Hot off the grill Featured

10:33am EDT December 21, 2004
It was a lesson well learned.

Leonhard Dreimann, CEO and co-founder of Salton Inc., learned the importance of good marketing working with Dunlop Sleepmaker, a bedding company in Australia.

"We had a bed that was endorsed by the Australian Chiropractic Association that had about a one-tenth of a percent market share," Dreimann says. "But it was probably the best bed (the company) made."

To sell the product, the company found a celebrity who had a lot of credibility in the Australian market who was also a chiropractor.

"He was a movie actor as well as a successful TV series star in Australia, and we made him the spokesperson," Dreimann says. "(We) turned that bed from a product that no one ever knew and finished with a 28 percent market share of all beds and quadrupled the profit of the company."

Dreimann figured that what worked once could work again -- this time in the United States with a retired former heavyweight boxing champion.

"I don't see all that much difference from what we've done here with George Foreman Grills," he says. "We found we had a product that was really very good, that consumers would really love and appreciate how it worked and what it could do for them, and managed to find the right celebrity with credibility. Once they (consumers) tried it, the rest became history. Word of mouth and the strength of the product took it from there."

The George Foreman Grill is just one item in Salton Inc.'s portfolio of products, which comprise some of the most popular brands in home products and small electric appliances -- Breadman, Juiceman, Ingraham, Farberware and Toastmaster, among many others. It's Dreimann's job -- and that of his team -- to ensure the marketing stays fresh and the brands popular.

And he's succeeded. Since leading a leveraged buyout of Salton Housewares Inc. from SEVKO Inc. with a partner in 1987, when sales for what was then a division of a larger company were $8 million a year, Dreimann has built the company into a $1.1 billion branding powerhouse. And although it posted a net loss for fiscal year 2004 and for the first quarter of 2005 ($3.2 million on sales of $274.1 million), the loss was expected due to a corporate restructuring. The restructuring, which included the elimination of 200 U.S.-based jobs, was designed to make the company more like its George Foreman Grill -- lean and mean.

"Our domestic restructuring efforts are yielding results," Dreimann says. "During the first quarter (of 2005), we demonstrated that we could maintain sales activity in the U.S. with a lower cost base, allowing us to improve our domestic performance without increasing sales. Were it not for rising product-related costs, our earnings per share would have been positive in the quarter. We remain on plan to realize a minimum of $40 million in cost reductions during fiscal 2005."

Innovative thinker

Although he has a marketing degree from the Melbourne University in Australia, Driemann's practical experience came from a weekly poker game with members of Gillette's Aussie division, which at the time was the company's best-performing division worldwide.

"I've learned from Gillette, which has developed many innovations and new products in a very profitable way and marketed them to be dominant in many of the categories they are in," Dreimann says. "From Papermate Pens to Braun shavers to Gillette razor blades to Foamy shaving cream to Right Guard deodorant, all these various brands have done extremely well in the marketplace, and many times and in many cases have been leaders for a long time.

"Gillette has given me a very wonderful background to take into consumer goods such as small electrical appliances and housewares this company is in," he says. "Many of the things we do, we try to parallel the successful methods that Gillette has always had."

But Dreimann's work has been successful on its own, garnering numerous recognitions over the years. Among them, he is a 1999 winner of the Ernst & Young Entrepreneur Of The Year for Illinois/North West Indiana. He chalks his success up to being constantly on the lookout for new ideas and creative ways to market the existing portfolio.

"We don't stop looking at new products," says Dreimann, a native of Riga, Latvia. "There isn't a day that goes by where we don't have meetings with somebody about new ideas or new approaches to marketing existing products or prototypes of new ideas for products. That's the lifeblood of this company."

And Dreimann says there is no hard and fast rule for determining which new products to bring into the fold.

"We have a group of very experienced marketing people and salespeople," he says. "We look at something and, if we think it's a good idea, we will expose it to a larger number of executives in sales, marketing and even finance to see how everybody reacts. We usually find if there is common excitement that there's a much better chance (the product) will be successful."

