Good morning, everybody. My name is Peter Benedict, Senior Research Analyst at Baird, and welcome to the day one of the ICR Conference. Really pleased to be hosting the next session here with Traeger. We've got the CEO, Jeremy Andrus. We've got the CFO, Dom Blosil, and as well as their new head of IR, Nick Bacchus, with us today. I think what we're gonna do is kick this off with a little bit of a video to give you a little flavor for Traeger, and then we're gonna go through a Q&A session. If you do have any questions, you can enter them into the portal, and we'll do our best to weave them into the conversation. Hannah, with that, can you boot up the video?
All right. Excellent. I'm still waiting for you guys to incorporate a shot of my Traeger with my beer can chicken in there, but I know I've got some more work to do. Maybe something for later this year. Anyway, thank you guys for spending some time here, again, on behalf of Baird and ICR. Jeremy, Dom, let's just kick this off with a little background quickly on the two of you and maybe just give folks a sense of what brought you to Traeger, and then we'll start to jump into the industry and the company.
Yeah, happy to. I'll jump in just for a few seconds on this. I found Traeger eight and a half years ago. What was remarkable to me was how the product market fit and just the important nature that the brand played in people's lives, and the level of energy that came from it. You know, it was predominantly a Pacific Northwest brand. It'd been around for 27 years. It was an innovation and a disruptive platform that really didn't find its way, you know, geographically very many places or just from a product and mass market perspective. Our mission since that very first day has been to bring this in.
This cooking experience that people just fall in love with, into other people's homes. You know, prior to that, I've always, you know, most of my career been an entrepreneur and have a real appreciation when you find this type of fit. You can't create it with money alone. You know, it's been you know, eight years next week that I will be CEO of the business, and it's been an incredible run.
Yeah, I've been with Traeger now for almost eight years as well. You know, I really view this as an opportunity to continue to work with Jeremy on really building a brand from the ground up. As Jeremy, you know, mentioned, it's really an incredible cooking platform. It has an amazing, passionate community, and we're really excited about the building blocks that we saw eight years ago, and it's been an awesome journey from point A to point B and really excited about, you know, the future and how we're positioned.
That's great. That's perfect. Let's start with the pellet grilling industry. There's a disruption going on within outdoor grilling, pellets taking share from gas. Maybe talk about kind of your guys' view, kind of 10,000-foot view of the market, size of the market, what's happening with pellet grills, why are they taking share from gas and what you think kind of the opportunity is, just from a sector standpoint.
Yeah, sure. First of all, I mean, everything in consumer starts with the experience that a consumer has with the product. We heard this qualitatively early on, and it took us some time to really unpack the attributes and why there was so much passion that a Traeger owner had for their Traeger grill. You know, it boils down to a simple set of attributes that accomplish our mission, which is bringing people together to create a more flavorful world. It goes back to an acronym that we call TVEC, and that stands for Taste, Versatility, Ease of Use, Consistency and Community. This is what Traeger owners love about Traeger. We went out and started to really try to understand quantitatively what that meant in terms of product market fit.
It was interesting to, as we surveyed owners of Traeger and some other competitive grills. Doesn't matter, gas, charcoal. We also looked at it head-to-head against the largest brands in the industry, Weber, Char-Broil, Big Green Egg. We saw back in 2016 that Traeger won hands down, and it was not even close. In fact, 90% of a consumer who owned a Traeger and a competitive grill brand used their Traeger and preferred their Traeger. It's just overwhelming. That is the foundation of what we're building. Of course, we are always innovating, and we are never satisfied with the status quo of the product experience. We started with a platform that was overwhelmingly better and really positioned to be a disruptor.
You know, our position has always been to gain share from a relatively low share base. In 2015, for example, Traeger had about 5% share of a dollar share of the grilling market in the U.S. Much lower in international markets that we play in. Fast-forward to end of, you know, third quarter of last year, we're about 10% of that market. We are taking share, we're taking unit share, and we're raising ASPs along the way. You know, we're at 3% household penetration in the U.S. We have about 2 million installed grills, and there are 75 million households that own grills.
If you think about much better product experience, a brand and community that people love and very low penetration in gaining share, that's a recipe for disruption. You know, if you were to rewind 10 years ago and look at share by fuel type, it was all gas. You know, it was 85% gas. Well, gas has declined to less than 55% share today, and wood pellet is up to about 20% share, and we're just over half of that market. You know, we are positioned to take share. We are a growth brand. We are methodically taking share with our channel strategy, but also our marketing strategy.
In some of our top markets, and I'll point to Utah as one of them, we were low single-digit penetration six years ago when we moved the brand from Oregon to Utah. Our latest household penetration is 16%. Which means if you think about the replacement cycle of grills, our market share is far higher than that. It just gives us a lot of confidence that, you know, at 3%, having no idea where the ceiling is, but knowing that, you know, Utah is still one of our fastest-growing markets, that this is a very, very significant disruptive opportunity.
