Project: Market Research and Report on North American 

Residential Wood Heaters, Fireplaces, and Hearth Heating 

Products Market (P.O. # PO1-IMP403-F&S) 

Final Report April 26, 2010 

Submitted to: 

EC/R Incorporated 

501 Eastowne Drive, Suite 250 

Chapel Hill, NC 27514

Prepared By: 

Frost & Sullivan 

331 E. Evelyn Ave. Suite 100 

Mountain View, CA 94041 

(P.O. # PO1-IMP403-F&S) 

North American Residential Wood Heaters, Fireplaces, and Hearth Heating Products Market 
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North American Residential Wood Heaters, Fireplaces, and Hearth Heating Products Market 

Table of Contents 

1) Executive Overview.........................................................................................4 

- Project Background and Objectives............................................................4 

- Introduction.......................................................................................5 

- Summary of Methodology......................................................................6 

- Definitions........................................................................................9 

- Summary of Key Findings.....................................................................11 

2) Total Market Analysis......................................................................................14 

- Market Overview..............................................................................14 

- Overview of Product Segments..............................................................15 

- Market Dynamics..............................................................................17 

• Industry Challenges.................................................................17 

• Market Drivers........................................................................21 

• Market Restraints.....................................................................24 

- Market Analysis and Revenue Forecasts (Base Year 2008) .............................27 

- Current Market Size By Unit Shipments (2008)...........................................29 

- Market Analysis – Revenue and Units by Product Type (2008).........................30 

- Market Estimate for Unbranded/Non-regulated Products Currently Sold in the U.S. 

by Asian Manufacturers (2008)..............................................................33 

- Installation Cost of Average System by Product Type (2008)...........................34 

- Manufacturer’s Price by Product Type (2008).............................................35 

- Trends in Regional Variation in Purchase Price by Product Type.......................35 

3) Analysis of Market Trends.................................................................................37 

- Fuel Consumption..............................................................................37 

- Usage Rates.....................................................................................39 

- Motive of Purchase.............................................................................41 

- Regional Trends.................................................................................45 

- Influences on Buying Styles, Customer Approval, and Other Psychographic 

Information.......................................................................................46 

- Reasons for Switching to Alternative Fuel Sources.......................................48 

4) Market Conclusions.........................................................................................49 
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- Evaluation of Growth Projections and Demand............................................49 

- Potential Market Impacts of New Emission Regulations.................................50 

- Conclusions.......................................................................................51 

5) Methodology..................................................................................................54 
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1 

Executive Overview 

Project Background and Objectives 

EC/R Inc. is currently providing technical support to the United States Environmental Protection Agency 

(EPA) in the review and possible revision of the current New Source Performance Standard (NSPS) for 

residential wood heaters, including assessment of sources not covered by the current rule such as hydronic 

central heating systems. The results of the review will inform EPA’s decision making on potential options 

for revising the NSPS. EC/R has subcontracted with Frost & Sullivan to undertake an assessment of the 

wood heaters market in North America, including the size of the market by revenues and unit shipments, 

location and regional distribution, growth trends, and market projections. This information will be valuable 

in any future assessment of the impacts of regulatory options that may be considered by EPA. 

This project has the following primary objectives: 

• Gaining an accurate understanding of the current and future market size of residential heaters and 

hearth heating products 

• Understanding the current demand patterns and drivers influencing buying decisions 

• Using expert qualitative data to estimate the impact of potential changes to emissions regulations 

for these products on various segments of the population 
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• Understanding the rate of usage and choice of fuel affecting consumer buying decisions 

• Understanding the growth vectors for this industry 

Introduction 

Because burning wood contributes to air pollution, the wood heaters, fireplaces, and hearth heating 

products market has been receiving more attention from government agencies and state and local 

governments. When wood is burned in fireplaces, stoves or other heaters, the pollutants that are released 

affect air quality both indoors and outdoors. Smoke that is released outdoors can leak into nearby homes, 

potentially affecting anyone who lives in the neighborhood. 

In addition, wood smoke contains a mix of pollutants that can be harmful to a person's health. Wood 

burning is a significant contributor to fine particulate pollution and wood smoke can irritate eyes, lungs, 

throat, and sinuses; reduce lung function; trigger headaches and allergies; and increase the severity of 

existing lung diseases, such as asthma, emphysema, pneumonia and bronchitis. Some chemicals in wood 

smoke, such as polycyclic aromatic hydrocarbons and volatile organic compounds, have also been linked to 

cancer.1

 Further, certain areas of the United States where residential wood burning is common have been 

designated as “nonattainment” for EPA’s National Ambient Air Quality Standard for fine particulate. 

These concerns have led government agencies to establish regulations and efficiency guidelines that wood 

heater, fireplace, and hearth heating product manufacturers must adhere to. 

For more than 20 years, an NSPS (Subpart AAA of 40 CFR Part 60) has been in place that regulates the 

manufacture and sale of certain new residential wood heaters. Cognizant of EPA, state, and local 

regulations, the hearth products industry has been developing and manufacturing wood-burning products 

that emit less particulate matter into the air. While wood-burning appliances manufactured in the 1970s and 

1980s produced about 42 grams of particulate per hour, most newer appliances emit 7.5 grams of emissions 

per hour or less.2

 Stoves that meet the 7.5 grams per hour (gr/hr) requirement (4.1 gr/hr for catalytic stoves) 

are considered EPA-certified (versus 4.5 gr/hr (2.5 gr/hr for catalytic stoves) for Washington State) and can 

 

1 Source: United States Environmental Protection Agency 

(http://www.epa.gov/burnwise/healtheffects.html) and Minnesota Pollution Control Agency 

(http://www.pca.state.mn.us/air/woodsmoke/healtheffects.html) 

2 Source: Responsible Wood Burning Factsheet, Hearth, Patio & Barbecue Association 

(http://basineducation.uwex.edu/centralwis/pdfs/FS_ResponsibleWoodBurning.pdf) 
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reduce emissions by approximately 90 percent.3

 In addition, these appliances are substantially more 

efficient than older models and consume less fuel to provide the same amount of heat. 

