Cuisinart Corporation

views updated

Cuisinart Corporation

1 Cummings Point Road
Stamford, Connecticut 06904
U.S.A.
(203) 975-4600
(800) 726-0190
Fax: (203) 975-4660
Wholly Owned Subsidiary of Conair Corporation
Incorporated: 1973
SICs: 3634 Electric Housewares & Fans

Cuisinart Corporation is a well-known manufacturer of small kitchen appliances. Best known for its food processors, Cuisinart established this home appliance as a market segment in its own right. The company eventually expanded its product line to include coffee makers, hand blenders, hand mixers, and toasters, among other house wares. Whatever the kitchen convenience, the Cuisinart brand has been equated with quality construction and top-of-the-line pricing.

Starting Out

Cuisinart was founded by Carl and Shirley Sontheimer. Trained at the Massachusetts Institute of Technology as an engineer and physicist, Carl Sontheimer owned and operated Amzac Electronics until he sold the company in 1967. Rather than face retirement, he opted for a livelihood that combined his expertise in electronics with cooking, his favorite hobby.

The Sontheimers first saw restaurant food preparation machines manufactured by Robot-Coupe while visiting a housewares show in France in 1971. Certain that they could create a home version of the device, the Sontheimers launched their own housewares business—Cuisinart. At first, the couple allocated $20,000 to import and resell top-of-the-line cookware from Europe to Americans. The Sontheimers also obtained the sole U.S. distribution rights for three prototype food preparation machines purchased from the inventor of Robot-Coupe’s restaurant food processors.

Building a Better Food Processor

In 1972, Sontheimer engineered the redesign of these restaurant food processors for home use. He improved and refined the machines, lengthening the feed tubes and enhancing the disks and blades. Sontheimer also initiated safety features that brought the device in line with U.S. codes and standards. Sontheimer then asked Robot-Coupe to manufacture his design, and within a year he introduced his food processor at the 1973 National Housewares Exposition in Chicago, Illinois.

Sontheimer continued refining his food processor design throughout 1974. His improvements to the device’s blades and disks made it possible to chop a pound of meat in less than 60 seconds or to mix puff shell dough in just 15 seconds. Sontheimer’s refinements not only decreased food preparation time dramatically, but also made cleanup easier.

Gaining Acceptance

Though professional chefs long had been using food preparation machines for slicing and shredding, the device largely was unknown to the American public before its debut in Chicago. Sontheimer’s timing was perfect for introducing U.S. consumers to the food processor, for during the early 1970s Americans were preparing more elaborate foods at home and their interests in kitchen gadgets was at its peak. Yet initially Sontheimer’s device sold poorly. Marketed to department and food stores, the Cuisinart food processor appeared to retailers and consumers to be nothing more than a high-priced, revved-up blender.

To gain acceptance, Sontheimer showed his food processor to James Beard, Julia Child, and other notable culinary experts. Their endorsements—as well as favorable articles in Gourmet magazine and the New York Times —likened Sontheimer’s Cuisinart food processor to landmark inventions such as the cotton gin and the steamboat.

Not surprisingly, sales accelerated in 1975, making Cuisinart first in the market it created. Eva Pomice, writing in Forbes, explained: “With marketing savvy and a credible product, [the Sontheimers] were able to dominate the upper end of the food processor business against such top competitors as Moulinex and Robot-Coupe. Sontheimer did it by making the Cuisinart name synonymous with top quality and price.”

At the time, industry analysts suspected that Cuisinart went from selling a few food processors monthly to moving between 150,000 to 250,000 of the devices in 1976, although no company statistics were available to confirm the estimates. By 1977, however, Cuisinart’s sales totaled $50 million. With its product firmly established, the company suspended its contracting of Robot-Coupe as the manufacturer of its food processors. A Japanese firm assumed the production of Cuisinart models instead.

Competition Heats Up

Other well-known kitchen appliance manufacturers—Sunbeam and Hamilton Beach, for example—began to enter the food processor market around 1977. By the end of that year, consumers could choose from more than 30 models of food processors, varying in price from $30 to $400. Though smaller, lower-priced food processors became the industry norm, Cuisinart would not bend in its quality standards or pricing. The company introduced a larger, more powerful, and more expensive model in 1978. Despite the proliferation of cheaper models by other name brand manufacturers, Cuisinart remained in control of the market, establishing a new level of price points for kitchen appliances. Owning a Cuisinart, Pomice observed, “was tantamount to wearing a pair of Calvin Klein jeans. You could hardly boast of a gourmet kitchen if you didn’t own one of these.”

Without its contract to manufacture and distribute Cuisinart’s food processors, Robot-Coupe launched its own model in 1978. The French company formed its own U.S. subsidiary and issued ads with Pictures of food processors above captions reading, “It used to be pronounced Cuisinart.” Irked, Cuisinart retorted through brochures suggesting that Robot-Coupe lost its position as a manufacturer and distributor of the company’s food processors because of inferior workmanship.

