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Salton, Inc.

Salton, Inc.

1955 Field Court
Lake Forest, Illinois 60045
U.S.A.
Telephone: (847) 803-4600
Fax: (847) 803-1211
Web site: http://www.saltoninc.com

Public Company
Incorporated: 1943
Employees: 2,466
Sales: $636 million (2006)
Stock Exchanges: New York
Ticker Symbol: SFP
NAIC: 335211 Electric Houseware and Fan Manufacturing; 335221 Household Cooking Appliance Manufacturing; 335228 Other Household Appliance Manufacturing

Salton, Inc., is a leading U.S. manufacturer of small appliances, for use in the kitchen as well as in other areas of the home. Its product line is a roster of widely popular items, including the George Foreman grill, Toastmaster toasters, the Juiceman juice extractor, the Melitta coffeemaker, Breadman bread machines, and Farberware appliances. In addition to its own line of Salton appliances, brands in the companys holdings include Westclox and Ingraham clocks and timepieces, Stiffel lamps, Ultrasonex electric toothbrushes, and many others.

While Salton products are available in department stores and such mass-market outlets as Kmart, the company has also had success selling appliances through television infomercials: half-hour programs that demonstrate a product, usually with a celebrity spokesperson. Company headquarters are in suburban Chicago, but almost all of its manufacturing is contracted for in Asia.

Following challenging financial times in the early 2000s (the company recorded losses and saw its stock prices decline), Salton in 2007 sought to strengthen its position through a merger with small appliance maker Applica Inc. Applicas product line included the Black & Decker, Windmere, LitterMaid, Belson, and Applica brands. The combined company, retaining the Salton name, was expected to emerge as one of the largest small appliance makers in the United States.

ENTREPRENEURIAL BEGINNINGS

Salton got its start in 1943 as the brainchild of inventor Lewis Salton. Salton left his native Poland shortly after the German invasion in 1939 and settled in New York, where he was soon employed as an engineer for RCA Corporation. He worked long hours and often got home after supper, to be faced with cold leftovers. Saltons wife dutifully ran to the kitchen to warm his food in the oven, but the engineer decided there must be a better way. He invented a heated serving cart on wheels. Now his supper could stay warm, and be easily rolled out to him as soon as he got home. Salton raised enough money to begin manufacturing his hot tray, and began going from store to store in New York trying to get a buyer. All along, Salton had a bigger idea in mind. He wanted to sell enough hot trays to finance what he thought would be really useful and a big money-maker: an industrial tape dispenser. The hot tray held its own, however, and the Salton Tape Dispenser never made it off the drawing board. Lewis Salton recalled in an interview with Advertising Age in the July 12, 1982, issue, that on one visit to a department store buyer, his business suddenly took off. I left the cart on the floor and walked into the buyers office and described it to him, he told Advertising Age. As I did, a saleslady walked in and asked the price of it. I told her $49.95. She came back and said, I just sold two. In an hour, Salton had an order for 60 hot trays.

Business was up and down at first, but in the 1950s the Salton Hotray became a staple in many U.S. homes. Two factors influenced early sales. Products like the Salton Hotray existed in Europe, and imports in the 1950s helped create a demand. Then Salton scored influential free advertising with a Ladies Home Journal feature on the device. Stressing the convenience of the product, the article concluded with a woman declaring she would rather be without her front door than without her Salton Hotray. After the article appeared, sales tripled.

Salton followed the success of the hot tray with a bun warmer in 1963. The company focused on convenience products that saved time in the kitchen or allowed consumers to make things easily at home that they would otherwise buy ready-made. Consequently, Salton manufactured an ice cream maker, a peanut butter grinder, a yogurt maker, a coffee grinder, a personal fan, and other such products. Sales of the core product, the Salton Hotray, began to drop off in the 1970s as microwave ovens became prevalent. Microwave ovens were the ultimate quick cooker and food warmer, and the simple hot tray could not compete.