Dreimann says he leads the company with the belief that getting employees motivated and behind a project is the surest way to succeed. So far, it's worked. Much of Salton's portfolio boasts successful track records, and Dreimann has acquired eight new brands over the past five years. Salton also acquired three companies, including Pifco Holdings, a United Kingdom enterprise, and AMAP in South Africa.

All told, Salton has operations in about 30 countries ad sells its products worldwide.

Growth driver

Under Dreimann, Salton's growth has primarily been through acquisitions and new product launches. He has worked tirelessly to grow the company quickly and, despite the restructuring, sees no reason to slow down.

"I see us five years from now probably double the size we are today," he says. "In 1987, when we were doing $8 million in sales, I did an interview and said that by 1997, we would like to reach $500 million in sales. That sounded like a pipedream to the person writing the article. We reached that target, then set a target to pass $1 billion. We reached that target as well."

Looking back, Dreimann isn't amazed at what he's accomplished in the 17 years since he and David Sabin, chairman and secretary of the company, agreed to undertake the leveraged buyout on a handshake and turn the Salton brand from simply being a brand manufactured by an injection molding company and sold by various distributors worldwide into a full-fledged business of its own.

"Over the years, different owners all over the world ran their businesses and used the product that Salton was initially made famous for -- the Salton Hot Tray," Dreimann says. "So when latest owners in 1987 acquired the Salton Co. here in the United States and discovered there were other Salton companies around the world, they wanted to meet them and see if there were things that could be done on a joint worldwide basis for the benefit of all in terms of product development and individual growth."

Dreimann, who at the time served as managing director of Salton Australia Pty. Ltd., a distributor of Salton brand kitchen appliances in Australia, was the only person who accepted the invitation to the United States to attend a housewares show.

"(I) met my partner David Sabin," he says. "We shook hands, formed a partnership, and he asked me to (move) to the United States and help grow the Salton Co., which we did with an LBO in 1987."

Four years later, in 1991, Dreimann and Sabin took the company public and it became Salton Inc.

"It had a little amount of capital because it was a small company that was growing rapidly," Dreimann says. "It was felt that going public would give it a vehicle to continue raising more capital for expansion and growth and to provide a vehicle for potential acquisitions or mergers when and if the opportunities would arise."

Dreimann has been able to do that, but with the money he raised came a price.

"If you're a public company, you really have to evaluate your risks," he says. "You may not be able to take (a risk) because you are responsible for a group of shareholders and ar e the face of the company that they have put their money into."

That's caused him to take a more calculated approach than he did in the company's first few years.

"If I would have stayed private, I may have taken risks with some things and made some investments in advertising and products to a larger degree than I have in being responsible for a public company," Dreimann says. "But that's not necessarily a bad thing. I think those checks and balances that we have -- if you question yourself and say, 'Is this decision really so risky that I could have a disgruntled number of shareholders for me having taken that risk?' then it's probably the wrong risk to take in the first place."

The current iteration of Salton may only be 18 years old, but the company owns brands with ties that go back to 1831, the year the Ingraham clock brand was introduced. Salton acquired the brand when it completed the purchase of Toastmaster in 1999.

Its most recent introduction is a collection of next-generation products sold under the Beyond brand name.

No matter how technologically advanced Salton's products become, Dreimann says they still follow the same food chain as every other product the company manufactures. That means marketing each brand the same way the 173-year-old analog clock brand is marketed.

"It's been received very well," Dreimann says of the Beyond brand. "But we have little distribution at the moment because it's such a new category. Only now are (retailers) creating departments that are in this particular area of the future, this area of electronics -- wireless access and computer controlled.

"The traditional retailer that we do business with has not really been in that area. But they certainly are very much aware of what Beyond products are. They're aware that they are definitely the product of the future."

Piece by piece, brand by brand, Dreimann is growing Salton's presence in consumers' homes.

"It's a slow process," he says. "But there is no doubt in my mind that these are the types of products that will be very common in most homes (in the future) and seen as a great benefit."

Even so, Dreimann doesn't recommend replacing your George Foreman Grill anytime soon.

HOW TO REACH: Salton Inc., www.saltoninc.com or (847) 803-4600