit and it can be dumped into another room.”

Can you give us a sense of retail pricing on the linears?

O’Connor: “Because it was new business for us, we could afford to take less margin on it. When the sales guys said, It’s a tough market out there. We’ve got to have great flames. We’ve got to have a really nice linear, but we’ve got to be really aggressive on the pricing, we listened. You can have the greatest fireplace in the world, but if the consumer never sees it or it doesn’t get on the floor because your prices are so high, then you are never going to get an opportunity to prove it.

“The base price for our smaller linear, the C34, is about $2,695, and the C60 is about $3,995. There are many linears on the market going for $6,000 or $8,000. We will have a small, a medium and a large size linear in April to give the dealers lots of time to be able to get them out and get them sold for the season. We’ve been very happy and surprised by the success of our current linear.”

Do you have any plans to come out with outdoor products in the near future?

O’Connor: “Possibly. With the success of our linear people are saying, Can you design your linear line to be outdoor? It’s really not that hard for us to do. It’s not on the list right now, but if customers want it and there is a market there for it, absolutely. I’m not sure what you’re hearing from other people, but it seems people are spending more money on barbecues and fireplaces and outdoor living, right?”

Absolutely. The Outdoor Room trend is going strong, and it will around for a long, long time. In fact, in my opinion, it’s now more than a trend, it’s a lifestyle that’s here to stay.

O’Connor: “I agree.”

Both wood and pellet have been struggling for more than a few years. Hearth dealers are relying more and more on gas products. But I’m sure their gross revenues are down because of the lack of wood and/or pellet sales, and that means their profitability is down as well. Have you found that some of your dealers are having a hard time?

O’Connor: “Yes, for people who are unfortunately relying on pellet, it’s tough for them. Our sales guy was traveling around the Boston and New York areas and he said, the dealers are just so heavy on pellet inventory and it’s not selling. Their infrastructure and their costs will stay the same, but their sales to support that are half of what they used to be.”

What percent of your business is in Canada vs. the U.S.?

O’Connor: “It changes every year, but overall our business in Canada is 39% and it’s 61% in the U.S.”

How many dealers do you have in the U.S., and in Canada?

O’Connor: “We have 306 dealers in Canada, and 578 in the U.S. for a total of 884 dealers.”

Do you still do business in Europe or other overseas locations?

O’Connor: “Yes, we still sell product overseas, but it’s less of a focus than it was about 15 years ago. At one point we shipped 24% of our pellet stoves overseas, but the challenge was that every country required different certification, and it became a lot of work trying to keep on top of all the requirements.”

What percent of your business is pellet appliances?

O’Connor: “Historically it’s been around 46-54%, but in the past two years it’s more like 22% on average.”

What trends have you noticed in the hearth industry this past year?

O’Connor: “GAS, GAS, GAS – it seems to be the fastest growing category, and it’s what our customers are asking for. We are noticing that the younger generation seems to be moving away from wood stoves and inserts, but I think there will always be a market for wood products.

“Our view is that the wood category is trending down and might continue moving in that direction. With the required changes coming with NSPS in 2020, our wood stoves will become more expensive in order to meet the new requirements, which will put additional pressure on wood sales.”

Are you concerned about the Net Zero programs in California and the city of Vancouver?

O’Connor: “Yes, we are very much concerned about it. So far this has been introduced for only new construction, but we are also worried about it being regulated into renovations in the future. It’s always hard to know how changes in regulations will affect an industry. We will most likely need to adapt and change to continue to thrive.”

What do you have for new products this year?

O’Connor: “We’re introducing two new gas linear fireplaces in late spring. Following the success we had with our C44 linear, we wanted to introduce both a smaller and a larger linear unit. The smaller unit is the C34 and it has a viewing area of 16 x 36 in. with 30,000 Btus. The larger unit is the C60 and it has a viewing area of 16 x 68 in. with 53,000 Btus. We are very excited about our new linear lineup and see this category growing.”

