Yeti recently joined the billion dollar–brand club as the pandemic fueled a surge in outdoor activities by many people willing to pay premium prices for its sleek, high-quality coolers, insulated mugs, and other accoutrements.
The company, founded in 2006 by outdoorsmen frustrated with cheaply made coolers with handles that broke easily and latches that snapped off, hit $1.09 billion in sales last year, a 19% jump from 2019’s level.
Over the years, Austin-based Yeti has expanded its assortment to include things like dog beds, waterproof bags, blankets, and camping chairs, while deepening the roster of its signature coolers, including a stainless-steel one that costs $800.
Now Yeti is undertaking its biggest new product launch yet, a line consisting of backpacks and duffel bags going for up to $249.99, and two soft-sided luggage pieces, the most expensive of which has a price tag of $449.99, adding to a modest assortment of bags, all with a view to keeping its hot streak going. (The company’s first-ever hard-sided luggage piece will come later.)
While there are plenty of incumbents in both categories, CEO Matt Reintjes says the bags and luggage fit in with what Yeti customers want from the brand, especially if they maintain Yeti’s signature quality and design. He sees the range complementing its existing offerings since many customers travel to places where they will engage in the great outdoors.
“There are certain things you need to get from here to there, and there are things you use once you’re there,” he tells Fortune. As for the prices, Reintjes says, “we’re going to be a premium player, and what you get for the premium is durability and design.”
Yeti was no doubt the beneficiary of the COVID-19 boom in outdoor activities, all the more since countless Americans needed alternative pastimes with travel severely curbed. For instance, the number of Americans who went hiking at least once in 2020 rose 16.3%, and casual freshwater fishing by 16.6%, according to new data from the Sports & Fitness Industry Association.
In 2020, Yeti found itself deprived of many of the activities that fuel sales, like tailgating and barbecues. But the company had been growing healthily well before the pandemic, and has continued to do so in no small part because of the intense, almost cultlike loyalty of its customers.
Wall Street firm BTIG said in a report last week that Yeti is “a luxury brand in the fragmented outdoor accessory equipment category that is unrivaled in its technological leadership, brand perception, and customer loyalty.”
The company will need that loyalty as a bigger chunk of its sales shift to its own website and stores. In addition to the $1 billion threshold, Yeti hit another milestone in 2020: More than half its revenue, 53%, came from its own stores and website, or direct-to-consumer (DTC), for the first time. (A big chunk of that comes from its Amazon Marketplace store.) On this front, Yeti is not alone: Brands from Levi’s to Coach to Ralph Lauren want to sell more directly to customers and rely less on middlemen to better cultivate shopper loyalty and have more control over presentation and distribution.
Yeti’s big wholesale partners include Dick’s Sporting Goods (15% of total sales in 2019), Lowe’s, REI, and Bass Pro Shops. While some of the shift in 2020 stemmed from many retail stores closing in the first quarter because of COVID-19 precautions, Reintjes sees DTC as a percentage of total sales staying high even after the pandemic recedes. (It was only 10% of sales five years ago.)
“We knew that as we built this passion-based outdoor, active brand, that consumers wanted to engage directly with us, not just for our product but for our storytelling too,” says Reintjes. Yeti’s products have developed a cultural presence that goes beyond simple coolers or drink holders, with novel marketing such as a lifestyle catalog and Spotify playlists from artists like Leon Bridges.
To one day reach the $2 billion level (Yeti has so far said it expects sales to be up only 15% to 17% this year), luggage and new backpacks won’t be enough. In fact, Reintjes sees a big untapped market not only abroad but stateside too. And he thinks Yeti can get even more mileage from its current product roster by adding some twists. That has lately included things like larger capacity single person drink holders to offering its products in more colors.
“The majority of our growth in any given year comes from legacy products,” says Reintjes. “The reality is that our products last a long time, and we continue to tell those products’ stories.”