One of the biggest names in hot tubs has purchased perhaps the oldest manufacturer of current pools and swim spas.
Watkins Manufacturing Corp. has acquired Endless Pools, maker of a variety of aquatic-fitness products, including one of the oldest swim-spa lines. The purchase was made through Watkins' parent company, Masco Corp., a Taylor, Mich.-based manufacturer of products for home improvement and new-home construction.
In positioning itself as a producer of a broader swath of personal well-bring products, Watkins management decided it was time to expand the company’s offerings beyond the hot tubs it has offered since its founding in 1977. Endless Pools supplies a variety of current pools, including aboveground, residential and commercial-grade models, in addition to swim spas, aquatic treadmills and deeper wells for aquatic exercise and therapy.
The purchase marks the beginning of a new business segment for Watkins, producer of the Hot Spring, Caldera, Limelight, Hot Spot and Fantasy brands of hot tubs. “We have a spa platform, and we have an aquatic fitness platform," said Watkins President Steve Hammock. "And the aquatic fitness [platform] will be built around the brand Endless Pools.”
He said Watkins chose Endless Pools because of its place in the industry. “We think they’re a leader in the space and they’ve done an excellent job with their brand," he said.
Endless Pools’ founder and president, James Murdock, said he felt comfortable placing the company he founded nearly 30 years ago in Watkins’ hands.
“While I am not from the spa industry, Watkins has always stood out to me as a cut above the rest,” Murdock said. “Their manufacturing prowess and their dedicated and committed dealer base are like no other.”
While Watkins and Endless Pools management see plenty of compatibility between the companies and brands, their business models differ greatly when it comes to distribution: Watkins works through dealers, but Endless Pools has sold direct to consumers since its founding in 1988.
This leaves Watkins retailers wondering if the Vista, Calif.-based hot tub maker will begin selling Endless Pools products through its dealer network rather than direct to the public. The products range from complete, stand-alone units to those that require some installation.
Though Endless Pools offers more than swim spas, that product category is top of mind for retailers. Many Watkins dealers currently sell other brands, and some are waiting to see if they should consider switching. Not only are Watkins dealers loyal to the supplier, but they make up a tightknit group who put plenty of stake in each other's strategies. So there tends to be a ripple effect within the network when one company makes a change.
On the other hand, some Watkins dealers who don’t currently sell swim spas may consider rolling out the category if Watkins opens that channel to them. In addition to reported increases in swim-spa sales, these items represent big-ticket transactions, which some may wish to bring into the stores.
“I had been talking to a couple manufacturers and will probably hold off … ” said Chris Callanan, owner of North Shore Pool Supply in Wakefield, Mass. “Endless Pools is obviously a very good product. I’ve never really heard anything bad about them. … I’m looking forward to see how it plays out.”
Hammock said things will remain business as usual for Endless Pools for a while, but did not comment whether the line eventually will be offered through dealers. “There’s going to be a very long transition for us,” Hammock said. “So it’s going to be business as usual for an extended period … then at some point in the future, we will introduce our strategy. … There’s a lot of work to be done here.”
Some long-term plans regarding the acquisition are known. The Endless Pools brand will remain distinct, Hammock said. Additionally, the line will continue to be made from its current facility in Aston, Pa. That is not expected to change, he said.
Endless Pools' founder/president, James Murdock, will remain with the company as chief innovation officer. Longtime Chief Operating Officer David Bills will manage the facility.
For the manufacturer and its dealers, this seems to be a fortunate time to dip into swim spas. By all accounts, the category is undergoing the sales growth that has been its promise for decades.
“We’re seeing a huge spike in swim-spa interest,” said Dave Doornink, director of marketing for Portland, Ore.-area retailer Oregon Hot Tub. “That’s probably where the biggest change has been.”
More manufacturers have entered the swim-spa category, raising consumer awareness, Doornink said, while reductions in price point put the product within reach of more consumers. And while smaller lot sizes make the products more appealing spatially, the aging population and increased concern about health issues makes the benefits more attractive, he added.
In addition to whether Watkins will make swim spas and current pools available to its network, dealers also wonder if the manufacturer will begin integrating Endless Pools features into its own line of hot tubs.
“I could certainly see Hot Spring developing a hot tub that would be suited for [Endless Pools] treadmills,” said Alice Cunningham, co-owner of Seattle-based Olympic Hot Tub Co. “To me … that would be a killer product, which would really boost Endless Pools’ [brand].”
Endless Pools was founded in 1988 by Murdock when he built his first current pool on a deck at Columbia University. The idea actually came to his father when he was a child swimming in place in the irrigation canals in the Phoenix area.
After earning an undergraduate degree in engineering from Princeton, then an MBA from Columbia and starting a career as a consultant, the younger Murdock decided to build the swim-in-place machine his father envisioned. Upon the advice of his first customer and investor, Murdock took out an ad in TheNew Yorker, thus beginning his consumer-direct strategy.
Murdock said that he also tried selling his product at pool- and spa-industry trade shows. “But it was not clear to pool and spa dealers why someone would wish to invest so much in a product to swim in place,” he said. “Meanwhile, my print advertising was generating leads from all over the country. To afford the advertising, I needed to sell everywhere, and the only way to do that was direct. Our direct-to-customer model was born very much of necessity.”
In 1992, Murdock moved his company onto the property his father had used for manufacturing industrial furnaces.
Some characterize Endless Pools as a boutique-type manufacturer, but Murdock expects the Watkins acquisition to take his company and its products to a new sales tier. “Watkins brings a commitment to manufacturing excellence while offering last-mile service and support that we never could,” he said.
Callanan agreed. “I think they have a really good product. But I don’t think they’re realizing their full potential. I think by having Watkins and Masco behind them, it really will make a big difference in how things go forward.”
Watkins was founded in 1977. Its Hot Spring brand is the only one to sell more than 1 million hot tubs, Watkins said. Before Endless Pools, Watkins most recently acquired American Hydrotherapy Systems, maker of Freeflow brand hot tubs, in 2011.
As for the company’s future, Hammock said, “Acquisitions are definitely a part of our ongoing strategy.”