By the early 1980s, Salton had developed into a worldwide company, with branches in the United Kingdom and in South Africa. Sales stood at about $8 million annually by 1983. However, the Hotray had dropped off in sales steadily since at least 1978. Headquartered at its manufacturing facility in the Bronx and still partially overseen by Lewis Salton as vice-chairman, the company was stagnating. In 1980 the company was purchased by Bromaine Holding Company, a South African conglomerate that had bought the rights to Salton U.K. and Salton South Africa. Bromaine brought in a new president for the firm, and then another and another. In two years, Salton ran through three top executives, and it was clear the company lacked direction. Salton needed to develop new products to stay atop the fickle home appliance market, but it lacked cash to develop them. By 1982 Saltons research and development team numbered only three people.

The company seemed to be going nowhere, and in 1983, Bromaine decided to sell Salton. The buyer, for an undisclosed amount, was the British firm Marley Ltd. Marley was on a buying spree in the United States, picking up two other housewares firms, Ingrid Ltd. and Max Klein Plastic Products. Marley planned to infuse cash into the dormant company and redevelop the dwindling hot tray market. The new leadership also planned to work on the specialty coffee maker business Lewis Salton ceased his association with the company he had founded at this point. He signed a noncompete agreement and began a new company. In 1985 Saltons headquarters moved to the Chicago area.

COMPANY PERSPECTIVES

Salton strongly believes in giving back to the community. Not only do we donate to numerous worthy organizations, we also encourage all of our employees to participate in volunteer organizations in their local communities. At Salton, we feel the need to assist with our community.

A NEW START IN 1988

Marleys fleet of housewares companies was subsequently bought by Sevco, Inc. The consolidation of these businesses was tricky, and apparently never worked. Sevco filed for bankruptcy in 1990, claiming that costs incurred in the acquisition and consolidation of its businesses had driven it under. Salton got out from under its parent in 1988 in a leveraged buyout orchestrated by Leonhard Dreimann. Dreimann had been head of Saltons Australian arm, and he had a clearer idea of where the company should go than any of its previous owners. He became chief executive officer in 1987, and in 1988 wangled the buyout of the firm, using only $2.5 million in venture capital. Dreimann acted quickly to get Salton back on the right track. He renamed the firm Salton Housewares, and switched its manufacturing suppliers from European firms to much less expensive producers in Hong Kong and Taiwan. In 1989, Salton Housewares merged with another small appliance manufacturer, Maxim, and the name changed again, to Salton/Maxim. The company was doing sales of around $10 million annually in the late 1980s, and after the Maxim merger, it jumped to $18 million. Then the company began to grow quickly, fueled in two ways. It began acquiring key brands, and it marketed products very successfully using television infomercials.

Salton/Maxims first infomercial success was the Sandwich Maker, in 1990. The Sandwich Maker was a product that had long been a staple in Dreimanns native Australia, but it had not been sold in the United States. It was a small countertop grill that cooked a sandwich while pinching the two bread slices together, so the filling was neatly enclosed. Salton/Maxim first ran a test infomercial for the Sandwich Maker in Florida. Dreimann recounted in a June 1997 interview with Adweek that the Sandwich Maker infomercial initiated an enormous interest in the small appliance. One Florida retailer called and asked for an entire shipping container of 6,000 units. The company did not have that many on hand. The contractor who made the Sandwich Makers insisted on selling Salton/Maxim at least 20,000 units, and Dreimann took the risk. Driven by the infomercial, the 6,000 units destined for Florida sold out immediately. When the company took the infomercial national, the rest of that initial order sold out, too. Over the next 15 to 16 months, Salton/Maxim sold more than three million Sandwich Makers, and sales leaped from $18 million to $52 million.

Salton/Maxim was suddenly a hot company. Buoyed by the sudden success of the Sandwich Maker, Dreimann decided to take the firm public. The company made an initial public offering in October 1991, selling slightly more than 40 percent of the company, or 2.3 million shares, at $12 a share. Just after the company went public, it suffered a series of setbacks, so that key products it expected to have on the shelf for Christmas were delayed. Salton/Maxims stock price plunged as a result. Several groups of stockholders sued, arguing that the prospectus for the public offering was misleading. The company eventually settled the suits in 1994 by issuing $900,000 of new stock to the disgruntled investors.

