Traeger opened on the NYSE a little over a week ago. An opening trade for over 3 million shares at $22 per share was well above its planned IPO price between $16 to $18. It’s now trading over $30 per share. It has well exceeded its projected ~$2 billion valuation.
In an interview shortly before the close on opening day, CEO Jeremy Andrus shared he hadn’t been watching the twists and turns of the day’s stock prices. Rather, he and his company are playing the long game to build a brand that is valued by more than dollars and cents, but by consumer passion and loyalty.
“At any given moment, the market may like us or not, but we’re just going to keep charging ahead, building the business,” he says, confidently exclaiming, “Traeger is unlike any other outdoor cooking solution because it brings so much joy and meaning into people’s lives. We are creating a community – the Traegerhood.”
With an estimated 3% share of the established grill market of some 75 million U.S. households, that’s a bold assertion for a highly-specialized grill company that sells only wood-pellet grills, unlike market-share leader Weber, which offers a full range of grilling options, including charcoal, gas and wood pellets. Weber went public on August 5 and opened at $17 per share. Currently it’s shares are trading under $19.
Traeger’s very specialization makes Andrus confident of his company’s ability to bring more and more families into the Traegerhood. A Traeger allows people to cook on real wood which imparts a unique flavor to food and it can do more than just barbecue and grill, but to smoke, bake, roast and braise.
Friend tells a friend
“The Traegerhood makes us truly different. When your community members love and trust you, they’re your best evangelists,” he continues. “Some 80% of Traeger owners have recommended the brand to an average of six other people. Traeger community members love to share.”
An elite member of the Traegerhood is industry-insider Russ Wheeler, CEO of retailer BBQGuys, who shares his personal favorite BBQ is smoked wings on a Traeger Timberline.
Traeger lends itself well to this communal spread. Unlike cooking on the kitchen stove where maybe 80% of it is done for one’s own family, the patio is the place where people gather so that outdoor cooking is less a solo, than a shared group experience.
And because cooking on a Traeger is so different than cooking on the typical charcoal or gas grill, people love to explain how it works. Then when the food is served, its better flavor seals the deal.
“A Traeger is very versatile. It actually makes cooking more fun and it makes your food taste better,” assures Andrus.
Due to its versatility and ease of use, firing up as quickly as a gas grill, Traeger owners cook on their grill an average of once every six days, or 56 times per year. And unlike other grills which sit idle during the winter months, Traeger owners continue to cook about once a week from November to February with Thanksgiving, Christmas and the Super Bowl key days to cook with a Traeger.
Friend-tell-a-friend, word-of mouth marketing may not be the fastest way to get the word out, but it is, without doubt, the most powerful and effective and from the company’s perspective, the most efficient.
The word is spread further through social media, where Traeger boasts the largest social media following of any other grilling brand, including 1.6 million followers on Facebook, Instagram and YouTube and some 350,000 user-generated posts across social channels, including Twitter.
Gathering around a wood fire may be the oldest method of cooking, but Traeger brings it into the 21st century with its Traeger app.
Through the app, owners can program, monitor and control their grill at the push of a button and access a digital library with some 1,600 customized recipes. The company reports its app is used by more than 1.6 million mobile devices per month.
Because of its high-tech edge, Andrus describes Traeger as a disruptor brand. “The grill industry is big and it’s been fairly stable and commoditized, until Traeger,” he says. “Our heritage is innovation. We are always pushing the boundaries of innovation to ensure we are cutting edge from the experience perspective.”
More grilling ahead
Looking to Traeger’s future, Andrus is confident the bounce it got during the pandemic year is just the beginning, when sales grew from $363.3 million in 2019 to $535.8 million in 2020. “Yes, during the pandemic, there was some acceleration, but outdoor cooking is a ‘sticky’ behavior. Some 70% of Americans say they plan to cook as much if not more post-pandemic,” he says.
With a 28% CAGR reported from 2017 through 2020, Andrus declares Traeger has a highly durable growth model. “We are taking share because we have a better product and a better user experience. It’s always been about bringing a better solution to someone who’s been cooking on a conventional grill,” he says.
And because of the consumable nature of the wood pellets used to fire a Traeger grill, the company has built-in, recurring revenue from their sales. It’s wood pellets are 100% hardwood and sustainable because they are made from sawdust and other byproducts of the lumber industry, which would otherwise go to waste. Some 22% of Traeger revenues last year came from sales of pellets and other consumables, like sauces and rubs.
Traegerhood can spread
In answer to a final question about whether the company’s heady growth is sustainable, Andrus says his company is just getting started.
“We have a really long runway in terms of penetration,” he explains. “Our brand awareness is 14% and it tends to be concentrated in the West and Pacific Northwest. But in the Northeast, the South and South Central, we are virtually unknown. These markets are huge opportunities for us.”
He goes on to explain that when the company moved its headquarters from Portland, OR to Salt Lake City, UT six years ago, it had only a low single-digit penetration in that state. But today, it’s up to 15%. He foresees the same level of growth as the Traegerhood expands across the country.
It has the wherewithal to do it, being carried by local specialty stores and national retailers like Ace Hardware, Amazon.com, BBQ Guys, Cabela’s, Costco, The Home Depot, Wayfair, and Williams Sonoma.
“We simply have to continue to provide a better product experience, amplify our messages and educate more consumers that there’s a better way to cook at home. It’s with a Traeger,” he concludes.