Yeah. No, no, for sure. Just before I get into some of the more specifics on you guys, just maybe can you give us a sense of how you see Traeger within that competitive set of other pellet grills? You know, the price points can go pretty high. How would you explain to people where Traeger sits in terms of maybe the price continuum, the quality continuum, which is within the broader assortment of, you know, that full 20% of the share of grills that are out there that are pellet?
Yeah, sure. First of all, we started to see a lot of sort of knockoff pellet grill brands back in 2015, 2016. Every trade show you went to, you saw something new. We don't see as many new entrants. I think you know, the position is fairly well established. We are more than 50% of share in pellet grilling. I would sort of describe the category by saying, at a very premium level, you have, you know, a handful of very small brands, very high quality fit, feel, finish, you know, many thousands of dollars price points and brands that most have never heard of.
You know, a brand called Twin Eagles, for example, or a brand called Memphis, these are very expensive, many of which are made in the U.S. Nice fit, feel, finish, but really no scale from an innovation, content or product development perspective. Most of the new players are at low price points. They're knockoff brands, they're followers, they are price and value-driven, and that tends to be how most consumer categories form. Our position is, it's, I would say premium but mass premium, because we want to, we want Traeger to be accessible to most people, not all people. You know, we're not going after highly price-driven consumers. That's why we don't sell into Walmart.
I would say the, you know, if you were to think about the other brands that you might have heard of, there are two, one, called, Pit Boss, largest customer is Walmart. Much lower selling prices. You know, but a brand that really doesn't or, a company that really doesn't spend invest in marketing, doesn't invest in product innovation, service sales. There's a position for, you know, sort of a lower-end position in the market for that brand. Weber, as you've heard of, launched a wood pellet grill two years ago now. It's, you know, Weber definitely dominates, a sort of mid-price point gas and low price point charcoal. It struggled to get traction, doesn't show up on the share data, at this point with that grill.
They, you know, they do a nice job in gas and charcoal. Outside of that, they're just a lot of other cats and dogs. Again, we're carving out a premium, but mass premium and accessible, innovative, experience-driven brand. ASP at retail is somewhere in the $850 range, and it's growing. Consumers are suggesting they are willing to spend more for a Traeger experience because they enjoy it, they appreciate it, and they are prioritizing discretionary spend in food around that.
Yeah, no, for sure. You know, one of the things that struck me as we started to do work on the business, this is much more than a grill, right? We've talked about the grill, but I want you to maybe spend a minute here helping folks understand the kind of ecosystem that you've built around the grill. There's consumables, there's connectivity, and then maybe as part of that, you know, the strength of the community, which you guys refer to as the Traegerhood. That was the other part of this story that kinda jumped out at us as we started to do the work. Maybe talk about the ecosystem. Is this more than just a grill? And then also, maybe a little bit about the Traegerhood.
Yeah, you know, it's, I appreciate that question. It was interesting. It's been interesting as we research the industry, when you ask consumer what grill they own, they usually refer to the fuel type. "I own a gas grill. I own a charcoal grill. I own a Kamado grill." Unless you own Traeger, then you own a Traeger, and you use the verb, I Traeger. There's this incredible passion that has always existed, and we've really, you know, we've used that passion to create a community. The community is driven by this very grassroots, very authentic connection that happens, you know, in neighborhoods, in offices on Monday morning when you're talking about what you Traegered over the weekend, and I would say, really dominates conversation on social media.
Whether you are spending time on Traeger's social media, which is by far has by far the most energy and following in the industry, or you're following one of our 1,400 community ambassadors, influencers, or sort of micro-influencers from, you know, Dan Patrick in sports radio, Joe Rogan, all the way down to, you know, someone local who's got a couple thousand followers but is very credible. This community is very connected. You know, and it's very evangelical. 80% of Traeger owners have recommended the brand to an average of 6 people. You know, as I look at the brands of products that are sitting around me in this room, I don't recommend any of them to anyone except, you know, maybe, you know, this brand.
I've always been, since the first iPhone, a high promoter. The brand Tesla and the brand Traeger. When a community with no referral program, no paid sharing, just chooses to share because they believe in it's part of their lifestyle, they self-identify with that brand, that's powerful. I would just say one last note, you know, as we came into the pandemic, boy, nearly a couple of years ago, you know, it was important to us to really rally our community knowing that everyone felt some level of fear and discomfort. People weren't traveling. They weren't eating out. What were they doing? They were Traegering in their backyard.
Really leaning into the community, finding innovative ways to get into their backyard, to teach them to cook, to share the passion of Traeger, and you know, it was a really nice accelerant for the community as they began to share more, really on social media, their love for cooking at home.
Yeah. No, for sure. I mean, look, the people who know the brand obviously love the brand. Maybe talk a little bit about, you mentioned the household penetration experience you've had in Utah, but then more broadly how low it is internationally or, across the country. Maybe talk about brand awareness, where that sits, nationally and regionally, what the strategy is here to drive that. I mean, retail distribution is pretty widespread. I mean, you partner with, you know, with Home Depot, with Ace, with Costco, so the product is there as well as on your website. It's able to be purchased. The question is, how quickly will people kind of put you in that consideration set, when they're going to buy a grill? Maybe talk about, some of those factors.
