Costco to Masco

Caldera Spas celebrates 45th anniversary

When Scott Clark brought Caldera Spas onto his showroom floor in 1995, it was a departure. “I was used to white spas with tile,” Clark says. The four Calderas he committed to at his South Bay Spa and Sauna store in San Jose, California, had a green, swirling marble look. “But the very first weekend I think we sold three or four of them — and two of them in less than 15 minutes each.”

Clark’s relationship with Caldera became more than a business endeavor. Eventually he married Shelley Ingram, the daughter of Dave Ingram, who founded Caldera. Clark and Shelley eventually moved to Reno, Nevada, and started their own hot tub store, The Spa and Sauna Co. It now comprises what will soon be four Nevada locations and two California locations.

Dave Ingram started Caldera in 1976, and this year marks its 45th anniversary. “Dave was very hands-on 45 years ago,” Clark says. “They used to do things like full mosaic tile on hot tub shells and commercial shells.”

“They were pioneers in the game,” says Steve Hammock, president of Watkins Wellness. In 1999, Watkins bought Caldera. It was the company’s first acquisition of another spa brand (but it has gone on to purchase American Hydrotherapy Systems and Endless Pools).

Caldera was one of the first hot tub manufacturers to venture into the mass-market segment. Its relationship with Costco was part of what attracted Scott Clark to bring on Caldera in the first place.

“The appeal was expanding opportunities to have some incremental business,” Clark says. “To go into Costco and work a parking lot sale, but without having 10 other manufacturers there.”

Dave Cintorino, co-owner of Offenbachers Home Escapes with four locations across northern Virginia and Maryland, began carrying Caldera in the early ’90s and remembers those early Costco shows as being tough. “Working for Costco can have its challenges,” Cintorino says. “It was a lot of time and effort to set up the shows and sometimes it didn’t pay off they way we would have liked.”

Some of the features and terminology Ingram pioneered are still in use today, like hot tub circuit therapy — the idea of moving to different seats in the spa to massage different areas of the body and the footridge — a place to anchor your feet so you stay seated when powerful jets turn on.

“The jet patterns in Caldera Spas are laid out different,” Clark says. “Some of the seating designs — the contours and lounges — are still unique compared to the other Watkins products.”

Those innovations didn’t go unnoticed at Watkins. “There were a lot of things we liked about Caldera; specifically, they had an attractive product line,” Hammock says. “They had done a great job with the style components and the comfort part of sitting in a hot tub. And we were in acquisition mode.”

Float My Boat

There are many reasons to move forward with an acquisition. Maybe the new company fills a hole in your existing product line. Maybe it’s a deal too good to pass up. Maybe it is in a sales channel you want to tap. But when Watkins started looking for a brand to buy, it was because it had reached a growth ceiling.

“The majority of our growth opportunity was vertical — getting more [Hot Springs] units from the customers that we had,” Hammock says. “But horizontally, we’d done a great job of covering the country. We didn’t expect a lot of growth from adding more locations.”

Watkins Wellness, which is part of the Masco Corporation, is the only publicly traded hot tub manufacturer. “We have a different mandate than others,” Hammock says. “Grow topline, grow bottom line, do it every year.”

With the growth opportunity within its core brand limited, Watkins started looking for other avenues. “We were thinking about getting into some other businesses, some adjacencies and things like that,” Hammock says, adding that they also knew they’d been good at building retail networks and at making retailers better, “so maybe we should do it again. Let’s take our strength and let’s build another network.”

Though mostly excited, there was concern with some existing Caldera dealers when Watkins purchased the brand. In the beginning, Cintorino says, there was the feeling that Hot Spring would get the majority of the attention and marketing budget. “To Steve Hammock and Mike Dunn’s (the recently retired executive vice president) credit, they’ve managed to be consistent with their marketing for both,” Cintorino says. “Steve made a commitment to have Caldera be a top five brand.”

And that’s a goal that Caldera and Watkins say they’ve hit.

“We’ve been trying to get more adoption for Caldera — really mainstream the brand and get in those top tiers of brands within the industry and within the consumer consideration,” says Caitlin Woelfel, Caldera brand manager since 2017. Within the past year, she says, Caldera climbed to the top of the competitive set with its net reputation score, which is something it had been tracking heavily. (A net reputation score measures consumer sentiment by looking at the reach, volume and the sentiment of a brand’s online chatter and reputation.) Caldera also climbed to the top of Bigfish Publication’s (former owner of SpaRetailer) TradeCertified scores, ranking No. 1 in several categories including overall top spa manufacturer; overall dealer satisfaction; and overall dealer support.

For some Hot Spring dealers, Watkins purchasing Caldera lead to the feeling that they now had to compete against their own manufacturer. But Hammock says Hot Spring dealers gained much more than they may realize.

“If there was no Caldera, there likely would’ve been no Mexico,” Hammock says, referring to Watkins opening a manufacturing facility in 2004 in Tijuana. “And Mexico has helped us tremendously because of access to labor, amongst other things.”

Caldera also had an existing fiberglass operation, which was new to Watkins. Hammock says it would have been impossible to obtain a new permit for fiberglass in California, and having that capability expanded the products in the Hot Spring family. “All that worked together,” Hammock says. “You end up with what we all want, this synergistic effect where the whole is greater than the sum of its parts.”

In addition to integrating product and processes, Watkins also had the challenge of integrating existing Caldera employees into the fold. “We retained 80% to 85% of the employees,” Hammock says. The majority of the people who came from Caldera are still with the company, he adds, mentioning a handful of people (Jose Jacobo, Karen Lane, Sal Mendez, Tim Melbrod, Wayne Racine and Victor Perez). “We’ve got just gobs of people.”

Carving Out Space

While there were production efficiencies, streamlining and culture Watkins brought to the table, the goal wasn’t to create a Hot Springs replica. The company wanted to ensure Caldera was its own distinct brand.

“We’ve been working hard to identify those differentiated consumer needs and the messages that really reverberate with the Caldera shopper and how we can talk to them,” Woelfel says. “We do a lot of brand and consumer research, and testing imagery and ads. It comes down to knowing the consumer and what resonates with them.”

One thing Caldera has found that resonates with customers is wellness.

“We deliver on that wellness message,” says Steve Stigers, vice president of marketing for Watkins. “And our Caldera owners amplify that message because it supports their active lifestyle, their recovery lifestyle. It’s adding value and improving their overall health and wellness.”

Stigers says Watkins wants Caldera to be leading in technology, performance and design, mentioning the brand’s Freshwater salt system as a technological advance.

“There have been some cool innovations with Caldera over the years,” Clark says. “The addition of salt in the last couple of years has really helped.”

Cintorino says the backing of Watkins has moved Caldera toward higher professionalism. “The branding is better, the advertising is better,” he says. “Everything is raised up a notch.”

With all the advancements, there are myriad reminders of the past for Clark — whether it’s old brochures showing his wife as a child or someone reaching out to repair a spa as old as the brand itself. “We got a web lead looking to see if we could repair a Caldera Spa [from] 1976 or ’79, early on,” Clark says. “They forwarded us the plans from the city that had Dave Ingram’s name on it.” Turned out Clark’s company wasn’t able to service the decades-old commercial spa, “but it was cool they allowed us to share that story.”