High-End Suppliers Shaking Slump

Despite a tough retail climate, some high-end companies are managing to rack up gains of up to 50 percent this year.

Suppliers such as Diamond Audio, Focal, Kove Audio and Zapco are all claiming gains of more than 20 percent in a market where sales of traditional car audio (excluding mobile video) are flat, they said.

Of course, not all high-end companies are laughing all the way to the bank. Illusion Audio has reportedly closed its doors, and Cerwin Vega is hoping to sell the company to one of several prospective buyers before the end of the year.

But many say the demand for higher-powered amps and top-quality speakers remains strong, even as overall store traffic is down, because consumers are willing to pay for a product that demonstrates superior performance.

Diamond Audio said sales were up 50 percent this year in dollars and forecasts the same growth next year. "If we had all our products ready for shipment in time, we would have increased our sales even more this year," said sales director Sam Taylor.

Diamond attributes its success to a no-holds-barred approach to musical sound quality. The company was founded by former rock 'n' roll concert promoter Rikki Farr, who was responsible for bringing Jimi Hendrix to the United States and producing concerts for artists including Guns N' Roses, Barbra Streisand, Alabama and Randy Travis, Taylor explained. Farr started the company when an engineer brought him some speakers to listen to and he decided to produce and market them.

Diamond just began shipping a new line of TDX subwoofers that feature an inverted design, which places the magnet on the inside of the speaker. The line uses neodymium magnets and the 12-inch model handles 1,200 to 1,400 watts RMS, the company said. The 10- and 12-inch models have suggested retail prices of $550 and $600, respectively. A 15-inch version is expected to begin shipping shortly at $650.

Diamond, which purchased Esoteric Audio's amplifier business a year and a half ago, is currently moving its offices from Santa Monica, Calif., to Chandler, Ariz.

JL Audio said its sales are "way up," although it would not offer specific totals. VP marketing Manville Smith attributes the growth to the fact that most of JL Audio's product introductions in the past 24 months have been at the high end (including subwoofer lines such as the w7 and w6v2 series).

"There's demand for high-end products that justify the price. People do a lot more research than they ever did before. They want to put their money in something that will give them a return on their investment," Smith claimed.

Focal took the reverse approach this year and launched a new lower-priced line of speakers, starting at $165 for a pair of 4-inch coaxials (compared to its previous low price of $300). Focal claims its sales are up 30 to 40 percent for the year in units and dollars.

The new lower priced Access series began shipping this month and is "designed for guys who want better sound but don't want the price tag of better sound," said national sales manager Jesse McKindley. It features titanium, inverted dome tweeters and black fiberglass cones. Access separates range in price from $280 to $299 and Access subwoofers, also with fiberglass cones, range in size from 11 to 16 inches at suggested retail prices of $230 to $450, respectively.

ZAPCO said its sales are up about 20 percent in dollars in the U.S. and 50 to 60 percent abroad. The company recently secured new financing, which has enabled it to increase production, as well as to allow terms to exporters, which has helped with international sales.

"We're coming from a long period where we've been stifled by production limits. Our demand was beyond capacity," explained director of sales and marketing John Borges, who said the company is looking forward to several years of growth. In the last three months, Zapco has been adding new dealers at a rate of 15 to 20 per month, he said.

In January, Zapco introduced the 4KW amp rated (conservatively) at 4,000 watts RMS for $6,000. Borges said it is currently on its third production run, the first of which was 50 units and the second of which was 100. "It's the sort of thing the dealers will buy as a showpiece," he said.

Borge said the company is now working on improving dealer services. It recently hired an employee advocate, whose sole responsibility is to expedite dealer orders and improve dealer service. It also hired a second sales trainer.

Kove Audio said its sales are up more than 20 percent over last year in dollars, according to president Gary Kovner. The company expects to release this fall the first amplifiers to use a professional sound processing technology called Aphex, which enhances sound harmonics. The technology, which has been used by artists such as Paul McCartney, Barbara Streisand, Fleetwood Mac and Ray Charles, has never been used in the consumer electronics industry, Kovner said. Aphex will be offered in all Kove and Hart amplifiers this fall and in two sound processors.

Phoenix Gold said sales are up this year and that the company will focus in 2003 on offering more retailer-friendly programs and services. Senior VP Keith Lehmann said the company will introduce at the upcoming CES in January new streamlined programs and product lines, better warranty service, more intensive field training and more competitive policies.

One of Phoenix Gold's more recent products is the Ti1000.2 stereo amplifier rated at 500 watts per channel or 1000 watts mono at a suggested retail price of $1,100. Phoenix Gold expects to introduce about a dozen new products at CES.

Cerwin Vega did not ship the Dmax line of subwoofers it showed last January, but is hoping to deliver it as soon as the company is purchased, according to Ken Koga, mobile audio product development manager. He said the company is currently speaking to several prospective buyers. "A number of really good companies are looking at us. We believe the brand will continue and I believe I'll be gainfully employed," Koga quipped.

Xtant said it is debuting a new amplifier line in October. The company is "going back to its technology roots," according to a spokesman, and delivering a new Xtant series "instead of confusing the market with an X series and an A series." The Xtant line returns to the company's former cosmetics, using chrome and natural materials. It includes four models, with a fifth "unique" model to debut in January, the spokesman said. The line leads with a 200-watt two-channel and is capped by a 600-watt mono unit.