Weber-Stephen Products Co.

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Weber-Stephen Products Co.

200 E. Daniels Road
Palatine, Illinois 60067-6266
U.S.A.
Telephone: (847) 934-5700
Fax: (847) 934-0291
Web site: http://www.weberbq.com

Private Company
Incorporated: 1958
Employees: 200
Sales: $145 million (1999 est.)
NAIC: 335221 Household Cooking Appliance Manufacturing

Family-owned Weber-Stephen Products Co. manufactures the Weber grill, a brand name that over the years has become all but synonymous with outdoor barbecue grilling. A sales leader in charcoal grills since the company’s inception in the 1950s, Weber-Stephen has in more recent years developed a line of gas grills, a market in which the company was late in pursuing. Based in the Chicago area, Weber-Stephen is not only privately held, it is extremely private in general, taking on the personality of publicity-shy George Stephen, who invented the Weber Kettle Grill and ran the company for more than 30 years. Eleven out of his 12 children have been employed by Weber-Stephen. All decline to be interviewed by the press.

Barbecuing — A Developing American Pastime: 1800s-1940s

Outdoor cooking dates back to the discovery of fire, and many cultures have traditions of great feasts in which wild game was roasted over or under hot coals. Supposedly, grilling came to America by way of the Caribbean island of Hispaniola, where in the 17th century shipwrecked sailors and assorted rogues adapted the native method of cooking over hot coals by suspending meat on a grid of green wood, which the Spanish called a barbacoa. They took this method to Mexico and the American Southwest. On the range, cattle ranchers created a metal barbacoa to cook meat in order to feed their ranchhands. The new barbecued meats and outdoor method of cooking became the perfect magnet for social gatherings, drawing crowds for fairs as well as political rallies.

Many houses in the early 1900s featured brick or stone fireplaces in the backyard where outdoor cooking was done. In cases where people were required to burn their own trash, backyard incinerators were modified to accommodate grilling. Many people fashioned barbecue grills and smokers out of wine barrels, oil drums, trash cans, water heater tanks, and metal roofing. Rather than using hot coals, these grills relied on wood and kindling. An unlikely man would develop a more convenient fuel that would greatly increase the popularity of backyard barbecuing. His name was Henry Ford.

Ford, who never cared for waste or passed up a chance to make more money, owned a saw mill that provided the wooden frames for his Model T automobiles. To make use of leftovers he decided to burn wood scrap and sawdust in order to form charcoal, which was then ground into powder, mixed with a starch binder, and compressed into briquettes. The Ford Charcoal Company was located in the Michigan town of Kingsford, which would eventually bear the name of the charcoal business. Ford’s method of marketing his briquettes was anything but subtle. With every rancar of automobiles, his dealers also received a railcar of Ford charcoal to sell. At first the briquettes were sold as heating fuel but soon they were discovered to be perfectly suited for outdoor barbecuing. Not only were they easier to use than wood, they provided an evenly distributed source of heat.

Makeshift grills were still the order of the day, but following World War II, when many veterans took advantage of the G.I. Bill to purchase vast numbers of suburban homes complete with backyards and patios, barbecuing became even more widespread and the first manufactured home grills began to appear. Most were of the brazier category: shallow, uncovered grills that tended to burn too hot and, cooking so close to the coals, were prone to flare-ups. Nevertheless, suburbia embraced the backyard grill, whether it be a permanent stone structure, a converted wine barrel, or a cheap tin brazier. Most grills were tended by men, who in the postwar era began to wield the tongs in the family—at least outdoors.

Invention of the Weber: 1951

One of those weekend chefs was 30-year-old George Stephen, who in 1951 lived in the Chicago suburb of Mount Prospect. He did his barbecuing over an old brick grill. In one of his rare interviews, he told the New York Times that “I was smoking up the neighborhood and burning up half of what I cooked. What was worse, I had to spend all my time away from the bar, standing there with a squirt gun to put out the fire when the grease hit the hot coals.” Wind and rain also added to the problems of cooking on an open grill. Stephen was part owner of Weber Brothers Metal Works, a Chicago custom order sheet metal shop that produced, among other products, half-spheres that were welded together to make buoys for Lake Michigan. Rather than just dream about the perfect outdoor grill, Stephen decided to create it, utilizing the metal shop at his disposal.

