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How Weber is preparing millennials for their grill journey

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Weber Grills CEO, Chris Scherzinger, joins Yahoo Finance to discuss Weber Grills' market debut, its global growth opportunity, and how the company differentiates itself from other grill competitors by offering a diverse product line for everyone.

Video Transcript

[THEME MUSIC]

- Grill maker, Weber, set to make its debut on the New York Stock Exchange today. Company priced its IPO last night at about $14 per share that was below the expected range of $15 to $17 billion. This pricing would give the company a valuation right around $5 billion. And joining us now to discuss, Weber Grills CEO, Chris Scherzinger live from the floor of the New York Stock Exchange. Chris, appreciate you jumping on with us this morning.

Let's start-- let's start our conversation with the top line growth here. I mean, it's been a huge year for you guys going up to almost $2 billion in sales, and I'm curious how you think about what the trajectory can be for Weber after a clear pull forward into a very unique year for a lot of companies.

CHRIS SCHERZINGER: It has been a really amazing time, right? But thank you Myles and Brian both for having me on. I'm super thrilled to be with you here today. We are excited as all get out for the future. It's a big day for Weber. We're a 7-year-old-- initially a family-founded business, you know. It's been growing-- to your growth point, we've been growing for a 10% or higher CAGR for 7 years.

So imagine putting up a 7-year double digit growth on the board. We have just as much excitement and probably more excitement for the future growth. An amazing opportunity and runway. In the pandemic environment, a lot of people came back to grilling, who may have lapsed in it. And I would say it was sort of a romantic story of falling back in love with barbecue, and that's going to take us forward as well. There are a lot of tailwinds. They're going to last post pandemic into our market going forward.

We think the grilling space is a really exciting growth space for the future. We identified a total addressable market of $49 billion. And so there's a ton of runway for our $2 billion business to grow in that direction. We're in-- we're really unique. We're in 50 million households around the world. And so when you think about that addressable market, so much of it is outside of the US, and that's where Weber really leads and has a tremendous presence in 78 countries around the world. So we're super excited about the growth potential.

- Yeah. Full disclosure, Chris. I'm a definite sucker for a new basting brush. I mean, I'm all about-- I'm constantly looking for accessories to improve my grilling situation here. Talk to us about your install base. 50 million households, not a lot of other companies can tout a metric like that. How do you get people to buy a new grill? I go down my block, and people are still using the same grills that they have, in many cases for 10 to 15 years. They look completely worn out.

CHRIS SCHERZINGER: Well, you can trust a Weber to last a long time. We make a great product. It's how we've built the brand that we've built and how we've become the market leader. In literally every country around the world with an established grilling market, Weber's the number one brand. We generally have a 3 times lead over the number two competitor. I should say the number two competitor's a different company in each country. So there really is no other global competitor in the outdoor cooking space, and that's a real differentiator for us.

We're also differentiating in that we play in every single sub-segment or category of grilling. So we're in charcoal, we're in gas. Those are the two biggest. They make up about 80% of the market and about 95% on a global basis. We're the biggest player there, and we're market share growers and market share leaders in both of those segments. But we're also in electric. We're in pellets. We're in smokers. We're in portables. In every category, we kind of have a grill for everyone.

And that's a big part of the global play is you can match up a Weber solution to your personal preferences or your lifestyle or your stage. And then the big differentiator I'd talk to you about, which I think you guys probably have heard about, and it's the kind of thing that's going to accelerate your purchase cycle and bring you back into the category faster is the Weber Connect Platform. That's our technology platform. It won the CES award last year for best connected homes-- connected smart home product. It's a game changer for grilling.

It's basically like ways for your grill. So it gives you a guided navigation system that changes on the fly depending on conditions on your patio or with your cook, and gives you revised instructions to make sure you get a perfect result every time. And that's something when we show that technology to this wave of millennials coming into the category. Now, I think it's something like in the US, 40 million consumers will turn 35 in the next 10 years. When I show them a grill with Weber Connect embedded in the grill, it drives the purchase interest up almost 50%.

So we know there's a big wave going forward for the category with a lot of new entrants and people seeing the technology applications from Weber that make them really excited and get into the category with us.