Legal Troubles Follow

Such promotional battles waged into the 1980s. Both companies placed ads in the New York Times during 1980 and 1981. Cuisinart asked consumers: “Are you as easily fooled as they hope you are?” Robot-Coupe ads responded: “Whose fooling whom?” Eventually, a lawsuit ensued. Robot-Coupe, the losing party, was ordered to stop producing ads implying that Cuisinart had changed its name or claiming that it manufactured Cuisinart food processors.

Though Cuisinart emerged from this litigation victoriously, the company was less successful later in 1980 when a grand jury accused it of price fixing. Retailers who sold Cuisinart food processors between 1974 and 1979 claimed that they experienced smaller supplies or were threatened with decreased supplies of Cuisinart food processors if they sold the products below the company’s “suggested” retail prices. The courts fined Cuisinart $250,000 and prohibited the company from suggesting retail prices for one year. In addition, Cuisinart was required to clarify for retailers that compliance with any suggested pricing was purely voluntary.

New Models for the 1980s

Despite its legal troubles, Cuisinart was able to introduce six new food processor models by 1982. The new designs were larger and more expensive than earlier models and proved to be the company’s testament to product diversity. These models featured more powerful motors, more blades, more attachments, and higher prices. In fact, one model sold for $600.

Nevertheless, Cuisinart’s critics warned that this was not the type of diversity of product needed: They wanted a variety of kitchen appliances manufactured by Cuisinart, not just a variety of food processors. Kerry Hannon, for one, told Forbes: “Sontheimer’s market blindness ... kept him from capitalizing on the quality of image that the Cuisinart name conveyed. He introduced a line of high-priced cookware into a jam-packed and fading market. But more natural line extensions like blenders, for example, eluded him.”

The Impact of Competition

Around 1983, Kitchen Aid introduced a direct competitor to the Cuisinart food processor—a high-priced food processor manufactured by Robot-Coupe. In response, Cuisinart instituted a trade-in allowance on its food processors to encourage existing food processor owners to upgrade their equipment. Consumers were allowed up to $66 in credit toward the purchase of a newer, more advanced Cuisinart model when they returned their older models. Soon the company accepted any brand of food processor for credit when upgrading to a new Cuisinart model.

The following year, Sunbeam debuted the Oskar food processor. At half the size of a Cuisinart, the little machine cost a mere $60, about $165 less than a Cuisinart. By 1985, Sunbeam sold 700,000 Oskars, commanding 25 percent of the market. (The previous year, Cuisinart controlled 20 percent of the market.)

In 1984 and 1985, Cuisinart began promoting culinary education and awareness through cookbooks and other media. Anne Greer’s American Southwest, published by Cuisinart, won the Tastemaker Award presented by the R.T. French Company as the best American cuisine cookbook of 1984. The following year, Cuisinart began a cooking videotape series to enhance the culinary education of consumers.

Company Perspectives

Cuisinart has been perfecting the art of great cooking for over 25 years. Now we’ve translated everything we know into a complete kitchen of easy-to-use appliances that makes cooking a pleasure.

The trend of downsized, lower-cost food processors—food processors for the mass market—continued in 1986. At first Cuisinart refrained from entering the foray because Sontheimer did not believe that he could manufacture a better product than already existed. He explained his thinking in Forbes: “We could put pebbles in a can, and if we put the Cuisinart name on it, it would sell. But after that, the name would be absolutely worthless. If we don’t feel we can make a better product, we don’t enter the market.”

Overcoming Sontheimer’s reticence, Cuisinart introduced the Mini-Mate, a chopper and grinder with a reversible, patented blade, in the fall of 1986. At $40 the device was less expensive than competing products and was introduced through a glossy magazine ad campaign created by Geers Gross. Promotions emphasized the Mini-Mate’s use in preparing common recipes such as tacos. The next year, Cuisinart followed the Mini-Mate with the Little Pro, a similar product in the $75 range.

Selling the Company

In 1988, the Sontheimers sold Cuisinart to a group of investors for $60 million. The time was right for the sale. Cuisinart showed good cash flow, and—with 85 percent of its revenue from food processors—the company’s line of extensions was ready for development. The new owners—a leveraged buyout group headed by former E. F. Hutton chair Robert Fomon—renamed the company Cuisinart, Inc., and readied itself for the upcoming decade.

Still, the company’s sales slid in 1988. Consumers liked—and purchased—competitors’ smaller and cheaper machines. They complained that Cuisinart models were too big and bulky to keep on kitchen counters. Frequently stored in closets, Cuisinart food processors had to be lugged out of hiding, which made their use inconvenient. Consumers also found Cuisinart hard to learn. Six to eight blades often overwhelmed the average cook, who saw uses for maybe one or two blades.