What is your forecast for 2017?

O’Connor: “We’re planning for a 12% overall increase in business, with the bulk of that coming from gas, wood being flat, and an increase in pellet sales.”

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Nick Bauer – President

Empire Comfort Systems, Belleville, Illinois

Nick Bauer with his dog Arlo standing in front of the 72-in. vent-free linear Boulevard fireplace.

With 10 years under his belt, (two as president), Nick Bauer has brought a strong sense of good product design into his family’s 85-year-old company.

Hearth & Home: Talk to me about 2016. How well did you do?

Nick Bauer: “2016 was a very interesting year for us. It started off a lot better than I expected in the first two quarters, and then the third quarter just got really, really slow and that slowness carried over into the first half of the fourth quarter. When it finally got cold around Thanksgiving and Christmas, the season finally hit. It was just a weird year.

“The past year was our first overall down year in six years or so. It’s still the second biggest year we’ve ever had. We’ve created a level of sales that we haven’t seen in our 83-year history, so it’s never fun to have a pullback, but at some point it’s going to happen.”

Which regions of the country were your strongest producers?

Bauer: “The Southeast still hasn’t got in the deep freeze yet this year, or really last year, and we’re usually pretty strong in the Southeast. The Midwest, Northeast, Northwest got cold, and they pretty much always get cold. So what matters for us is how much cold they get in the Southeast.

“We’re the market leader when it comes to vent-free appliances, and their vent-free is a little more dependent on cold weather, whether it be vent-free heaters, which we sell tens of thousands of a year, or vent-free logs, which we sell tens of thousands a year. Direct-vent isn’t as dependent on the weather as vent-free is.”

Talk to me a bit about the difference between American Hearth and White Mountain Hearth.

Bauer: “Most manufacturers have two different brands that go to market. American Hearth was a separate company Empire set up probably 15 or 17 years ago, which we folded into our Empire banner. We value both brands. Some product goes into both brands and some product is different in both brands.”

Then you have one, two, three, four other brands, Loft Contemporary, Boulevard Linear, Empire Cast Iron Stoves, and Carol Rose Outdoor. Could you define those for me?

Bauer: “Loft is our contemporary product. The rest are more brand names inside our American and White Mountain Hearth family. The Boulevard Linear speaks for itself; we’ve got cast-iron stoves; and Carol Rose Outdoor is named after Carol Burtz, who has been with us 57 or 58 years. They are more family names than brands.”

Speaking of the linear look, is that still hot as a fire?

Bauer: “Yes. It’s kind of funny because Empire is an 85-year-old business, and 20-25% of our sales are space heaters that we developed in the ’70s and ’80s. Now we’re selling $5,000 to $8,000 linear fireplaces. So we go from old school to new school.

“Historically we’ve been your traditional gas log guy, good, better, best price points. We haven’t really participated much in the $4,000 to $10,000 arena until these last couple of years. Now that we are, maybe we should have started earlier because we literally can’t build them fast enough. Unfortunately, we have long wait times on our linear product because we get more orders than we can build.”

Are you finding that consumers are putting more than one fireplace or fire pit in their backyard, because I’m hearing that from some manufacturers?

Bauer: “That wouldn’t surprise me because we’re coming out with a series of fire pits this spring to sell with the Carol Rose outdoor collection. We want to have a fireplace inside, a fireplace outside, we want to have a gas grill and we also want to have a fire pit. Consumers are buying all of these things and our goal is to be the manufacturer they buy it from.”

Let’s talk a bit about your Broilmaster line of grills, and what you’re doing with the old Vermont Castings line.

Bauer: “The Broilmaster line continues to maintain its place in the market. The best thing about the Broilmaster is that it’s a 50-year-old grill and it lasts 50 years. It’s not a fancy stainless-steel grill, which is why we bought the Vermont Castings grill. Unfortunately, after doing the math and designing the product, at this point it just doesn’t work for us. That was one of those risks that we took and it didn’t work.”

