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Hearth & Home April 2017

Discovery III from Quadra-Fire.

Sales Slide Continues

By Bill Sendelback

Weather and the price of fossil fuels continues to negatively impact the sales of wood-burning products.

It has been a tough few years for wood stove and fireplace insert sales. With U.S. wood stove manufacturer unit shipments off 4% through the third quarter of last year, and insert sales down a whopping 35.5%, most manufacturers report disappointing wood-burning product sales and are not expecting much improvement in 2017.

Canadian manufacturer shipments of wood stoves were actually up 8.6%, but fireplace insert sales, like in the U.S., were down 30.5%. With wood stove sales in the U.S. struggling to hit 85,000 units, no one is optimistic enough to project wood stove sales hitting the recent high mark of 127,196 established in 2008.

“Wood stove sales have definitely been struggling the last couple of years,” says Stuart O’Connor, vice president of Sherwood Industries, manufacturer of the Enviro brand. “Last year was a tough year, especially in the U.S. with the uncertainty of the national elections, and we expect wood stove sales overall to be flat for 2017.”

Aspen from Kuma Stoves.

“We normally consider wood-burning sales to be stable from year to year,” says Jeni Forman, senior vice president of Retail Sales for Hearth & Home Technologies (HHT), “but the last two years have been a little tougher than usual. Wood-burning is ingrained in our population, so we expect a return to stable, slow growth starting this year.”

But a big concern expressed by some manufacturers is the apparent decline in the average price of wood stoves and inserts. “We’re seeing a little bit of a shift in market share from specialty retailers to the Big Box stores,” says Forman. “This is resulting in lower average prices, just like it has with grills, a shift caused by some consumers looking for lower-priced products because of the soft economy.”

“We’re seeing a stunning turnaround in the average wholesale price of wood stoves, with a huge drop,” according to Dave Kuhfahl, president of Hearthstone Stoves. “Part of this may be that some lower-priced, single-burn-rate products are now EPA certified and included in the total numbers.”

Industry manufacturer shipment numbers reflect that, through the third quarter of 2016, the average wholesale price of wood stoves in the U.S. had dropped 13%, from $915 to $796 even as the average price of wood-burning fireplace inserts had risen 6.2% from $1,225 to $1,301. The average wholesale price of wood stoves in Canada has also suffered, down 5% from $768 to $730, while inserts were up one-half percent, $1,018 to $1,067.

Although there is concern about the drop in average wholesale wood stove prices, the less expensive steel stoves actually lost market share to the more expensive cast-iron models. Through the third quarter of 2016, U.S. unit sales of steel wood stoves dropped to 56% of the total from 72% in 2015. In Canada, steel stoves continued to dominate with 88% of the 2016 market following a similar 87% share in 2015.

Despite sales numbers that few can brag about, manufacturers remain cautiously optimistic. However, few are introducing new wood burners this year, and it’s not because of soft sales numbers. It’s because most are putting all of their R&D efforts into tweaking and testing existing models to meet the EPA’s New Source Performance Standards’ (NSPS) 2020 emissions standard.

Ashford 25 from Blaze King.

“After our wood stove sales were at record levels in 2015, the following year was unusual,” says Alan Murphy, president of Blaze King. “The year started soft, and even record sales in October and November were not enough to keep us from being down 11% with U.S. sales off 15%. Now that we finally have a winter, and with strong January and February sales, we should be in for a good year.”

Murphy is “happy” that the industry is being “challenged” by the NSPS, but Blaze King does support the industry’s efforts to move the 2.0 gph emissions standard from 2020 to 2023. “But we want the NSPS rule reopened. The holes in the standard’s auditing procedures are draconian and can put manufacturers out of business.”

The standard allows the EPA to randomly pull units to be tested by a testing lab of EPA’s choosing. If any of the units fail by testing to more than 150% of the NSPS standard, the EPA, within 72 hours, would issue a “cease and desist” order to stop production of that model and put a hold on all such models in the supply chain, such as manufacturers’, distributors’ and dealers’ warehouses. That manufacturer then would have to send two such models to separate test labs in order to prove that EPA’s testing was incorrect.

Manufacturers point out that initial testing is not easily reproducible, possibly resulting in retesting failure, and the EPA’s audit procedure could easily damage a brand. The HPBA is challenging this segment of the NSPS as part of a lawsuit against the EPA.

New from Blaze King is its Ashford 25 catalytic insert shown at last year’s trade show but finally in production with a cast-iron front and an emissions rate of 0.9 gph. Murphy says Blaze King offers 11 wood stoves and inserts tested to less than 2.0 gph, including one at 0.84 gph.

