Investment Opportunities Will Be Available as Fragmented Industry Consolidates, Report Notes
MINNEAPOLIS–(BUSINESS WIRE)–The barbecue grill industry is experiencing rapid growth, thanks to growing consumer interest in creating outdoor living spaces, product innovations and consumer desires for healthy, tasty alternatives in food preparation, according to this month’s Chronicle report published by The Mercanti Group, an investment banking firm headquartered in Minneapolis and with offices in Los Angeles and New York City.
“There is no question the grilling industry is enjoying considerable success,” says Mercanti founder and managing director Jim D’Aquila. The report, authored by Mercanti analyst Michael Pohl states, “Statistics collected by the Hearth, Patio and Barbecue Association (HPBA) reveal that sales of outdoor grills reached an all-time high of more than $2.9 billion in 2006, representing growth of 12 percent over 2005 sales dollars. Today, the HPBA reports that 81 percent of all U.S. households own a grill.”
Moreover, it’s indicated that 74 million adults barbecued in the past year, with two-thirds of them doing so at least once a month.
“Consumers increasingly are building more elaborate outdoor spaces complete with elegant, all-season furniture and kitchen appliances which include a grill,” according to the Chronicle. “A 2006 study performed by The American Institute of Architects found that 64 percent of its members reported an increase in clients’ interest in outdoor living spaces, up 17 percent from the prior year’s results. The amount of money spent on outdoor rooms is growing quickly as well.”
A key market driver in the grilling industry are the recent innovations made by barbecue grill manufacturers that make cooking outdoors almost as easy as cooking indoors, states the Mercanti report. New features, such as infrared cooking, warming drawers, rotisseries and cooking surface lights, have driven sales through increased price points and heightened consumer interest.
Also contributing to the growth of the barbecue grilling industry is the rise in self-sufficient, health conscious consumers. “The ‘do-it-yourself’ attitude no longer only applies to home improvement,” Pohl writes. As evidence, the report cites the number of cooking shows on primetime television, which have increased dramatically as reality television has entered the kitchen and the Food Network has gained popularity. “Restaurants also are becoming more daring and many of their new menu items are hot off the grill,” the Chronicle states. “Diners are becoming more aware of the fact that grilled meals often serve as a healthy, leaner alternative to fried foods or microwaveable meals.” Barbecue aficionados are also turning to leaner food alternatives, featuring more meat alternatives, including vegetarian hamburgers along with more vegetables.
These trends have sparked a flame in the grilling industry that should have investors on the lookout for hot deals, according to the Chronicle. The report cautions that, because the industry is highly fragmented with brands diversified among the smaller manufacturers where most sales take place, M&A activity tends to be sparse. However, D’Aquila adds, ”To capitalize on projected industry growth, major players in the industry will become more acquisitive as niche manufacturers with an expertise in infrared grilling and other innovative technologies establish leadership positions in their respective markets. Investors should be cognizant of this potentially profitable opportunity and ready to cook while the coals are hot.”
A full copy of this report can be obtained at www.mercantigroup.com.
About The Mercanti Group
The Mercanti Group is a results-oriented boutique financial advisory firm that embraces a fierce commitment to client service and provides creative Merger & Acquisition, Capital Raising and Strategic Advisory solutions to small and middle market companies, private equity firms and individual business owners in the consumer, health care, technology, business services and manufacturing industries. Mercanti offers companies the expertise and capabilities of a large investment bank with the focus, attention and energy of a small entrepreneurial firm. Mercanti has offices in Minneapolis, Los Angeles and New York. Mercanti also is strategically affiliated with Marquette Financial Companies, a diversified financial services company which is a part of the Pohlad family holdings. If you would like more information on The Mercanti Group, please visit the Web at www.mercantigroup.com, or contact a Mercanti professional at 612.333.0130 (Minneapolis); 310.444.0130 (Los Angeles); or 212.883.0130 (New York).