So the Vermont Castings grill is dead and gone?

Bauer: “Yes.”

Is the Net Zero regulation in California something that greatly concerns you?

Bauer: “I don’t think ‘greatly’ is the right adjective. I would find a more extreme word. As someone who is young and who has just started his career in this industry, and who wants to be in this industry for the next 20, 30, 40, 50 years, it’s of grave concern that there are forces actively trying to put our industry out of business. It would be different if they were willing to work with us, communicate and be open, but I’ve been at D.C. hearings with these people. I’ve shaken people’s hands when they’ve told me their entire job was to put me out of business.

“It is extremely troubling to have a City Council in Vancouver with five people who just banned natural gas without due process. We went and participated. They didn’t let HPBA finish its presentation. Half the people didn’t even listen to it. It’s extremely concerning and it scares me. We’ve been selling appliances that burn gas for 85 years.That’s what my great grandfather sold in the 1920s and 1930s when the gas industry had just started. It’s really scary.”

But back to Net Zero – I think the regulation is due to go into effect sometime around 2020, but already a number of major builders such as Pulte have figured out how to put up a house that creates as much energy as it consumes, and they are doing it from California to Texas up to Connecticut. I assume you get constant updates from the HPBA concerning what is going on in California and Vancouver.

Bauer: “We have 2.5 people and all they do is this type of stuff for us. Unfortunately, I get all the updates when they happen so sometimes I kind of wish I could be blind and deaf to them, but I can’t. There are huge challenges and that’s a huge myth that it was allowed to go into law without HBPA even knowing. Once something is passed, it’s very hard to get it reversed.”

What trends in the hearth industry do you see right now?

Bauer: “Our largest market share in the industry is definitely linear and outdoor products and inserts. We are predominantly a heating company. We’re not your big aesthetic fireplace guy. We believe it is called ‘Fire’ for a reason, because it produces heat. So we do really well with inserts, and vent-free logs. We have an outdoor product that has also done really, really well.”

The incidence of fireplaces in new construction is way down; only about 50% of new homes have a fireplace. Do you have any ideas of how that could be turned around?

Bauer: “I blame it more on the manufacturers than anything else, myself included. A number of manufacturers are chasing the national homebuilders that are doing tens of thousands of fireplaces a year, and giving them a $300 fireplace. So the guy buys his starter home and with it a junk fireplace. Later, when he trades up to a custom home, we act surprised when he doesn’t want another fireplace. It’s our fault.

“We’ve got to realize that we’re not just selling one fireplace. We could be selling them two or three more fireplaces as they move from house to house. Nothing will change until we as an industry start putting a value on our product and stop chasing the price point. Unfortunately, I don’t see that changing.”

What new products will you have this year in Atlanta?

Bauer: “It will be pretty much a continuation of what we have been doing. We have a True Flame direct-vent fireplace product that uses a catalyst, similar to the old catalyst in wood stoves, to get a really efficient, wavy wood stove-like flame. We’re continuing to expand our outdoor line with fire pits, and the indoor linear line with some new see-through fireplaces with outdoor kits.

“We’re getting a lot of requests for fireplaces that can be vented on the inside of a house and on the outside of the house, so we’re coming out with a vent-free and a direct-vent version of a see-through unit that can be vented on the outside wall.”

What is your forecast for sales in 2017?

Bauer: “I’m cautiously optimistic. I’m a product of the Great Recession. I joined this business in 2007 when everything was down 20 to 30 to 40% a year. So I always really struggle to forecast growth. But I think the consumer market is going to be strong. I don’t see building going gangbusters, but building is still double what it was three, four or five years ago.

“From an internal Operations standpoint, we’re planning for a growth year. We need to do a better job of keeping up with the demand that we currently have, and we’re working really hard to do that.”

What have I not asked that you would like to get out?