While some of its dealers say that 2016 was “difficult,” Foyers Stûv had a sales increase and a “pretty good” year, says Nadia Gilbert, North American Operations and Marketing manager. “We’re seeing more of our wood burners going into living rooms,” she says. “People now want to see them. So we’re focused on designs to help customers see the fire.”

The Stûv America 16 cube.

Stûv is not introducing new wood stoves this year, but offers freestanding and insert models tested to less than 2.0 gph, the 2020 maximum for wood models tested with cribs.

Jeni Forman of HHT sees the continuing movement of modern, contemporary designs in gas hearth appliances, but sees modern, linear styling “struggling” in wood-burning products. “Most wood stove sales are in rural markets where more traditional designs dominate,” she says. Forman believes the consumer wants a big, open view of the fire with glass as big as possible, offering an opportunity for more transitional styling with less ornate designs over the glass and less door trim.

HHT is one of the companies not introducing new wood stoves this year. “We’re focused on preparing for the 2020 NSPS standard, and we’re well on the way,” says Forman. “Even if the 2020 date is moved to 2023, the industry will see fewer new models launched as we all push to meet the standard. Unfortunately, some manufacturers may not make it.”

Highlighting Forman’s concerns about the “dramatic” price gap between products sold by specialty retailers and mass merchants, she points to a wood stove model with thermostatic control introduced by an HHT brand two years ago, with moderate success. “Today’s consumer is not ready to pay more for features such as thermostatic control. There is not a lot of elasticity in what today’s consumer will pay.”

Also concerned about the drop in the average prices of wood stoves, Hearthstone’s Dave Kuhfahl admits to 2016 being “not a very good sales year” with the company’s wood-burning product sales down 18%. He points out that sales in New England were the hardest hit because of the low heating oil prices, the major heating fuel in the region.

While expressing “cautious optimism” for 2017, Kuhfahl says many U.S. manufacturers are suffering because of the strength of the U.S. dollar, making it difficult to sell into Canada and other countries and giving Canadian manufacturers a price advantage selling into the U.S.

Hearthstone now has 14 wood burners certified to the current NSPS standard, and the company is “trying hard” to meet the 2020 standard, according to Kuhfahl. But the company has elected not to sell its 2020-certified models until 2018. “We don’t want our dealers to get stuck with pre-2020 models, so this will give them time to sell off their older models and restock with 2020 models.”

Tula wood stove by Hearthstone Stoves.

Kuhfahl also is concerned about models testing to less than one gph; he says that these models may cost the consumer $600 to $800 more. “I think the consumer will say ‘no’ to these higher prices,” he says. Kuhfahl also has noticed a demographic shift in wood stove purchases.

“Older generations are not buying wood stoves because of the effort those stoves require and because of the glut of lower-cost fuels such as heating oil, natural gas and LP, and many kids are not married and have not yet bought a home. With that and today’s rigid regulatory atmosphere which has given wood-burning a tarnished image, I don’t forsee any favorable movement for wood stove sales.”

New from Hearthstone is its Tula wood stove, a European-styled, transitional model including a heat storage area on top.

After two poor wood-stove sales years, Bret Watson, president of Jøtul North America, is seeing his wood stove sales rebound in the first quarter of 2017. Now that winter has finally arrived, Watson sees “some life” in wood-stove sales and says Jøtul is “back in a growth mode.” But after seeing his wood stove sales down 8% in 2016, Watson is concerned about the future.

“We can only hope for winters,” he says. “If not, by 2020 the industry could be down 25 to 30%. The new normal for oil prices is less than $60 a barrel. This won’t help us get back to the sales totals of the past.”

F500 Oslo by Jøtul.

Jøtul is seeing a shift to smaller wood stoves. Sales of its four smallest models are up while sales of its larger units are down. “With mild winters and low fuel prices, consumers don’t need heat,” he says, and clean-faced models are becoming more popular.

“Not everyone wants arches in their glass door,” he says. “They want more view of the fire and more modern styling.” As a result, Jøtul is offering clean-faced versions of its F100 and F400 models and has redesigned its F500 Oslo to offer both clean-faced and arched-faced models.

While most wood stove manufacturers are glad to have 2016 behind them, at least one manufacturer had a sales year to celebrate – again. Kuma Stoves saw a 20% sales increase in 2016, its third annual sales increase in a row. Mark Freeman, president, is planning on a 15 to 20% sales increase this year.

“I think we will make this goal as we increase our market share. We think we have found our market – products made in the USA. People are starting to care about this, and also our 100% satisfaction guarantee is working. We offer middle prices because customers today don’t have deep pockets, but they want the basics, quality and heat. We’re going to keep doing what we’re doing because it’s working.”

But another part of the company’s recent sales success is that its market currently is west of the Rockies, an area hammered this season with winter weather. Kuma, however, is planning to expand its sales to the East.