KEY DATES

1943:
Polish immigrant Lewis Salton founds the company in New York.
1955:
The companys first product, the Salton Hotray, is a staple in many U.S. homes.
1980:
The company is purchased by Bromaine Holding Company, a South African conglomerate.
1983:
Bromaine sells Salton to the British firm Marley Ltd.
1985:
Company headquarters move to the Chicago area.
1987:
Leonhard Dreimann, head of Saltons Australian arm, becomes CEO of the company.
1988:
Dreimann leads a leveraged buyout of the company, renaming it Salton Housewares and switching manufacturing to less expensive sources in Hong Kong and Taiwan.
1989:
Salton Housewares merges with another small appliance manufacturer, Maxim, and the name changes to Salton/Maxim.
1990:
Salton/Maxims infomercial success begins with the Sandwich Maker, a small countertop grill.
1991:
The company goes public.
1992:
Salton/Maxim acquires the Juiceman brand juicer.
1994:
Salton/Maxim purchases the Breadman and the distribution rights for products marketed by infomercial salesman Ron Popeil.
1996:
Windmere-Durable Holdings, Inc., acquires 50 percent of Salton/Maxim.
1997:
The George Foreman grill is introduced through a joint venture with Foreman, former heavyweight boxing champion.
1998:
The alliance with Windmere ends; company announces purchase of Toastmaster for around $53 million.
1999:
Salton/Maxim changes its name to Salton Inc.
2004:
Salton undergoes cost-cutting efforts to reverse a bleak financial picture.
2007:
Salton merges with Applica Inc.; Leonhard Dreimann steps down as CEO.

GROWTH AND ACQUISITIONS

Salton/Maxim actually had a very effective formula for marketing its products. Interest in the Sandwich Maker virtually ceased by the end of 1991, but the company was able to pick up on a new fad, juice extractors. Interest in this product was driven by an infomercial narrated by Jay Korditch, an ex-football player who swore that juicing fruits and vegetables had helped him overcome cancer. Korditch advertised the Juiceman brand juicer, and Salton/Maxim did brisk sales of its own similar appliance. After six months, the juicing craze seemed to end, then Salton/Maxims Dreimann took an unusual step. Though his own company had warehouses full of unwanted juicers, Dreimann advocated buying the Juiceman brand juicer. Since Juiceman was the leading brand, Dreimann gambled that it might outlast the fad. He proved correct, and the Juiceman became one of Salton/Maxims staple products.

Salton/Maxim also bought Breadman in 1994, another market-leading popular kitchen item sold through infomercials. Salton/Maxim began a steady series of its own infomercials, finding that even if sales through the ads themselves only broke even, retail sales usually jumped. Another 1994 acquisition was distribution rights for a line of products marketed by Ron Popeil, a noted infomercial salesman. Popeils products included an Automatic Pasta Maker and Popeils Automatic Food Dehydrator. Salton/Maxim also acquired Block China, a noted supplier of tableware and glassware, in 1996.

After going on this acquisition spree, in 1996 Windmere-Durable Holdings, Inc., a manufacturer of kitchen and personal care appliances, acquired a 50 percent stake in Salton. Windmere had produced many of Salton/Maxims appliances at its Hong Kong factory since the early 1980s. The alliance gave Salton/Maxim needed cash, and provided the company access to Windmeres mass-market distribution channels. Salton/Maxim also licensed the White Westinghouse brand name for small kitchen appliances in 1996.

Salton/Maxim continued its strategy of marketing innovative products through both infomercials and mass marketers. It had a big hit in the late 1990s with its George Foreman grill. Salton made the grill in 1997 as a joint venture with Foreman, a former heavyweight boxing champion. The countertop grill, endorsed by a celebrity, advocated as a cooker that reduced fat, produced sales of approximately $200 million within four years. Total company sales in the late 1990s rose significantly, from about $99 million in 1996 to $182 million in 1997 to more than $305 million in 1998. By 1998 roughly half the companys sales were brought in by products marketed through infomercials.

Salton/Maxim decided to end its alliance with Windmere in 1998, and it bought back the 50 percent share that company had owned. Shortly after, Windmere had a financial shock that almost brought it to collapse. Other small appliance makers also had troubles in the late 1990s, including Sunbeam and Hamilton Beach/ Procter Silex Inc. Salton/Maxim seemed far and away the best run and most profitable of all the companies in its niche. Shortly after buying its shares back from Windmere, Salton/Maxim agreed to buy Toastmaster for around $53 million. Toastmaster was a well known brand of small household appliances with sales of about $100 million.