Stephen designed a barbecue grill that featured a ventilated lid to control the smoking and flaming. Using two halves of a buoy, Stephen’s prototype stood thigh high with a round fire pan and a matching lid with four closable vents. It worked so well that many of his friends wanted one too. The next year he decided to build 50 of the grills and see if he could sell them. “George’s Barbecue Kettle,” as the refined product was first called, was priced around $50 at a time when braziers cost just $7, yet it sold so well that by 1958 Stephen bought out Weber Brothers and dropped all other metal working projects in favor of building nothing but his outdoor grill. He renamed the shop Weber-Stephen Products, retaining part of the original name in case he had to return to doing other sheet metal work.

In 1959 Weber-Stephen employed 12 men who turned out 15,000 units. Stephen hired Ed Schaper, a printing salesman, to help sell the kettle grill. Both men not only forged relationships with wholesalers, they visited area supermarkets and shopping centers to show consumers how to cook on the new kettle grill, which unlike open braziers had the ability to circulate heat by an adjustment of the vents. One of their early big breaks came during a Wisconsin bratwurst festival when, because of a sudden rain storm, all of their competitors had to shut down. The kettle grill, protected from the elements by its lid, had the field to itself.

Sales grew steadily, generally between 15 and 30 percent, so that by the late 1960s the Weber grill was a fixture in the Midwest, particularly Chicago and Milwaukee. On either coast, however, Weber grill sales trailed such competing brands as Big Boy and Charbroil. When inexpensive foreign products, including Hibachi grills, entered the U.S. market in the 1970s, many domestic grill manufacturers responded by turning to thinner metal and lightweight designs in order to compete on price. Weber-Stephen took an opposite approach, opting for more solid construction and targeting the high-end market. With many Americans becoming interested in more sophisticated fare than just hamburgers and an occasional chicken breast, the Weber grill became the product of choice for the more upscale market. Clearly well designed and made to last, Weber grills could easily command a premium pricepoint. Weber-Stephen had by this time developed a roster of freelance representatives to sell their grills in the United States and Canada and, to a lesser degree, overseas. Sales increased by 40 percent a year in the mid-1970s. Although the company did not announce its financial results, it was estimated that by the late-1970s Weber-Stephen was shipping between 500,000 and 800,000 units a year, generating gross sales between $15 million and $24 million.

The product was so entrenched by now that “the Weber” became almost a generic term for barbecue grill. Stephen continued to run the company, bringing his children into the operation, with 11 out of 12 working for Weber-Stephen at some point. As more and more households purchased grills, the market began to mature and the rapid growth in Weber sales tailed off. In the late 1970s and into the 1980s, Weber-Stephen would make attempts at diversification, turning to such products as lanterns, bird feeders, mailboxes, tablecloths, sail covers, and electronic bug zappers. After suffering poor results in these ventures, the company decided to focus on making its grills even better. They also moved aggressively to protect their kettle design. In 1983, some two dozen foreign competitors exhibited grills that looked like Webers at the National Hardware show, prompting Weber-Stephen to pursue a five-year legal battle to gain trademark status on its kettle design.

Aside from foreign companies, Weber-Stephen faced an additional challenge from the makers of gas grills, which had been around since 1960 when the units were tied to natural gas lines and anchored in place. In the early 1970s propane tanks were introduced, making gas grills portable. George Stephen recognized the potential of gas and as early as 1972 made an attempt to incorporate it into his line of grills, but in the end he decided instead to focus on charcoal grills. By the mid-1980s, however, gas grills were beginning to make significant gains, despite a price that was much higher than charcoal grills. Many consumers were simply won over by the speed and convenience of gas.

Weber-Stephen, well behind in gas grill development to such heavyweight competitors as Sunbeam Products, invested the money and resources necessary to develop gas grills, pre-miering its Genesis line in 1985. In that year, charcoal grills still outsold gas grills by a wide margin, accounting for 70 of the more than 11 million total units sold, but the momentum was clearly with the gas segment of the market. The sale of charcoal grills peaked in 1988, then began to slide, while the sale of gas grills continued to rise, finally surpassing charcoal in 1995.