Like most manufacturers, Kuma is offering no new wood stove models in 2017, although the company is developing a pellet stove featuring a patented fuel feed system. Freeman is EPA 2020 testing each of his current wood stoves, and now offers four non-cat models and one catalytic model.

Napoleon Fireplaces had strong overall sales in 2016, but its sales of wood stoves and inserts were down slightly. While expecting wood-burner sales to continue at a slow pace, Napoleon continues to invest in new styles and models of wood burners, according to John Czerwonka, vice president of Hearth Sales. He suggests that one reason for a dip in sales is that some consumers and some dealers are waiting for new models certified to the 2020 standard.

“We’re seeing more interest in modern, transitional styling rather than more contemporary designs,” says Czerwonka. “And we’re seeing more interest in larger models versus smaller units.”

Napoleon is “focused heavily” on designing new models and re-engineering current models to meet the 2020 standard. Although Napoleon is headed toward non-catalytic technology to meet that standard, the company is also looking into catalytic technology. Napoleon is introducing no new wood stoves for 2017, opting instead to unveil them for 2018.

With its wood stove sales showing a slight increase in 2016, Pacific Energy Fireplace Products is seeing “real positive indicators” for a better 2017, says Corey Iversen, North American Sales manager. Iverson thinks contemporary styling is a significant trend in wood stoves. But what is driving development of new models is the NSPS 2020 standard even though many of those new models will be delayed until 2018, he adds.

“We’re very confident all of our products will meet the 2020 standard,” he says. “We’re trying very hard to stay with non-cat technology, but we see a place for catalytic technology. It’s a very quick way to get low emissions, especially for large fireboxes. We’ve been working on our aesthetics, but now we are focusing on technology.”

Alderlea 1.2 cu. ft. firebox by Pacific Energy.

New from Pacific Energy is its Alderlea 1.2 cu. ft. firebox, emitting only 2.6 gph, a small cast-iron model featuring vertical or horizontal venting outlets. In the company’s value priced True North line, its TN 10 wood stove is new.

Younger consumers are “steering away from wood and moving to gas,” according to Sherwood Industries’ Stuart O’Connor. He sees that as one reason for the 16% sales decline in his wood stove sales in 2016, and expects flat sales in 2017.

“Regulations like the NSPS are not helping our industry,” he says. “We would normally invest in new wood burners, but not this year as we prepare for the 2020 standard.” Sherwood is concentrating on the internals of its wood stoves, working on a hybrid technology.

“Our dealers seem to like the hybrid technology, but they suggest we stay away from catalytic technology because it requires more consumer call backs.”

Last year was “supposed to be a strong wood-stove year” for Stove Builder International (SBI), but after a strong start, 2016 wood-stove sales were “just okay” according to Marc-Antoine Cantin, president. “But with the momentum of a busy December and January, 2017 should be better.”

SBI is working mainly on a new wood-burning fireplace and new pellet stoves, but it will have a “bunch” of new products for 2018. “We’re working on getting our models to the 2020 standard, but we plan to introduce them in 2018. If they can push the 2020 standard out to 2023, that will allow all of us additional and needed R&D time.”

Like all wood stove manufacturers, Travis Industries is retesting its entire line to meet the 2020 standard. “It’s a full-time job, so we’re hoping that the standard gets moved to 2023,” says Perry Ranes, director of Sales. “There is really nothing driving the wood stove market with low heating fuel prices, mild winters and a still sluggish economy, so the market continues soft,” says Ranes.

“We think the market will hold its own with not a lot of change,” he says. “We’re forecasting some growth for 2017, but it will come from our newer products.” While Travis is not yet introducing new wood stoves or inserts, it is now offering enameled colors in its Rockport mid-sized, cast-iron wood stove.

Cape Cod wood stove by Lopi.

The HPBA continues to challenge the NSPS issues, now with the help of Federal legislators. In January, U.S. Congressmen Collin Peterson (D-MN) and Bob Goodlatte (R-VA), along with six other members of the U.S. House of Representatives, introduced legislation “to ensure regulatory fairness for wood-appliance manufacturers, retailers and consumers,” according to the HPBA. Known as the “Relief from New Source Performance Standards Act of 2017,” the action would extend the 2020 NSPS standard from taking effect May 15, 2020, to May 15, 2023.

“My constituents are tired of an overly aggressive EPA setting unachievable regulations that do nothing but hurt our employees and raise prices for those simply looking to heat their homes during cold weather,” says Congressman Peterson. There is no word on when this bill may come to the floor of Congress for a vote.

Also bound to have an effect on wood-stove sales this year is that the Federal tax credit for biomass stoves and inserts that are at least 75% efficient did not get extended; it ended with consumer purchases as of Dec. 31, 2016.

Berkeley by Sherwood Industries, manufacturer of the Enviro brand.

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