Freed Captured

Effective July 1, BSH (Bosch, Thermador, Gaggenau brands) has purchased the assets of Freed Distribution based in Texas but covering the markets of TX, LA, AZ, NM, CO, UT, and 1/2 of MS, and 1/2 of NV.  There were always primary and secondary drivers in BSH's development of direct distribution on the US east coast that muddied the waters of BSH's true intentions.  The acquisition of Freed Distribution is a direct and crystal clear signal, to us anyway, that BSH will in short order acquire or cancel their entire 2-step distribution channel.

Explanation for consumers way too interested in the appliance industry:
A 2-step distributor provides 2 valuable services.

• They allow smaller brands which could not possibly afford a national direct sales staff, to be represented by a sales force in a given territory (example Texas) by sharing this resource with other compatible brands (for example a dishwasher brand, a laundry brand, and a cooking brand).  The distributor sales force will pitch all these brands with each dealer sales call.  They will also leverage a "must have" brand to increase sales of another of its brands in a more competitive segment.
• Distributors have warehouses and own product in their territory, increasing service to the dealer and reducing inventory risk and cost to the manufacturer.

Distributors make a 25% to 30% margin for these services.
BSH obviously believes that their product line is complete enough, and that their individual dealer sales are dense enough, such that the cost of direct sales will be less than this 25% to 30% distributor margin.
GE, Whirlpool, Maytag, Electrolux, Miele, Dacor, and Fisher & Paykel, are sold in this way, while Viking thought better of it, and Sub-Zero straddles the line.