Key Dates:

1951:: George Stephen invents the kettle grill.
1958:: Weber-Stephen Products is established.
1989:: Weber Grill Restaurant opens.
1993:: George Stephen dies at the age of 71.
1995:: Gas grill sales surpass charcoal grill sales.

Weber-Stephen made another attempt to broaden its business in 1989 by opening The Weber Grill Restaurant in Wheeling, Illinois. With its kitchen using six oversized Weber grills that customers could watch in action through a large window, the restaurant not only offered food that typical outdoor chefs might prepare, it demonstrated the versatility of the Weber grill by featuring such dishes as veal-stuffed pork chops or trout grilled with a bread crumb crust. The Wheeling restaurant was clearly testing the waters for a possible franchising concept, but mixed reviews dampened the enthusiasm for rapid growth. Weber-Stephen maintained that the restaurant was a success and that it would consider opening new outlets if the right situation arose, and in fact the Weber Grill Restaurant was still open a dozen years later, although no new restaurants had been added.

Death of George Stephen: 1993

Although Stephen would remain president and CEO, in the early 1980s he began a transition of power by forming an executive committee, comprised of his heirs and longtime company executives, that would one day run the company. He then spent a good deal of time traveling to such places as Africa and Antarctica. He concentrated on the manufacturing side of the business, leaving marketing to others. Stephen died in 1993 at the age of 71; his son James, the third oldest child, assumed the position of president and CEO. Like his father, James Stephen refused to speak with the press, and the company’s financial results were closely guarded. Not having to answer to shareholders on a quarterly basis was an advantage that Weber-Stephen continued to hold over its competitors. The company was able to invest in research and development and not have to show immediate results. No matter how profitable Weber-Stephen may have been when its founder died, some observers questioned how well positioned the company was for the long run.

Weber-Stephen continued to steadily sell its high-end charcoal grills in the 1990s, even after sales of gas grills overtook charcoal. By the end of the century barbecuing was more popular than ever. According to the Barbecue Industry Association, about 75 percent of all U.S. households owned a barbecue grill in 1999, and 40 percent owned more than one. Many owned both a gas and a charcoal grill. Almost 60 percent of grills were used year-round, with men far more likely than women to do the barbecuing. Many consumers buying Weber grills were upgrading to a better-made unit that would not rust out in a season or two. Gas grills, in the meantime, were becoming even more expensive, with new models being introduced each year in a manner similar to luxury cars. With the U.S. economy booming in the late 1990s, deluxe barbecue grills became almost a status purchase. Some of these “outdoor cooking systems,” which featured a massive gas grill cooking surface, side burners, and a refrigerator, approached $10,000 in price.

Weber-Stephen, with its reputation for quality and accepted higher pricepoint, was well situated to take advantage of consumers’ desire for more expensive gas grills. The company staked its territory below the deluxe market but well above the average-priced grill. While Sunbeam focused on the $150-$200 market, Weber-Stephen’s low-end gas grill cost $360 and was never sale priced. In 1997 the top-end Weber gas grill cost $1,000. A year later the company introduced the Summit model costing $3,000, which it launched with a splashy advertising campaign in major magazines.

Entering a new century, Weber-Stephen appeared to have made a successful transition between generations of the Stephen family. Charcoal grills maintained a loyal following, gas grills were highly profitable, and the Weber name continued to be a valuable asset, which along with its grill designs the company was active in protecting. Weber-Stephen sued a Chicago hardware store that had taken the Internet address www.webergrills.com in order to sell Weber grills. When it was clear that it would lose, Weber-Stephen withdrew the suit. The company also sued Sunbeam in 1998 over patent infringement involving the use of a sear grid on gas grills.

Weber-Stephen looked to further expand its distribution channels beyond hardware stores to department stores and other high-end retailers. It also looked to the Internet to sell its high-cost, low volume grills. Discount stores, such as Wal-Mart and Kmart, where most consumers bought grills, was one market that the company needed to shore up. Foreign sales offered potential as well, but presented several ongoing challenges. With little trademark protection in many countries, Weber had to compete with cheaper knock-off s of its designs. Shipping costs of its heavy units also put the Weber grill at a price disadvantage. But perhaps one of the greatest obstacles to increased overseas sales was simply a cultural one: convincing men that there was no shame in doing the cooking.