In 1999 Salton/Maxim changed its name to Salton, Inc. The public company, which had been sold on the NASDAQ, moved to the prestigious New York Stock Exchange that year. Salton announced that it would expand its presence in infomercials and push into Internet sales. The company had a strong roster of top brands, with its new Toastmaster, the continued blockbuster George Foreman grill, the Breadman, the Juiceman, White Westinghouse and a slew of coffeemakers, waffle irons, shower radios, and assorted other home gadgets. The company continued to bring out new items, hoping to ignite fads. These ranged from a modest bagel slicing machine to a high-priced kitchen computer with video, CD, cable television, and Internet and e-mail access from the countertop. Salton had grown from a modest company with one principal product to a comprehensive kitchen and home electronics distributor.

FURTHER EXPANSION AND FINANCIAL CHALLENGES

Salton began a new century in business with the purchase, for $137.5 million, of the rights to use George Foremans name and likeness in perpetuity, in order to continue marketing and selling Foreman food preparation equipment. This arrangement would allow Salton to develop and market new Foreman products on a royalty-free basis. The newly acquired Toastmaster was also targeted for growth and development during this time, as the company focused on new product designs, including a toaster oven with a removable inner liner, new packaging, and an updated logo.

An alliance with Kellogg USA resulted in the joint marketing of Kelloggs Pop-Tarts and Eggo waffles with Saltons Toastmaster appliances. Salton also announced plans to cosponsor a cooking series for public television. These strong developments, along with high hopes for the upcoming introduction of the revolutionary Ultravection oven, all contributed to record sales for the company, which reported a 78 percent increase in net sales, to $661.2 million, over the previous years third quarter results.

Acquisitions during this time included Brewster, New York-based Sonex International Corporation (maker of electric toothbrushes and related products); the intellectual property assets and molds of The Stiffel Company (designer of lamps); and the Relaxor brand of massagers and other personal care products. For the year 2000 the company reported an increase of 65.4 percent in net sales, to a record $837.3 million, and a 165.8 percent increase in net income, to a record $91.8 million.

The 2001 acquisition of U.K.-based appliance maker Pifco Holdings plc, for about $75 million, bolstered Saltons global presence and included Pifcos established distribution channels through which other Salton products might be marketed. On the domestic front at this time, Salton acquired the Westclox, Big Ben, and Spartus brands, for $9.8 million, from the bankrupt General Time Corporation, formerly the leading maker of wall and alarm clocks in the United States.

Net sales and net income slipped in 2001, signaling the onset of some financial reversals the company would endure in the early 2000s. In 2002, Salton announced the settlement of three separate legal issues, agreeing to pay $8 million to settle a civil claim brought against it alleging price-fixing in connection with distribution to retailers of its popular George Foreman grills. Agreement also was reached (under undisclosed terms) with Advantage Partners, a licensee of Popeil Inventions, which had accused Salton of a rotisserie oven patent infringement. Finally, a breach of contract lawsuit brought by rival Applica, Inc.

In 2003, Salton recorded a loss of $95 million. The following year, amid fierce competition in the industry, the companys sales slipped and its stock price dropped. From a high of $60 a share in 2000, Salton stock was trading at a little over $5 per share by 2004. In spite of its strong range of product offerings, led by the usually successful George Foreman grill and line of Westinghouse home appliances, Salton cited slow domestic sales and complications with moving production overseas as contributing to its financial woes.

RESTRUCTURING AND RENEWED HOPE FOR THE FUTURE

Reportedly on the brink of being delisted from the New York Stock Exchange, Salton management set about to restructure its debt and cut its costs by a goal of $40 million. The advertising budget was slashed, and lay offs in the workforce ensued.

In the wake of such efforts, Saltons stock rebounded slightly. Cost-cutting continued into 2005 as the company divested some of its holdings including its majority shareholding in Amalgamated Appliance Holdings, as well as its Block China brand and its license to market Calvin Klein tabletop products. By the fall of 2005, with the restructuring nearly completed, domestic expenses had been reduced by more than $50 million. The New York Stock Exchange also approved a plan for Saltons continued listing.

