As 85 percent of American households prepare to fire up their grills on Independence Day, one company is feeling warm all over.
Blue Rhino Corp, the largest grill gas cylinder exchange provider in the US, operating at more than 26,000 locations, has reason to celebrate as well.
"Grills are flying out of the stores," said Jerry Shields, a spokesman for Home Depot, the world's largest home improvement goods retailer.
Indeed, a recent survey of 600 people by Atlanta-based Home Depot found that 40 percent of American men and 29 percent of women chose backyard grilling as their favorite summer pastime.
While mindful of the fun aspect, Blue Rhino, is capitalizing on the safety side. Shares of the company, which was created in 1994, are defying a gloomy market and business is brisk -- thanks to a recent government fire protection regulation that now requires all grill gas cylinders to be fitted with a special safety valve.
Industry experts estimate that roughly 40 million grill gas cylinders, currently in use at homes across the US, do not meet the new requirement.
So in order to play it safe, a growing number of barbecue enthusiasts are opting for the convenience of Blue Rhino's cylinder swapping, available at retailers such as Wal-Mart Stores Inc, Home Depot Inc, Sears Inc. and Lowe's Cos.
Spokesmen for Wal-Mart and Home Depot said they were experiencing strong sales of gas grilling equipment, with some customers preferring to purchase a grill and a gas cylinder at the same time.
Homeland security
Billy Prim, Blue Rhino chief executive officer and co-founder, says the company's business has also gotten a lift from a weak US economy and the fallout from the Sept. 11 attacks, which led many Americans to entertain more at home.
"Besides the safety regulation, the economy is dictating that instead of having that birthday celebration at Morton's [restaurant], you are probably going to have it in your backyard," Prim said.
The propane cylinder industry is currently estimated to be a US$1 billion business, with only 30 percent coming from exchange and 70 percent from refills. According to the Barbecue Industry Association, the cylinder exchange revenues are up from less than 10 percent only six years ago.
So with the Fourth of July fast approaching, Blue Rhino is hoping for an even bigger windfall as families snap up its 9kg white gas cylinders, emblazoned with a cerulean rhinoceros, with a flaming snout.
Each new 9kg cylinder -- exchangeable for about US$18 -- carries a gross profit margin of 25 percent for Blue Rhino. The retailers can mark that up by another 30 percent.
In the US, Independence Day is by far the most popular holiday for barbecuing, followed by Memorial Day and Labor Day.
According to the Hearth, Patio & Barbecue Association, three out of four grill owners fire up a grill each Fourth of July; and about 85 percent of US households own grills, with gas grills being a leading cleaner and convenient choice over charcoal.
The gas grills can cost anywhere from US$120 to US$3,000, depending on size and individual tastes.
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