Is Grass Greener on Scotts' Side?
Lawn care. The two words typically inspire white-picket-fence images of middle-aged men mowing the grass, teenagers weeding the backyard, suburban mothers pruning the rose bushes. But for Jim Hagedorn, the words mean war. He views grass and gardens as a commercial combat zone, a place where executives engage in a life-and-death battle for profits. "I run my own war every day," he says. "Instead of taking land, [we gain] market share."
Hagedorn, 51, is serious about his military metaphors. He served as an F-16 fighter pilot for seven years. And as the CEO of Scotts Miracle-Gro, he has been pushing the firm to conquer the lawn-care industry through targeted research and innovation, releasing dozens of new products from heat-resistant grass to powerful pesticides. "I would like Scotts to be the McDonald's of lawn and garden," he says.
While Hagedorn's war is far from over, he has won some major battles. Since he took the reins of the Marysville, Ohio, company in 2001, sales have jumped more than 10 percent each year and net income has grown 23 percent annually. Today the firm rakes in a third of the $8 billion lawn-and-garden-care industry's revenues. "Because of its strong brands and management's ability to execute," says Douglas Lane, a senior research analyst at Avondale Partners, "the company dominates its niche."
Dirty fun. Certainly, industry trends have helped. For decades farmlands have been giving way to housing developments, and grass now covers 40 million acres of the country, blanketing nearly as much land as the state of Washington. At the same time, aging baby boomers have been devoting more time-and money-to their lawns, and gardening has become the nation's No. 1 outdoor activity, more popular than walking or golf.
A 1995 merger between the grass seed giant Scotts and the fertilizer heavyweight Miracle-Gro made the company the largest in the industry. But Scotts has found plenty of room to continue growing, and during Hagedorn's tenure, the company has been using its technical know-how to boost sales and create new markets. After Hagedorn found out, for instance, that consumers wanted their fertilizer pre-mixed with water, the company introduced LiquaFeed, a hose-and-bottle system that automatically combines water and plant food. The product was projected to post sales of $20 million last year; it brought in twice that amount.
In its 18,000-square-foot grass research center in Ohio, Scotts has also created numerous niche products to help expand its market share. The company recently released a new turf seed called Sea Spray that is tailor-made for beachfront properties: Unlike other grasses, the company says, the grass stays lush and green after contact with salt water. Next on the research agenda? "Dog-urine-proof grass," says Hagedorn. "It's a real problem. The uric acid [from a dog's urine] causes yellow burn spots."
Scotts launches a targeted advertising campaign for each new product-and they're usually successful. "They know marketing," says Avondale's Lane. "This is a company that branded dirt." The public-relations push, Hagedorn explains, introduces new inventions to the consumer and promotes gardening as a way of life. "Our biggest competitor is people's time," he says. "We have to make it easy and fun for people to work in the garden."
advertisement