By 1989, Cuisinart controlled 12 percent of the market, and its revenues fell to about $50 million. Though Cuisinart maintained its image as a high-priced product for serious cooks, consumers more and more perceived its products as too heavy, too complicated, and too expensive in an arena with too much competition. Highly leveraged, the company filed for Chapter 11 bankruptcy, with $43 million in debts and $35 million in assets. In December the current owners sold the company to Conair Corporation, a national manufacturer of home appliances and personal care products based in Stamford, Connecticut.

Conair renamed the company Cuisinart Corporation and instituted a new marketing program for its products. With more advertising and product demonstrations, the new owners hoped to improve relations between Cuisinart and department stores, as well as become a presence in the bridal market.

New Product Development

In 1990, Cuisinart launched the Food Preparation Center. This device was a food processor with a feed tube large enough to hold whole tomatoes and a whisk attachment so that it could handle operations of a standard mixer. In 1991, planning for the brand extension of upscale products began in earnest. In the meantime, Cuisinart introduced the Mini Prep, a smaller version of its food processor, and offered a newsletter and coupon incentives to Cuisinart buyers. The company also established new accounts with gourmet specialty stores.

The following year Cuisinart continued to plan for a product line beyond food processors. In 1993, Cuisinart introduced its first hand-held and countertop blenders. The company also launched an innovative pasta maker. The Cuisinart Deluxe Pasta Maker debuted at the Gourmet Products Show. With a three-pound capacity and heavy-duty induction motor, the machine made a lot of pasta at once—and quickly (in about 20 minutes). Unused pasta could be stored for use at a later date. The pasta maker directly answered consumers requests for kitchen appliances that supported more health-conscious lifestyles and more consumers staying at home.

Cuisinart also began developing coffee makers around 1994. By 1995, the home appliance market needed a revolutionary new product to lift it from the doldrums. As Lewis Mendelson, an executive vice-president of Dazey, explained in the Discount Store News: “There’s a lack of innovation, and that’s not because nobody’s trying. The problem is that there’s a finite number of things people do in the kitchen and a finite number of solutions.”

Nonetheless Cuisinart impressed the industry with a line of coffee makers introduced at the 1995 Gourmet Products Show. These coffee makers reduced the acidity common to many home models. In addition, Cuisinart models responded to consumers’ tangible needs such as color and design. Moderately priced coffee makers started to look like Euro-styled top-of-the-line models.

Cuisinart also excited the high-end appliance sector with hand-mixers and toasters. In particular, the company introduced a long, extra wide slot toaster in 1996 that was one of eight preferred toasters Good Housekeeping magazine selected from a field of 25. Chosen the toaster for bagel lovers, the Cuisinart two-slice model was applauded for wide slots able to accommodate a whole, unsliced bagel, for a motorized raising and lowering system, and for a setting to defrost without toasting.

After 25 Years

The year 1996 marked Cuisinart’s 25th anniversary in culinary appliances. To commemorate the occasion, the company adopted “Your Kitchen Resource” as a new advertising tag line. At this point in its history, Cuisinart had products in 70 percent of all small appliance categories.

In October 1997, Cuisinart debuted the industry’s first iced cappuccino and hot espresso machine within its Coffee Bar line. A company press release explained: “The professional quality results achieved with Cuisinart’s Iced Cappuccino and Hot Espresso Maker answer the growing consumer demand for great tasting specialty coffee at home. And with the number of cappuccino drinkers steadily increasing in America, Cuisinart’s new culinary appliance has a definite place in today’s kitchens.”

The next year, Cuisinart entered two new market categories: The first foray, into kitchen textiles, expanded the company’s kitchen accessories line, which until that time included kitchen utensils, scales, and prep boards. Now Cuisinart offered towels, aprons, oven mitts, and potholders as well. Cuisinart also entered the hard anodized non-stick cookware market in March 1998. Previously the company offered only non-stick and stainless steel lines. With the addition of a hard anodized non-stick cookware line, Cuisinart gained a presence in every major cook-ware category.

Cuisinart continued to add to its product line in 1998 with a cordless percolator in the Coffee Bar line and a new electronic hand mixer. The SmartPower CountUp Hand Mixer featured the lowest mixing speeds available and came equipped with a digital timer.

In the Future

Cuisinart planned to continue developing innovative culinary tools and devices beyond 1998. The company expected to promote culinary education; for example, by underwriting the public television series Cooking Secrets of the CIA CM [Culinary Institute of America], by publishing booklets and other materials, and by supporting promotional activities for brides and home chefs. Cuisinart sought to maintain its upscale image through marketing to fine department and gourmet stores, thus serving cooking hobbyist and professionals alike. As the company’s promotional material revealed: “People who love cooking can find comfort in the fact that Cuisinart has the financial strength and resources to provide ongoing support to consumers and to the culinary industry.... [T]he company is dedicated to building worldwide recognition for all Cuisinart products.... Reaching cooking enthusiasts everywhere is our lifelong goal.”