By the fall of 2006, even with its improved balance sheet achieved through net debt reduction, Salton continued to struggle. Management announced in 2006 that one option for strengthening its position involved a merger or acquisition of the company itself; the following year, such an agreement was reached with competitor Applica Inc. Under the terms, Salton was merged with APN Holding Company, which had acquired all outstanding common shares of Applica. Applica and its subsidiaries then became subsidiaries of Salton, creating one of the largest U.S. publicly traded companies engaged in the sale of small household appliances. According to a company press release, consolidated annual sales of the combined company were expected to exceed $1 billion.

In May 2007 Salton announced the resignation of cofounder Leonhard Dreimann from the position of CEO. William M. Lutz, Saltons CFO, stepped in as interim CEO. After the merger, with new leadership and a range of well-recognized brand names available for worldwide distribution, a strengthened Salton planned to build on its reputation as a leading provider of small kitchen and home appliances, home electric products, timekeeping products, lighting products, and personal care products.

A. Woodward
Updated, Robynn Montgomery

PRINCIPAL SUBSIDIARIES

Toastmaster Inc.; Applica, Inc.

PRINCIPAL COMPETITORS

Conair Corporation; KitchenAid; Helen of Troy Ltd.

FURTHER READING

Bernard, Sharyn, Windmere Alliance with Salton/Maxim to Create Synergies, HFN, March 4, 1996, p. 6.

Bernard, Sharyn, and Ann-Margaret Kehoe, Salton to Buy Block China, HFN, June 10, 1996, p. 1.

Brown, Erika, Ooh! Aah! Forbes, March 8, 1999, p. 56.

Dworman, Steven, Salton-Maxim Solutions, Adweek, June 30, 1997, p. S14.

Gallun, Alby F., Despite Foreman Line, Salton Shares Lack Punch; Investors Concerned About Eventual Slowdown in Sales, Crains Chicago Business, July 31, 2000, p. 7.

Miller, James P., Salton Ponders Sale to Hedge Fund, Chicago Tribune, October 24, 2006.

Murphy, H. Lee, Salton Maxims Stock Plunges, HFD, December 23, 1991, p. 56.

Norris, Floyd, A Battered Stock Follows the Fads, New York Times, June 22, 1992, p. D8.

Osterland, Andrew, Putting a Gizmo in Every Kitchen, Business Week, May 31, 1999, pp. 9496.

Porter, Thyra, Salton Reinvents Toastmaster for the 21st Century, HFN, January 31, 2000, p. 25.

Ratliff, Duke, Salton/Maxim Buys Juiceman, HFD, January 17, 1994, p. 143.

Ryan, Dick, Ingrid Parent Closes Salton Deal, Retailing Home Furnishings, September 5, 1983, p. 21.

Salton Inc. Enters into Definitive Merger Agreement with Applica Incorporated, Business Wire, February 8, 2007.

Thau, Barbara, Toastmaster/Salton Merger Completed, HFN, January 18, 1999, p. 34.

White, Jennifer, Salton, Applica Merger Would Be a Big Deal, HFN, October 30, 2006, p. 1.

Zisko, Allison, Calvin Kleins the New Kid on Saltons Tabletop Block, HFN, June 19, 2000, p. 1

Zotti, Ed, Ideas Brew in Inventors Kitchens, Advertising Age, July 12, 1982, p. M10.

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Salton, Inc.

Salton, Inc.

