A Brand Built To Last Fred Carl's Viking Range Corp. sells $6,000 stoves at a time when people are cooking less and eating out more. His secret? Creating Mercedes-like snob appeal in the kitchen.
(FORTUNE Small Business) – When people come into the Wallingford, Conn., showroom of Delia, an upscale appliance distributor, they can't resist trying the big black knobs of the ten gleaming Viking Ranges lined up along one wall. They pass their hands quickly over the blue flame. Sometimes, says Tim Boyd, vice president of Delia, they casually mention that their grandmother used to cook on a Viking.
Which is, of course, impossible. The Viking Range Corp. has only been around since 1984. Its stoves are rugged-looking and well made--they crank out 15,000 BTUs per burner, about twice the heat of a typical range--but you'll rarely find them in restaurants. In fact, Vikings are more like the Range Rovers of the kitchen, loaded with extra features that seldom get used. Most home chefs don't need 15,000 BTUs (not even grandmothers), but people know the Viking name and are willing to pay for it.
The story of how Viking established such a strong brand in an industry so resistant to outsiders starts with Fred Carl Jr., 53, a fourth-generation builder and designer in Greenwood, Miss. Carl is an unlikely revolutionary of the kitchen. Bearded, balding, and genial, he says things like "dad-gum" a lot, and he doesn't even cook. But although he'd never built an appliance before launching Viking, he introduced a whole new category to the business that giants like GE and Maytag had overlooked: professional-style cooking equipment for the home.
To begin at the beginning, Carl was designing upscale kitchens in the early 1980s when three women--two clients and his wife, Margaret--gave him the same assignment: Find a better stove. The heavy-duty, hand-built models like the old Chambers that Margaret had grown up with had gone out of style, and appliances had become a commodity for the biggest manufacturers. "At that time, everyone was chasing price and taking costs out," says Jim Converse, VP of sales at Sues Young & Brown, a Baldwin Park, Calif., appliance distributor. His Beverly Hills customers used to take one look at what was available and ask, "Don't you have anything better?"
For gourmets and design snobs, "better" had come to mean a commercial range like the ones in restaurants. Unfortunately, it was tough (and sometimes illegal) to put them into homes. The heat from big burners required special ventilation, and because restaurant ovens aren't insulated, they were a fire hazard next to wooden cabinets. Worse, they didn't come with broilers, so you had to buy a separate wall oven.
But in these obstacles Fred Carl saw an opportunity. What if he could adapt a commercial range for the home market? He started visiting restaurant-supply houses and talking to salespeople, and his idea began to take shape. "I did all my drawings and had it all spec'd out," Carl remembers. As a designer, he'd often specified the upscale combination of the time, a Thermador cooktop and built-in wall oven with a total price of about $3,000. The Viking would offer those components in one stand-alone unit with professional-level performance. Moreover, it would look like something out of a restaurant. After a year of research Carl started looking for a manufacturer to help turn his vision into reality. He thought the "range project," as it became known around town, might take another 18 months. It took six years.
Carl had faced formidable obstacles before. At 20, he was forbidden to date a 16-year-old girl living a few blocks away whose parents thought he was too old for her. So he arranged for a younger boy to pick up Margaret Leflore on his behalf, in exchange for a six-pack of beer. The ruse continued, with a rotation of escorts, for more than a year, and he married her a week after she turned 18. As Margaret says, "Don't tell him no."
But "no" is exactly what Carl heard from the half-dozen commercial-equipment makers he approached early on. Most figured the consumer market wasn't worth pursuing. To prove them wrong, he started a grassroots marketing effort among designers and the kitchen cognoscenti. A self-described "religious" reader of trade magazines like Kitchen & Bath Business, he'd see a kitchen design featuring a commercial range and think, "Bingo, that's the kind of designer I need to get the word to," he says. "So I started a little list of designers." He talked an old friend into doing an airbrush version of his design sketch for a brochure, then mailed out a few dozen copies to people on the list, like Florence Perchuk, a noted kitchen designer in New York City. After installing hundreds of commercial ranges, Perchuk was only too familiar with their drawbacks. She told Carl, "We're waiting for you--you have no idea."
