Coast Spas Group's Don Elkington Talks About The Hot Tub Industry

Don Elkington is president of the Coast Spas Group, a Canadian manufacturer once known for adding televisions to its tubs, but now better known as a leader in international hot tub sales. AQUA reached him at his offices in Langley, British Columbia, and asked about selling in the Euro Zone and beyond, and the threat posed by manufacturers in China.

We're coming up on show season. A couple of years ago in Las Vegas, I remember there not being many hot tubs out on the floor. You'll have more company this year, I think.

Shows are really important to this industry, whether that's in spas or pools or if you're a supplier. This year, we're going to the New Orleans and Lyon [France] shows. These shows are crucial to our growth and they give us an opportunity to show the world what we're up to. We do these shows every year, consistently.

This year we're in New Orleans, and I'm not sure how it will be attended. I do like Vegas. I think Vegas is a place people can get to quickly, it's inexpensive to fly into and find a room. New Orleans costs a little more to get into and the rooms are a little pricey. But, why not change the venue and see what happens?

We've always found attendance at shows to be quite consistent, although Vegas has been the platform for many years.

Last year we did Vegas, Atlantic City and Barcelona. Each one of these shows was a huge success for Coast Spas, and hopefully for everyone else, too. We signed up 26 new dealers from these shows.

You mentioned a couple of European shows. Can you talk about that market?

People think about the European mainland when they think about selling overseas, but really I think about international sales when I think about sales outside of North America, whether it's Russia, Australia or the Middle East, and certainly the European Union.

There's going to be a huge show in the UK soon — in Birmingham — which is certainly a first for our industry to have a large show presence there. There's been a small show in Brighton, and they're still going to have that, but this will be on a larger scale. Europe is a growing market, and we need to have a presence there as an industry, and to show quality and safety, foremost. We are under strict production guidelines here from UL to CSA in Canada, we're regulated to make sure our products are safe, compliant, and meet the minimum standards for consumers.

People know when they buy an American or Canadian spa, they can be sure they're safe.

When you get into Europe, you see a lot of hot tubs that were made outside of North America, and that is a concern on a global, standardized quality assurance and safety level. We need to set an example and educate these new customers, who, in most cases have never been in our industry. They take spas as a secondary product in their stores, and have no experience with them.

That's why these European shows are so crucial. For us, they've been instrumental in protecting our bottom line, because during the recession in the United States and Canada, the European market continued to grow. And that growth has helped ensure that we're moving forward and staying in business.

What's the level of awareness outside of North America?

We just highlighted an article to our dealers in the United Kingdom. Someone did a survey of the most-wanted household items. The top thing was a hot tub.

Back in the 1990s, a certain type of teakettle was No. 1, then black dining tables and chairs, bread makers and beige carpets. But for this year it was the hot tub followed by the walk-in closet, U.S.-style refrigerator, music equipment and 3-D television. So, things are changing there.

It's always been sort of a status symbol there and in the Cold War countries, so they were always able to get high retail dollars for hot tubs. But I'm seeing the UK become more Americanized, and price is becoming a leading factor, as we've seen in North America.

But outside of that, in the other countries in the European Union, prices are always high and quality remains No. 1 with them. The best dealers selling our products are those that sell quality and keep the price high and really sell a great unit. That's true whether it's Coast or anything else. And it's been like that since I started selling into the EU in 1992.

We're very prominent in Australia, too. There there's a huge influence from the Asian market because it's so close, but it's still about quality. They're willing to pay more for a better-quality product, and they get higher margins and larger retail dollars for their products because consumers there are realizing quality is so important.

Are the Chinese catching up in quality?

That's a huge question, and there are so many answers to it. I was heavily involved in working to get the word out that that market was really going to hurt us. But there are so many loaded questions with that. Whether they're made in China, Mexico, the United States or Canada, as long as they follow some safety measures, it doesn't matter where they're built. They just need to be safe.

If a hot tub is manufactured anywhere and there hasn't been a lot of concentration on quality, there's going to be a problem. So products made outside of North America can still have a quality basis to it. But I don't really believe that China can hurt our industry much anymore.

Say a person is trying to buy one of the Chinese hot tubs. First of all, they may find that it doesn't even exist! And, if it does, it may not conform to UL 1563 regulation, so it would never hit our shores. (I shouldn't say "never." Somebody could buy a container of hot tubs, and it's not like there's anybody there checking for that.) My concern would be if those spas aren't built to proper safety specs and they present a danger, then it does affect our industry. But I don't feel that it's a big worry. Freight is expensive from China. We're in the Northwest, so we're closer to China. But in terms of getting a container to our docks, it's pretty expensive. Now, if you've got to rail that product into Wisconsin, that product has gone up in price. So the only advantage the Chinese would have is labor. Components are what components are.

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