550 Business Center Drive
Mount Prospect, Illinois 60056
U.S.A.
(847) 803-4600
Fax: (847) 803-1186
Web site: http://www.saltoninc.com

Public Company
Incorporated: 1943
Employees: 219
Sales: $305.6 million (1998)
Stock Exchanges: New York
Ticker Symbol: SALT
NAIC: 335211 Electric Housewares & Household Fan Manufacturing; 335221 Household Cooking Appliance Manufacturing

Salton, Inc. is a leading manufacturer of small electronics, principally for the kitchen. It has a roster of strong selling items, including the George Foreman Grill, the Juiceman juice extractor, and the Breadman bread machine. It markets appliances under a variety of other well-known brand names such as Toastmaster, White Westinghouse, Farberware, Block China, and its own Salton line. The company sells its goods both in department stores and in mass market outlets such as Kmart. It also has had key success selling appliances through television infomercials: half-hour programs that demonstrate a product, usually with a celebrity spokesperson. The company has kept abreast of changing tastes by bringing out new products quickly, catching fads and then moving on to the next. Salton experienced enormous growth in the 1990s, with sales growing at over 60 percent annually between 1996 and 1999. Company headquarters are in suburban Chicago, but almost all its manufacturing is contracted in Asia.

Entrepreneurial Beginnings

Salton got its start in 1943 as the brainchild of inventor Lewis Salton. Salton left his native Poland shortly after the German invasion in 1939 and settled in New York, where he was soon employed as an engineer for RCA Corporation. He worked long hours and often got home after supper, to be faced with cold leftovers. Saltons wife dutifully ran to the kitchen to warm his food in the oven, but the engineer decided there must be a better way. He invented a heated serving cart on wheels. Now his supper could stay warm, and be easily rolled out to him as soon as he got home. Salton raised enough money to begin manufacturing his hot tray, and began going from store to store in New York trying to get a buyer. All along, Salton had a bigger idea in mind. He wanted to sell enough hot trays to finance what he thought would be really useful and a big money-maker: an industrial tape dispenser. However, the hot tray held its own, and the Salton Tape Dispenser never made it off the drawing board. Lewis Salton recalled in an interview with Advertising Age in the July 12, 1982 issue, that on one visit to a department store buyer, his business suddenly took off. I left the cart on the floor and walked into the buyers office and described it to him, he told Advertising Age. As I did, a saleslady walked in and asked the price of it. I told her $49.95. She came back and said, I just sold two. In an hour, Salton had an order for 60 hot trays.

Business was up and down at first, but in the 1950s the Salton Hotray became a staple in many U.S. homes. Two factors influenced early sales. Products like the Salton Hotray existed in Europe, and imports in the 1950s helped create a demand. Then Salton scored influential free advertising with a Ladies Home Journal feature on the device. Stressing the convenience of the product, the article concluded with a woman declaring she would rather be without her front door than without her Salton Hotray. After the article appeared, sales tripled.

Salton followed the success of the hot tray with a bun warmer in 1963. The company focused on convenience products that saved time in the kitchen or allowed consumers to make things easily at home that they would otherwise buy ready-made. Consequently, Salton manufactured an ice cream maker, a peanut butter grinder, a yogurt maker, a coffee grinder, a personal fan, and other such products. But sales of the core product, the Salton Hotray, began to drop off in the 1970s as microwave ovens became prevalent. Microwave ovens were the ultimate quick cooker and food warmer, and the simple hot tray could not compete.

Under New Owners in the 1980s

By the early 1980s, Salton had developed into a worldwide company, with branches in the United Kingdom and in South Africa. Sales stood at about $8 million annually by 1983. However, the Hotray had dropped off in sales steadily since at least 1978. Headquartered at its manufacturing facility in the Bronx and still partially overseen by Lewis Salton as vice-chairman, the company was stagnating. In 1980 the company was purchased by Bromaine Holding Company, a South African conglomerate that had already bought the rights to Salton U.K. and Salton South Africa. Bromaine brought in a new president for the firm, and then another and another. In two years, Salton ran through three top executives, and it was clear the company lacked direction. Salton needed to develop new products to stay atop the fickle home appliance market, but it lacked cash to develop them. By 1982 Saltons research and development team numbered only three people. The company seemed to be going nowhere, and in 1983, Bromaine decided to sell Salton. The buyer, for an undisclosed amount, was the British firm Marley Ltd. Marley was on a buying spree in the United States, picking up two other housewares firms, Ingrid Ltd. and Max Klein Plastic Products. Marley planned to infuse cash into the dormant company, and redevelop the dwindling hot tray market. The new leadership also planned to work on the specialty coffee maker business. Lewis Salton ceased his association with the company he had founded at this point. He signed a non-compete agreement and began a new company. In 1985 Saltons headquarters moved to the Chicago area.