Carl still had to convince appliance retailers, who didn't think anyone would pay that kind of money for a stove. When Cal Callahan of Delia, Viking's northeast distributor, told retailers the price of a first-generation Viking--about $4,700--they said he was out of his mind. So Carl opted for a distribution strategy that would heighten the exclusivity of his brand. Other manufacturers were selling through national chains like Home Depot and Best Buy, but he set up a carefully selected network of dealers and regional distributors. With million-dollar showrooms and well-trained salespeople, these locations could even offer in-store demonstrations to show just what 15,000 BTUs can do to a panful of scallops.
He started signing up stores like McPhails, a chain of high-end appliance showrooms in Northern California. Dan Post, VP of sales at McPhails, says that even in its formative years Viking Range was everywhere--from cooking demonstrations to upscale magazines to trade shows. "The end users were asking designers for it," he says, "so contractors saw it as a go-to product."
Meanwhile Carl still faced manufacturing problems. His six-year search for a manufacturer had ended with U.S. Range, a commercial-equipment maker near Los Angeles. But between 1985 and 1988, U.S. Range went through several management changes, and Carl's Viking Range project got lost in the shuffle each time. Production finally started in 1987, but the early stoves had major quality problems, like melted wiring harnesses and "burner explosions" (don't ask). Carl soon got fed up with U.S. Range--"We were like a stepchild to them," he says--then tried a different appliance maker, and finally decided to build the ranges in-house.
Never mind that the company at the time had just 20 employees, or that the closest thing to a manufacturing expert was Ron Ussery, a former appliance repairman in his 20s. Carl and Ussery spent a few days taking apart a range in Viking's rented warehouse. They put the parts on white butcher paper on the floor, labeling them and sorting out which ones needed to be built and which could be bought--in effect, reverse-engineering their own product. Carl then recruited a manufacturing chief to buy some machines and hire a crew of 30 factory workers. The first Viking rangetop came off the assembly line in December 1989.
The process wasn't always pretty. By the mid-1990s, thanks to huge demand, Viking's backlog had ballooned to 22 weeks and $20 million in orders. "We were going to be losing dealers; we were losing customers," Carl says. He halfheartedly tried some Japanese manufacturing techniques, then adopted the principles originated at Toyota, which include building each product to order and managing inventory from the assembly line. Result? Today no customer waits more than nine days from order to delivery, and most products are shipped in four. Finished inventory stays about an hour on the plant floor, compared with 14 days in 1995.
Viking has capitalized on that success by expanding into the rest of the kitchen. It began with ventilation hoods and dishwashers, and in 1996 it took aim at rival Sub-Zero by introducing refrigerators (see box). The growth potential is clear. Professional-style appliances represent just 5% to 10% of the total market, but that slice is growing fast. According to NPD Intelect, a research firm, last year's sales of gas ranges priced above $2,500--a category that didn't exist before Viking--were up 122% over 1999. While analysts don't track the privately held company, observers peg its sales for 2000 at close to $200 million, about 60% of which came from cooking equipment. Carl says Viking has been profitable since its launch. Stephens, the Little Rock investment bank that brought Wal-Mart public, bought out Viking's original shareholders in 1992 but has no plans to take the company public.
Despite the economic slowdown, Carl expects a big year in 2001. Viking is now introducing a new line of kitchen appliances called the Designer Series, with the same performance as the professional line but incorporating a lighter, more streamlined design for those who find the traditional Vikings too industrial-looking. Carl is also launching a separate housewares division, which now sells cutlery and cookware but could eventually include small appliances like food processors and mixers. "We know there will be a lot of people out there who might not be able to afford a Viking kitchen or range," Carl says, "but they can afford a Viking mixer." Or a $135 saucepan, for that matter.
And Carl takes that brand-extension strategy a step further with his Viking Culinary Arts Centers. Borrowing a page from Land Rover, which operates driving schools where potential customers can try out its SUVs, the company is opening a combination cooking school and retail store that lets customers "test drive" Viking appliances. For $60 you can spend an evening learning to make veal medallions with spinach fettuccine; for $375 you can spend a whole weekend. Carl opened the first two centers in 1999 in Memphis and Nashville, with plans for up to 35 by 2005. "We want to create a total culinary experience, branded 'Viking,'" Carl says. He recently picked up a couple of premium cabinet brands, and he has plans for more acquisitions. "I see Viking being the flagship of a collection of luxury goods in the shelter category," he says.
Farfetched? Maybe. But you know what they say about this guy: Don't tell him no.