It's first of all, I would point to two key ways that we get to our prospective consumers to sort of communicate the brand and who we are. One is at retail. We have a very thoughtful omni-channel distribution strategy where we've really partnered with retail partners who love Traeger and are willing to showcase the brand at retail. We've always invested first and foremost in retail, the merchandising experience, visual, product marketing communication, and I would say most importantly, a retail associate who cooks on Traeger and loves Traeger. When someone walks up looking for a grill, there is no question what they are selling them. We spend a lot of time doing that.
We have narrow but deep channel partnerships. Home Depot has been an incredible partner. Ted Decker, President of Home Depot, is an awesome evangelist for the brand, and a really good friend of the brand. John Venhuizen, CEO of Ace, another real evangelist and great friend and partner to the brand. Retail is an important way because we're talking about an innovation that's not always easy to describe. When they get it's sticky and it works, and we thought retail is a great opportunity to leverage a captive audience. The other is through our marketing platform.
We have a platform of social media, digital content, influencers, and then we've started to really invest in what we call our market assault program. That's where we choose specific geographies and make really aligned sales and marketing investments in those geographies, acknowledging that, you know, we're competing with a lot of other product companies and brands for consumers' attention, and our best way to succeed is to go narrow in those geographies. I talked about Utah, but if I were to sort of step back and broadly define awareness in the U.S., you're gonna see Pacific Northwest, where the brand was founded in 1987.
You're gonna see more penetration in the Southwest, in sort of Rocky Mountain, Utah, Colorado, up to Idaho, and then you'll see smatterings in markets that we've invested in. Dallas, Atlanta, some of those sort of traditional grilling markets, we're picking up steam, but fortunately, there's a direct correlation between unaided awareness and conversion, and we're very focused on both.
Excellent. I think I'd be negligent if I didn't ask about supply chain. It's the topic this year for every company in every sector right now. Maybe give us a sense of where you're sourcing your product, how you're addressing and dealing with the global supply chain challenges that are affecting everyone, and what kind of your view is on how things kinda maybe progress here in 2022.
Yeah, sure. Look, as we all know, it's a complicated environment right now, you know, from a transportation perspective, you know, from a microprocessor component perspective. I would start by saying, you know, we have a really strong operations team, brought in about a year ago, a new head of global supply chain, a new head of manufacturing, new head of supply chain strategy, and we are keeping up better than most brands. In fact, our on time and in full, which is a measurement of service to retailers, is by far best in category, just quantitatively. But we've worked really hard to manage cost where we can. Transportation is expensive. We're being as thoughtful as we can. All of the controllables we are going after aggressively.
Some of these costs will naturally come down over time. We're certainly not waiting for that. We're also having this moment to think differently about our business in terms of how we efficiently design product for manufacturing, for transportation, where we manufacture product. We have begun early manufacturing in North America and plan to lean into that in the coming years. You know, it's a painful environment. We are being very thoughtful around how we manage through it. I would say on a positive, we're not only delivering product to our retailers best in class, but as we said in the third quarter, we didn't leave revenue on the table due to inventory. We are in stock. We're leaning into inventory positions.
We're investing working capital in the inventory because we think it's the right way to run our business right now. As painful as it is behind the scenes, we're keeping up just fine. Our retailer partners and our end consumers are very pleased with quality and timely delivery.
That's great to hear. I'm getting a warning here. I think we maybe have 2 minutes or 1 minute. Maybe just on the M&A front, you guys acquired MEATER last summer. Maybe just talk about the role that plays in connecting you with your consumers and maybe what different things that might open up for you or other avenues of growth.
Yeah. First of all, MEATER was an opportunistic acquisition. We partnered with them to integrate their product into a new premium cooking experience that we launch later this quarter. MEATER stood for exactly what we did. It's premium, it's innovative, its consumers have a passion for home cooking. We acquired that. You know, the meat probe protein probe space is actually very large. There are 22 million probes sold in the U.S. every year. This is a very large category, but very price point driven. MEATER is disrupting it, and they're doing it in a similar way through an app on the phone where you get content, have this great cooking experience. It's growing. It's as we announced in the third quarter, growing very nicely.
It fits perfectly with our brand. I would say the integration from a team and an operations perspective is going well, and we're very bullish on this partnership long term.
Great. Well, listen, Jeremy, thanks so much. I'm sorry we're up against the time here, but we appreciate your time. Dom, Nick, thank you guys as well. Sorry I couldn't weave you into the conversation, but maybe for another day. Thanks, everybody, for watching and listening. If you have any questions, please don't hesitate to reach out to me or anybody on my team at Baird, as we'd be happy to help you as you come up the learning curve on Traeger. Thanks, everybody.