Bauer: “Empire is celebrating its 85th birthday on August 26 of 2017. Every five years we do a big party, shut down the factory, have all our friends and family come in. We get so locked into the day-to-day of the business, the block and tackle, and the new products and new customers and new markets, that it’s good just to look back and think about the history over 85 years and four generations.

“We’ve been on this street since 1937, and whether it be World War Two or the Great Recession, or whatever, we’ve been able not only to survive but thrive. That’s what I’m most proud of, and what our employees should be most proud of.”

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Stephen Schroeter with the LV74 linear fireplace.

Stephen Schroeter and his brother Chris grew up in the business, and they’ve watched, and participated in, its growth almost all of their lives.

Hearth & Home: What percent of your business is each of the following categories: wood, pellet, gas, electric?

Stephen Schroeter: “I would say we are very strong in gas. We have a long history in gas and we are known for our reliable products. We have a lot of new wood products this year. Last year, we introduced a few pellet products with our Vicenza line. We also have a lot of new electric products as well this year. We’re a one-stop shop where specialty dealers can come to one source, one brand.”

I recall one time having a conversation with your father and telling him, “Wolfgang, you’ve never seen a product you didn’t want to manufacture.”

Schroeter: “I think my brother and I are a little different than that. We like to stick to our core divisions – Grills, Hearth, and HVAC. He (Wolfgang) is very entrepreneurial. He is a very unique individual who sees things that other people can’t.”

I believe there is a real need throughout the U.S. and Canada for hearth-only retailers to diversify, and you’ve got more than one product. You’ve got barbecues and you’ve got HVAC that hearth retailers, given the right exposure, should be picking up.

Schroeter: “Yes, but you’ve got to put both feet in. It’s like buying a TV. Would you buy a TV at a shop that only had two TVs on display? No, you would go to a place that was a real professional in their industry. Putting the products on the floor is just the tip of the iceberg. All the support, all the training, all the inventory, all the behind the scenes stuff is the bottom of the iceberg and you have to dedicate 110% into that new category in order to succeed. It can’t be a sideline.”

Many hearth dealers started in the late ’70s, early ’80s and they have small stores, perhaps 1,200, 1,500, 2,000 sq. ft. So if you’re talking about putting on a good display of grills or patio furniture or whatever, you’re out of space. You just don’t have enough room, and somehow a lot of them just haven’t made that move to larger quarters.

Schroeter: “Most of the customers that have made the move to a larger showroom have been successful. I can’t name one unsuccessful store off the top of my head. An expansion to a larger showroom, going deeper into diversification, and being dedicated, is a recipe for success.”

How do your hearth and barbecue divisions compare in terms of gross revenues? Is hearth still dramatically more than barbecue? I know you’ve done very well with barbecue over in Europe.

Schroeter: “It’s great to have two large, successful divisions. Our barbecues are highly sought after internationally. It’s a trend that is moving very quickly. A lot of it comes from marketing, but a lot of it comes from the product itself being top-notch at a very good price point.”

You obviously sell barbecues through some online dealers, correct?

Schroeter: “Yes. We do sell to reputable online retailers and many brick-and-mortar dealers sell online as well.”

Have you felt any pushback from your brick and mortar dealers?

Schroeter: “No. They sell at MAP pricing online, which means the retailer can sell at the same price or less because they have the opportunity to do what they want in their own stores. So we’re using the single strongest marketing engine in the world to generate more leads for our dealers, and then obviously they go to our website as well. They want to see all of what Napoleon has to offer and then they can go on the dealer locator.

“This year, more than ever, especially in the U.S., I have heard our dealers say many times, ‘Customers are coming into the store and asking for the Napoleon P500. I want a Napoleon Rogue barbecue. I saw the commercial on TV. I checked the website.’ The heavy marketing we’re doing, on ESPN and other various channels, is definitely driving specialty business in a big way. I will say our specialty dealer business is just skyrocketing in the U.S. on the grill side.”

