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A Smoking Hot Opportunity
Backyard grilling and innovation are two words not normally thought of in the same context. Alchemy Grills, a Toronto-based company, aims to break that preconception. The company offers dual- temperature cooking zones, both fuelled by charcoal and wood, supported by a celebrity chef to spearhead marketing efforts. The company is currently pursuing seed round financing to fund growth into 2024.
Sizzle and Smoke
The back yard enthusiast became a term during the pandemic that referred to those of us who looked to improve our outdoor space, including our outdoor kitchens and grills, while locked down or working from home. This coincided with an uptick in sales of both grills and smokers with an estimated 20mm grills being sold in the US in 2020 alone. This was partially driven by a boom in amateur pitmasters trying their hand at smoking using the latest gadgets from Traeger, Komodo Joe or the classic Big Green Egg. There was also an interesting trend of current grill/smoker owners adding another to they outdoor setup, with an estimated 40% of grill owners owning 2+ grills. Why would you need 2? With a traditional grill you aren’t able to get that low and slow smoking effect and your smoker isn’t built with the idea of high heat cooking, so you need two separate products, until now.
Alchemy is a Toronto based company that brought the first and only simultaneous grill/smoker to market in 2022. In addition to the smoker and grill the Alchemy is also fitted with a plancha which is aimed at the burgeoning flat top grill market. With the Alchemy grill you can grill at high temperatures while smoking low and slow at the same time. Designed in Austin and backed by chef, author and tv personality Matt Basile, the Alchemy grill is set to take on the burgeoning back yard enthusiast market. In addition to the grill Alchemy is launching several attachments as well as a consumables business division including rubs, sauces, and fuel.
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Targeting the Premium Market with Premium Build Product
As mentioned above, 2020 saw more than 20 million grills sold in the US alone, a large and established market. It is safe to assume the majority of these are lower end grills; however, even if we assume that a conservative 1% of these grills fall into a comparable high-end category to Alchemy, we can estimate just how big the market is south of the border. When looking at the data in terms of $, the chart below shows the US charcoal market is approximately $1 billion. What this chart doesn’t show is the recent growth in the charcoal market versus gas, especially in the higher end grills. In our talks with several Canadian BBQ retailers, they have seen increasing growth in both the charcoal and wood pellet markets with gas grills being on the losing end of the equation.
For the Canadian market we assume that it mirrors the US for the most part, just at 1/10 the size. Some areas, namely the sunbelt of the southern US, that have a much higher adoption rate of grills due to their climate, but studies have shown that many Canadians grill year-round despite the cooler weather. Using some back of the napkin math that gets us to a yearly TAM of high-end grills in Canada of 20K
COVID Boom Over...are the smoking hot sales sustainable?
As expected, the pandemic had a very positive impact on grill sales with 38% of grill owners purchasing a new grill between 2020 and 2021. Surprisingly, of those new grill purchases, only 27% of them stated they did so because they were cooking more at home due to the pandemic. This could signal that the increase in grill purchases could be more than a pandemic-related anomaly and rather a shift in consumers interest in grilling and smoking.
The CEO of the HPBA (Hearth, Patio & Barbecue Association.) was quoted as saying
“Over the past two years, the industry had the impression that grill and smoker purchases and backyard grilling were at all-time highs, driven by people spending more time at home and changing their overall habits,” said Jack Goldman, president and CEO, HPBA.
“Now, with the first industry-wide study conducted since the pandemic took hold, we have a clear picture of how much the pastime of grilling has grown, and we’re finding it’s at near record levels.”
Who are the current Pit Masters?
Half of the global grill market is controlled by only three companies with the wide offerings from Middleby (who owns Kamado Joe, Char-Griller, Lynx, Masterbuilt and others), making up 1/5 of global sales. To put that in context, the global BBQ market for 2022 was estimated at $5.4 billion and expected to grow at 4% per year.
A sub section of the smoker market is the wood pellet smokers that offer an ease of use not found in your traditional charcoal smokers such as the Green Egg or Kamado Joe. There has been a large jump in ownership of pellet-fired grills over the last few years with Traeger now controlling close to 12% of the global market.
Adding some sizzle to the competitive BBQ space
One advantage to being a later entrant into an existing market is being able to improve on competitors’ offering. Alchemy is aiming to do just this with their multi-style approach to grilling. By offering a plancha, smoker and grill, Alchemy is an all-in-one solution for the enthusiast BBQ'er. These features are contained in a well-engineered product that is aesthetically pleasing while also offering more smoker space that most competitors. In addition to the grill, Alchemy plans to launch a line of consumables, both fuel for the grill as well as sauces and rubs.
If you are interested in being part of the Alchemy opportunity, we would be happy to arrange a meeting with management reach out to 4Front at firstname.lastname@example.org
For more information about the Alchemy Grills check out their website and if you’re in the market for a new grill check out the list of current dealers HERE. More markets will be coming in 2024 as the company expands across Canada and into the US.