This is an English adaptation of a FoodBud historical article originally published on May 30, 2022.
Outdoor camping surged during the pandemic, raising a practical question for foodservice operators: what should consumers eat and drink in outdoor leisure occasions?
Restaurant brands in China had already started testing the opportunity. Pizza Hut launched camping meals; Haidilao offered barbecue delivery with outdoor grilling tools such as grills and brushes; barbecue restaurants began selling outdoor picnic barbecue gift boxes. As pandemic pressure hit hotpot, barbecue, and other chain-restaurant formats, some operators looked beyond dine-in occasions into delivery, outdoor, and at-home consumption.
Examples included barbecue chains such as Muwu BBQ pairing delivery orders with simple grill racks and charcoal for self-grilling, while hotpot-ingredient retailer Guoquan expanded its product ecosystem by selling self-developed barbecue equipment to better serve family dining scenarios.
This article looks at Weber, the global outdoor-grill manufacturer, and the capital behind it.
In 1952, George Stephen Sr. was working at Weber Brothers Metal Works in Chicago, Illinois, making marine buoys, when he developed a better idea for grilling. His invention was a dome-shaped grill with a lid, designed to protect the food’s juices and seal smoky flavor inside the cooker.
Stephen cut a buoy in half, added vents and supports, and helped launch what became a backyard-grilling category. Over the following decades, Weber built a loyal base of barbecue enthusiasts and professionals around the world.
Weber’s product portfolio spans traditional charcoal grills, gas grills, smokers, wood-pellet and electric grills, and more recent grills using Weber Connect technology. Beyond equipment, Weber also produces grilling inputs and consumables.
According to Frost & Sullivan, Weber held 23% market share in the United States and 24% globally in 2020. The company was a leader in major outdoor-cooking markets including the United States, Germany, Australia, Canada, and France. Weber also estimated that it held the number-one or number-two brand position in each key region it served.
Weber listed in North America in 2021. At the time referenced in the article, its market capitalization was $2.16 billion, or about RMB14.4 billion. Over the previous 40 years, annual revenue grew from $37 million in 1980 to $2 billion, or about RMB13.3 billion.
Key data points from Weber’s business included:
Weber entered China in 2016. During the pandemic, sales rose in China, Japan, South Korea, Singapore, and other Asian markets. The article stated that Weber expected revenue in China to maintain annual growth of more than 200% in the following years.
To adapt products for Asian markets, Weber sold many lidded grills in Asian countries with a thermometer on the lid. Zhong Zhengfeng, Weber China’s general manager, said that unlike European and American markets with established barbecue cultures, Asian consumers tend to watch temperature changes closely during grilling because they worry about burning food. In accessories, the Asian market also sold skewer accessories for barbecue.
Weber’s U.S. manufacturing footprint included a 620,000-square-foot manufacturing center in Chicago, or about 57,000 square meters, plus two factories in Illinois of 67,000 square feet and 59,000 square feet. In Illinois, it also had a 757,000-square-foot global distribution center and a smaller 320,000-square-foot distribution center mainly serving North American DTC and e-commerce operations in the United States and Canada.
In Europe, Weber’s factory and distribution center in Poland began operations in the fourth quarter of 2021. The manufacturing facility covered 487,000 square feet, with a 52,000-square-foot office, and served as Weber’s hub for Europe, the Middle East, and Africa.
In 2010, BDT Capital acquired control of Weber, excluding the restaurant-store business. According to SEC disclosures cited in the article, BDT Capital used a co-investment fund to take control through a $65 million equity investment and $150 million of debt.
At the time of the article, BDT Capital and Byron Trott held 48.6% and 6.2% of Weber, respectively, and still controlled the company. Weber’s market capitalization was cited as $2.16 billion, or about RMB14.4 billion, and its listing raised $250 million.
In January 2021, Weber acquired smart-oven company June. June’s co-founders joined Weber: Matt Van Horn became president of June, and Nikhil Bhogal became Weber’s senior vice president of technology and connected devices. June became a strategic business unit inside Weber. The acquisition was mainly intended to expand Weber’s smart-product business.
In April 2021, before the listing, Weber acquired R. McDonald Co. for $29 million in cash and $14 million in equity, mainly to expand in Australia and New Zealand.
Byron Trott previously worked at Goldman Sachs. During that period, he advised Warren Buffett on several Berkshire Hathaway transactions, including acquisitions of McLane, Marmon, and Pilot Flying J, as well as Mars’ 2008 acquisition of Wrigley.