Is it the same in Canada?

Schroeter: “Yes. Actually it’s surprising. You never know when a saturation point will hit, but the demand for our product is so strong and it continues to grow. Canada had a very successful year.”

Now, is the Outdoor Room trend still going strong in Canada?

Schroeter: “Absolutely. People have great kitchens already. They have great bathrooms. Now they are looking at what else they can do in the home.”

I look at it as a room that has been given to the industries – hearth, barbecue and patio furnishings – just like manna from heaven, and all of a sudden you can sell them fire pits, outdoor fireplaces. You can sell them barbecues, outdoor kitchens, outdoor furniture. Look at the money that represents. It’s huge.

Schroeter: “We did look, and we’ve just finished doing some research that is called the ‘Hot Spots Research Study.’ It was a study of Americans regarding the fireplace category. We asked, ‘How many people currently have a fireplace and in which room?’ Thirteen percent of the population responded that they have a fireplace in their backyard or outdoor area. Then they were asked, ‘How many would actually like to have one in their backyard?’ Thirty-five percent of the population said they would like to have one.

“The difference between the two is what they want to have and what they are actually being given, maybe by a builder now or maybe by a retailer for that matter. It shows a massive opportunity between what people actually want and what they actually have currently in their homes.

“Our study shows that the backyard and the bedroom are the two rooms with the greatest potential for additional fireplace sales. In the bedroom, 28% of the population already have a fireplace, but 53% say they want one. That is a huge, and very significant, opportunity.

“At the Expo, the agency we commissioned to do the research is putting on a seminar on Friday, March 3 at 10:30 am; it’s called ‘If You Show It, They Will Buy It.’ It’s some pretty powerful stuff.

“There’s the research study, and there is also a ‘Design Guide’ to go along with it. We worked with the well-known architect Wayne Visbeen. It’s a great book for dealers to have to provide design ideas to consumers.”

Speaking of design, what are your feelings about the gas linear fireplaces?

Schroeter: “I think linear has been a great thing for the industry. If you look through our ‘Design Guide’ you’ll see how the linear fireplace can single-handedly fit seamlessly in the four pillars of design – traditional, transitional, rustic/eclectic, and contemporary/modern – whether it be drift logs, rocks, glass or lighting. But there is a style and a fit for all of them, which makes it really interesting. And it’s a great thing for the retro market for the future, too, so it has a very lasting, and very big effect on the industry.”

What is your forecast for 2017 for your company?

Schroeter: “We believe we’re going to do quite well. We’re anticipating double-digit growth in all three divisions.”

And you have about 1,400 employees, right?

Schroeter: “Yes. That’s a lot of responsibility. And if you factor in all the dealers, the responsibility adds up even more. We do our best to make sure that everyone is successful.”

Is there anything else you want to get out?

Schroeter: “We have our new Rogue Grill which we released last year. It was the single best release we’ve ever had as a company. It is just a wonderful product. This is a specialty grill series under $1,000 that uses identical components as we do in our $4,000 grill. Napoleon stands for one quality level no matter what size grill you buy.”

I’ve never thought of Napoleon as a company that promotes electric fireplaces very much. Is that category becoming good business for you?

Schroeter: “I believe we have some really great electric products, and so do our dealers, and the sales definitely show it! At the upcoming show we will display some innovative products. We’ve done a lot of investment in this category.”

Is the hearth network in the U.S. and Canada doing well selling electric? Because I know they dragged their feet for years and years.

Schroeter: “Yes. The ones who are committed are very successful. The dealers who show it, stock it, and have it available to go right away do really well. It has become a huge sales and profit generator for them. It really is a massive industry, and if you’re not seeing it, you’re blind.”

I think there are still a lot of retailers who are blind.

Schroeter: “If dealers want to diversify their portfolio and move into a new category, it’s a tremendously fast growing category.”

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