BUSINESS 2.0: Bottom Line Design  

How to heat up a stodgy brand

Stalwart British stovemaker Aga has captured a lucrative new urban market by selectively modernizing an icon of the gentry.

By Elizabeth Esfahani, Business 2.0 Magazine

(Business 2.0 Magazine) -- Martha Stewart owns an Aga cooker. So do Tony Blair, Paul McCartney, and other moneyed urbanites.

Once a symbol of Britain's stuffy fox-hunting set, Aga's massive half-ton cooker - a word that translates to "range" in the United States - is becoming an unlikely totem of hip modern design.

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The 84-year-old Aga (Charts) brand is one of the United Kingdom's most beloved: In the early 1990s, it spawned a genre of fiction, dubbed "Aga sagas," about Britain's country-dwelling upper middle class.

But while its flagship product, the $10,000 cast-iron cooker, has remained virtually unchanged since 1922, Aga is proving that even the stodgiest brands can strike a lucrative balance between tradition and innovation.

Cooking up profits

Much like Burberry and Land Rover, Aga in recent years has undergone a radical transformation, releasing a slew of trendy new products while remaining true to its design heritage. Under CEO William McGrath, who took the reins in 2001, both sales and profit have more than doubled. Last year's revenue swelled 15 percent to $501 million, while profit was up 16 percent to $43 million.

"Aga has moved the brand on," says Oliver Wynne-James, a London-based analyst with Panmure Gordon, "by expanding overseas and, above all, launching a clever marketing campaign that has positioned the Aga as a central part of a kitchen makeover."

Radically different from a typical range, Aga's cooker is always on, eschewing knobs and controls in favor of compartments that are constantly heated at different temperatures. Salespeople assure skeptical customers that the feature has a negligible effect on energy bills and that learning how to cook the Aga way is worth the effort.

Some Aga owners have found innovative uses for the heat, like warming up on chilly days, drying clothes, and, in the case of one customer, using the 150-degree compartment to hatch ostrich eggs.

A saga for the Aga

In the 1960s, Aga was swallowed up by a piping and plastics conglomerate called Glynwed, which neglected the high-end appliance brand to focus on its 80 other subsidiaries. But McGrath, then Glynwed's finance director, saw untapped potential in the well-known brand.

"At one point, Aga was 10 percent of Glynwed's business and 90 percent of its publicity," he says. By the mid-'90s, Glynwed began selling off its other divisions, eventually leaving only Aga with McGrath in charge.

Determined to jump-start the brand's perpetually flat sales, McGrath decided to reposition Aga as compatible with modern urban domesticity. A $2 million ad campaign took the cooker out of the country home and showed it in the sleek kitchens of stylish young city dwellers.

McGrath also invested heavily in Aga's development team, which introduced a broader range of color options - think aubergine and pistachio - and smaller, two- and three-compartment models. In 2004 the company also debuted the popular electric Aga. "We've broadened the customer base so it's a little younger and more urban," McGrath says.

Meanwhile, the company used cash from the sell-offs to go on a spending spree starting in 2000, purchasing four high-end appliance brands - including upscale French ovenmaker La Cornue - with the aim of dominating the luxury market and hitting $1.8 billion in revenue by 2010.

Whether it reaches that goal will depend on Aga's appeal in international markets, particularly the United States. But McGrath is certain that Americans will be telling their own Aga sagas in no time.

Whether they'll be calling the range a "cooker" is another story.

Elizabeth Esfahani is a writer living in London. Top of page

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Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer LIBOR Warning: Neither BBA Enterprises Limited, nor the BBA LIBOR Contributor Banks, nor Reuters, can be held liable for any irregularity or inaccuracy of BBA LIBOR. Disclaimer. Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.