In Buffett’s 2003 shareholder letter, Buffett said Trott understood Berkshire Hathaway better than any investment banker he had dealt with. In the 2007 shareholder letter, Buffett again mentioned Trott, saying he was one of the rare investment bankers who could put himself in the client’s position.
During the 2008 financial crisis, Trott helped bring Buffett into Goldman Sachs as an investor. On a Sunday in October, Buffett received a call at his home in Omaha from Goldman Sachs vice chairman Byron Trott. Trott’s request was direct: he wanted to persuade Buffett to invest in Goldman during the crisis.
Trott also told Buffett that the government was pushing Goldman to merge with Wachovia. Buffett rejected the idea, reasoning that one company was associated with a former Treasury secretary and the other with a retired Goldman executive who had also served as deputy Treasury secretary; in his view, the government could not finance a deal between the two.
As the financial crisis deepened, Wall Street investment banks began to understand that capital alone was not enough. They needed a highly credible figure to provide a signal of confidence, and Buffett was the strongest candidate.
Goldman ultimately offered to sell Buffett $5 billion of preferred stock with a 10% dividend rate, meaning Goldman would pay Buffett $500 million annually on the transaction. The deal also allowed Buffett to convert into Goldman common shares at a price 8% below the then-current market price.
In simple terms, Goldman sold Buffett a bond-like instrument with a 10% annualized rate and the ability to convert at maturity into common stock at an 8% discount to the then-current price. Buffett’s key question was whether Goldman would fail.
Buffett quickly decided to accept the transaction. After Buffett’s investment, Goldman soon found other investors, and its share price rose 6%. Years later, Buffett converted Goldman preferred stock into common stock, generating large gains and making Goldman his fourth-largest holding. The transaction took only a 20-minute phone call.
In 2009, Trott left Goldman Sachs and founded BDT Capital. The new fund raised $9 billion. The article said Trott had been connected to investment transactions involving at least 10 of the world’s 30 richest individuals.
Joining Byron Trott’s BDT Capital “club” was not cheap. Investors needed to contribute at least $25 million to become limited partners in BDT Capital’s first fund, with a potential investment payback period of 10 years.
Trott had long-standing relationships with top U.S. business families, which shaped the fund’s ambitious scale. Examples included the Pritzker family, heirs to Hyatt Hotels, and family members of Walmart founder Sam Walton. Trott relied on these families, while their family offices were also gaining influence on Wall Street. Wealthy families were increasingly hiring investment teams to arrange equity investments in small and midsize companies directly, rather than handing money to external fund managers.
Family offices with billions of dollars were looking for direct-investment opportunities. BDT Capital’s private-equity funds also maintained contact with family offices and introduced suitable investment opportunities. Trott was also an M&A specialist, and his relationships with family offices helped him identify opportunities to facilitate transactions among them.
Trott had a 150-person team and had played roles in major transactions, including JAB Holding’s nearly $19 billion acquisition of Dr Pepper Snapple Group. Through that work, Trott built a relationship with Germany’s Reimann family and earned its support for JAB to manage wealth and build a food-sector investment portfolio, including acquisitions of capsule-coffee maker Keurig Green Mountain, sandwich chain Pret A Manger, bakery-cafe chain Panera Bread, and Krispy Kreme.
BDT Capital’s structure differed from other investment banks in two key ways. First, it did not have traditional business lines such as financial services. Instead, each investment professional was a generalist, allowing the firm to better serve wealthy families whose needs were often broad and deep rather than limited to one-off transactions. Second, BDT bankers handled both advisory and investment transactions, which are separated at many other firms.
Trott said a key skill for a BDT Capital investor was not only being a top investment professional, but also acting like a psychologist when dealing with wealthy families and companies.
BDT Capital built a strong social network among wealthy clients, playing a connective role. At BDT-hosted gatherings, wealthy clients could quickly open up about common concerns, allowing trust to form quickly.
A recent regulatory filing cited in the article showed that BDT Capital had raised $6.5 billion for its latest fund. According to a person familiar with the matter, the fund was the firm’s fourth, had 35 investors, and targeted raising $13 billion by year-end. BDT Capital’s affiliated investment institutions managed about $33 billion. Its third fund raised $9.1 billion in 2020.
Tom Pritzker of the Hyatt Hotels heir family said he believed BDT Capital provided services that generated incremental value for clients, mainly wealthy families; if BDT could create additional value for those families’ businesses, the result would be substantial rewards.
Note: IPO, market-capitalization, fundraising, ownership, acquisition, dividend, and forward-growth figures are historical as of the 2022 source article.