- Chris, you have Myles here almost jumping out of his seat. He is-- I think you may have just sold him on the connected grill experience. He hasn't been--

CHRIS SCHERZINGER: That's really why I'm here. I came on to sell you guys grills. That was the whole point.

- Well, Chris-- I mean, I have the Weber. I like standing and just looking at the meat, guessing with my beer and not using the app. So we'll talk offline about what I need to do.

CHRIS SCHERZINGER: OK. We will get you set up for sure. Yeah, exactly.

- Chris, talk to us about your international expansion. You noted you are in 78 markets, but where are you selling into overseas and where are you looking to get over the next two years?

CHRIS SCHERZINGER: Well, it's an amazing growth platform for us, emerging geographies. We've over the years-- Weber's been international for decades, and we've built up markets in Germany-- in Germany, consumers pronounce the brand "Veber," and they are convinced it's a German born and bred brand. And we have the-- we have the same relationship in Australia-- it's Weber-- and they think it's an Australian brand for decades. We build the brand authentically, and we build the market authentically. And many times in an emerging market-- let's say a big focus for us on China right now, big focus on Japan, South Korea, Colombia and Chile, and Latin America.

In these markets, there's a culture of open fire cooking. And we show them the Weber way, and we really retailize or Weberize the category and bring a professional retail marketplace into that market. And that's what's been to all of our success in the Nordics, in Southern Europe, really high growth markets for the last five or 10 years. We're expanding that now into China, Korea, Colombia-- the other markets that I mentioned earlier.

- And then, Chris, just thinking about the US market a little bit. Obviously, there was a lot of attention around Traeger's IPO and what's happening in the wood pellet market. I'm just curious how you guys are seeing that mix and maybe just to think about kind of my peer group-- the millennial group-- what they're favoring as they begin a grilling journey.

CHRIS SCHERZINGER: You know, the millennials-- first of all, I'd say this wave of millennials that this 40 million is coming, that's just US by the way. Internationally, it's more than double that number. This wave of millennials that are coming into the category, they still have a strong preference for gas and charcoal. It's over 80% of millennials. That's the grill type they intend to purchase. But we're good with pellet. We like the pellet space, and we compete in that space.

We think we have a better mousetrap in that space. On a Weber SmokeFire, which is our pellet grill that launched last year, you can achieve temperatures of 600 degrees. So not only can you cook low and slow, you can high-heat-- sear a steak. You can cook real grilling on a pellet format. And so depending-- we're a brand for everyone. We have a big tent. If you like charcoal, we have the best charcoal for you. If you like gas, we have the best gas for you.

We're bringing technology to all these segments. There's a ton of growth in front of us in electric in that segment of the category. A lot of growth in portables. We launched a new grill called the Weber Traveler, which is going to change tailgating experience when tailgating comes back at some point after the pandemic. Lots of upside for us in the future there.

- Chris, as you know, last week we had the Traeger IPO. We now have your IPO. If an investor is sizing up both of your companies, why should they choose Weber over a Traeger?

CHRIS SCHERZINGER: Well, look, it's just a different scale. And nothing against Traeger, they do a great job with what they do. It's just a relatively small niche. It's a single product in a single segment, in a single market, the US. Well, Weber's proposition is going after a $49 billion total addressable market on a worldwide basis. And so much of that unrealized market opportunity is outside of the US.

And so when you think about Weber's footprint in 78 countries, and not just footprint but leadership footprint with market share leadership, established channels. We have a network of 200 brick and mortar stores around the world that sell only Weber products, and they are a Weber exclusive store and retail experience. And they also have grill academy. So you can go take a class on how to learn how to grill something different, which Myles, I need to get you to a grill academy class--

- Oh, he's ready right now--

CHRIS SCHERZINGER: I know you'd like that-- because it's a game changer. You know what? So it's just a different scale-- I think there's room for everyone to be successful. It's a fast growing space, but we're-- our appetite is really big, and we want to be in every segment of the category and every country around the world.

- All right. Chris, I got a couple of flying steaks coming up on Saturday. I'll be sure and be careful with them, making sure we don't overcook anything here. Chris Scherzinger, CEO Weber Grills. Chris, congratulations on the IPO today. I know we'll be in touch as you guys continue--

CHRIS SCHERZINGER: Thank you so much guys. Appreciate it--