New Start in the Late 1980s

Marleys fleet of housewares companies was subsequently bought by Sevco, Inc. The consolidation of these businesses was tricky, and apparently never worked. Sevco filed for bankruptcy in 1990, claiming that costs incurred in the acquisition and consolidation of its businesses had driven it under. Salton got out from under its parent in 1988 in a leveraged buyout orchestrated by Leon Dreimann. Dreimann had been head of Saltons Australian arm, and he had a clearer idea of where the company should go than any of its recent owners. He became chief executive officer in 1987, and in 1988 wangled the buyout of the firm, using only $2.5 million in venture capital. Dreimann acted quickly to get Salton back on the right track. He renamed the firm Salton Housewares, and switched its manufacturing suppliers from European firms to much less expensive producers in Hong Kong and Taiwan. In 1989, Salton Housewares merged with another small appliance manufacturer, Maxim, and the name changed again, to Salton/Maxim. The company was doing sales of around $10 million annually in the late 1980s, and after the Maxim merger, it jumped to $18 million. Then the company began to grow quickly, fueled in two ways. It began acquiring key brands, and it marketed products very successfully using television infomercials.

Salton/Maxims first infomercial success was the Sandwich Maker, in 1990. The Sandwich Maker was a product that had long been a staple in Dreimanns native Australia, but it had not been sold in the United States. It was a small counter-top grill that cooked a sandwich while pinching the two bread slices together, so the filling was neatly enclosed. Salton/Maxim first ran a test infomercial for the Sandwich Maker in Florida. Dreimann recounted in a June 1997 interview with Adweek that the Sandwich Maker infomercial initiated an enormous interest in the small appliance. One Florida retailer called and asked for an entire shipping container of 6,000 units. The company did not have that many on hand. The contractor who made the Sandwich Makers insisted on selling Salton/Maxim at least 20,000 units, and Dreimann took the risk. Driven by the infomercial, the 6,000 units destined for Florida sold out immediately. When the company took the infomercial national, the rest of that initial order sold out, too. Over the next 15 to 16 months, Salton/Maxim sold over three million Sandwich Makers, and sales leaped from $18 million to $52 million.

Salton/Maxim was suddenly a hot company. Buoyed by the sudden success of the Sandwich Maker, Dreimann decided to take the firm public. The company made an initial public offering in October 1991, selling just over 40 percent of the company, or 2.3 million shares, at $12 a share. Just after the company went public, it suffered a series of setbacks, so that key products it expected to have on the shelf for Christmas were delayed. Salton/Maxims stock price plunged as a result. Several groups of stockholders sued, arguing that the prospectus for the public offering was misleading. The company eventually settled the suits in 1994 by issuing $900,000 of new stock to the disgruntled investors. As it turned out, the stumble after the public offering was an aberration.

Company Perspectives:

With its commitment to innovation, Salton Inc. continues to provide the nations top retailers with unique products that meet the different needs, tastes, preferences and budgets of millions of consumers.

Growth and Acquisitions in the 1990s

Salton/Maxim actually had a very effective formula for marketing its products. Interest in the Sandwich Maker virtually ceased by the end of 1991, but the company was able to pick up on a new fad, juice extractors. Interest in this product was driven by an infomercial narrated by Jay Korditch, an ex-football player who swore that juicing fruits and vegetables had helped him overcome cancer. Korditch advertised the Juiceman brand juicer, and Salton/Maxim did brisk sales of its own similar appliance. After six months, the juicing craze seemed to end. But then Sal ton/Maxims Dreimann took an unusual step. Though his own company had warehouses full of unwanted juicers, Dreimann advocated buying the Juiceman brand juicer. Since Juiceman was the leading brand, Dreimann gambled that it might outlast the fad. He proved correct, and the Juiceman became one of Salton/Maxims staple products. Salton/Maxim also bought Breadman in 1994, another market-leading popular kitchen item sold through infomercials. Salton/Maxim began a steady series of its own infomercials, finding that even if sales through the ads themselves only broke even, retail sales usually jumped. Another 1994 acquisition was distribution rights for a line of products marketed by Ron Popeil, a noted infomercial salesman. Popeils products included an Automatic Pasta Maker and Popeils Automatic Food Dehydrator. Salton/Maxim also acquired Block China, a noted supplier of tableware and glassware, in 1996.

After going on this acquisition streak, Salton/Maxim allowed itself to be 50 percent acquired in 1996 by Windmere-Durable Holdings, Inc., a manufacturer of kitchen and personal care appliances. Windmere had produced many of Salton/Maxims appliances at its Hong Kong factory since the early 1980s. The alliance gave Salton/Maxim needed cash, and provided the company access to Windmeres mass market distribution channels. Salton/Maxim also licensed the White Westing-house brand name for small kitchen appliances in 1996.

Salton/Maxim continued its strategy of marketing innovative products through both infomercials and mass marketers. It had a big hit in the late 1990s with its George Foreman Grill. Salton made the grill as a joint venture with Foreman, a former heavyweight boxing champion. The countertop grill, endorsed by a celebrity, advocated as a cooker that reduced fat, produced sales of approximately $200 million within four years. Total company sales in the late 1990s rose precipitately, from about $99 million in 1996 to $182 million in 1997 to over $305 million in 1998. By 1998 roughly half the companys sales were brought in by products marketed through infomercials.

Salton/Maxim decided to end its alliance with Windmere in 1998, and it bought back the half of its stock that company had owned. Shortly after, Windmere had a financial shock that almost brought it to collapse. Other small appliance makers also had troubles in the late 1990s, including Sunbeam and Hamilton Beach/Procter Silex Inc. Salton/Maxim seemed far and away the best run and most profitable of all the companies in its niche. Shortly after buying its shares back from Windmere, Salton/Maxim agreed to buy Toastmaster for around $53 million. Toastmaster was a well known brand of small household appliances with sales of about $100 million.

In 1999 Salton/Maxim changed its name officially to Salton, Inc. The public company, which had been sold on the NASDAQ, moved to the prestigious New York Stock Exchange that year. Salton announced that it would expand its presence in infomercials, and push into Internet sales. The company had a strong roster of top brands, with its new Toastmaster, the continued blockbuster George Foreman Grill, the Breadman, the Juiceman, White Westinghouse and a slew of coffeemakers, waffle irons, shower radios, and assorted other home gadgets. The company continued to bring out new items, hoping to ignite fads. These ranged from a modest bagel slicing machine to a high-priced kitchen computer with video, CD, cable television, and Internet and e-mail access from the countertop. Salton had grown from a modest company with one principal product to a comprehensive kitchen and home electronics distributor. Perhaps most importantly, Salton had proved inimitable in its marketing know-how. Its surge of growth in the 1990s was extraordinary. Yet it was possible its expansion would continue, as the company held on to its formula of quick rollouts of new products and highly effective advertising.

Principal Subsidiaries

Toastmaster Inc.

Further Reading

Bernard, Sharyn, Windmere Alliance with Salton/Maxim to Create Synergies, HFN, March 4, 1996, p. 6.

Bernard, Sharyn, and Kehoe, Ann-Margaret, Salton to Buy Block China, HFN, June 10, 1996, p. 1.

Brown, Erika, Ooh! Aah! Forbes, March 8, 1999, p. 56.

Dworman, Steven, Salton-Maxim Solutions, Adweek, June 30,1997, p. S14.

Murphy, H. Lee, Salton Maxims Stock Plunges, HFD, December 23, 1991, p. 56.

Norris, Floyd, A Battered Stock Follows the Fads, New York Times, June 22, 1992, p. D8.

Osterland, Andrew, Putting a Gizmo in Every Kitchen, Business Week, May 31, 1999, pp. 9496.

Ratliff, Duke, Salton/Maxim Buys Juiceman, HFD, January 17, 1994, p. 143.

Ryan, Dick, Ingrid Parent Closes Salton Deal, Retailing Home Furnishings, September 5, 1983, p. 21.

Thau, Barbara, Toastmaster/Salton Merger Completed, HFN, January 18, 1999, p. 34.

Zotti, Ed, Ideas Brew in Inventors Kitchens, Advertising Age, July 12, 1982, p. M10.

A. Woodward

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