The trend toward cleaner-burning and more efficient appliances is also supported by changeout programs 

that encourage homeowners to replace old, uncertified products with low-emission wood-burning and other 

solid biomass-based appliances. Because these programs have the potential to dramatically reduce air 

pollution, many areas in both the United States and Canada have used these types of programs. In addition, 

programs that provide incentives, such as rebates, tax exemptions, and low-interest loans for the purchase 

of these products, are driving the transition toward cleaner-burning and high-efficiency appliances in North 

America. 

In terms of regulations, the market is expected to witness various changes in the future. The EPA’s review 

of the NSPS is expected to lead to changes in the standard. The Clean Air Act requires NSPS to be based 

on best demonstrated technology (BDT), considering cost and other non-air impacts, and technologies have 

improved since the NSPS was first promulgated in 1988. Possible changes may include the lowering of 

particulate matter emissions for freestanding wood stoves, fireplace inserts, and pellet stoves, and 

extending applicability of the NSPS to units such as hydronic heaters, masonry heaters, other biomassbased units, and fireplaces, furnaces, wood stoves, and pellet stoves currently exempt from EPA 

certification.4

 Extending the applicability of the NSPS to these additional units may result in parallel 

additional NSPS subparts. 

Summary of Methodology 

Frost & Sullivan used a combination of primary and secondary research methodologies to compile all the 

necessary information for this project. Secondary research was used to complement the primary research 

efforts and fill any information gaps. 

Primary Research 

Primary research formed the basis of this project. Secondary sources were used to generate some contact 

lists and validate some of the findings. A discussion guide was developed by Frost & Sullivan and 

approved by EC/R prior to implementation. Primary research interviews were then conducted with 

manufacturers, Canadian suppliers, distributors, value-added retailers, and home improvement chains. 

Furthermore, primary research included interviews with industry associations to collect information about 

 

3 Source: United States Environmental Protection Agency (http://www.epa.gov/burnwise/how-toguide.html)

4 Source: Houck, James E. Houck and Tiegs, Paul. (December 2009). EPA Regulations/NSPS. Hearth & 

Home
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the market. Discussions were typically telephone conversations, for 30-90 minutes in duration. Notes were 

taken from the conversations in an electronic format and used in the analysis. 

In order to ensure that the primary research provides as complete a picture as possible of what is happening 

in the industry at present, as well as what can be expected in the near future, specific information was 

sought from the following sources indicated below: 

• Manufacturers, suppliers, distributors, value-added retailers and home improvement channel 

partners 

o Key market trends, market challenges, drivers and restraints 

o Market analysis with qualitative and quantitative metrics on growth, market size, market 

potential, unit cost, and installation cost 

o Impact of voluntary programs and tax credit 

o Regional trends in terms of price, user preferences, fuel preferences, usage rates, buying 

patterns, etc. 

o Motive of purchase, usage rates, fuel consumption and purchase criteria 

o Emission regulations and factors driving the switch to alternate fuels sources 

• Industry Associations 

o Trend analysis, challenges, drivers, and restraints for North American market 

o Market data including market growth, market size, and unit cost 

o Emission regulations and its impact on the industry 

o Factors driving the switch to alternate fuels sources 

o Regional trends in terms of price, user preferences, fuel preferences, usage rates, buying 

patterns, etc. 

Secondary Research 

Secondary research was used to complement our primary research; the following were included: 

• Published sources 

• Government bodies (e.g. U.S. Census Bureau and U.S. Environmental Protection Agency) 

• Industry associations (e.g. published HPBA data) 

• Trade journals 
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• Internet sources 

This information was used to enrich and verify the primary data. This data was then compared with and 

contrasted to market data from Frost & Sullivan’s internal databases for validity and authenticity. These 

databases span more than 20 years of research across most market segments, technologies, and 

geographies. 

Through triangulation and cross-verification of the information and data collected from a variety of 

sources, Frost & Sullivan believes it has presented an accurate analysis of the wood heaters, fireplaces, and 

hearth heating products market in North America. 

Market Sizing 

Primary and secondary data sources were used to create a series of forecasts on the size of the total North 

American residential wood heaters, fireplaces, and hearth heating products as well as the size of each 

product segment. 

• The forecast period was 2006-2015, with a base year of 2008, and forecasting through 2009-2015. 

• Other forecasting variables used include historical growth trends, drivers and restraints and their 

impact on the industry, economic trends, trends in the residential construction market, consumer 

confidence, climatic variations, raw material pricing trends, and pricing trends of alternative 

heating sources. 

Forecasts were refined from a bottom-up perspective during the latter stages of the primary research 

discussions. This approach was supplemented with a top-down estimation to arrive at an accurate estimate 

of the market and to account for unavailable information from some suppliers since a few of the 

organizations contacted claimed some financial information to be confidential business information 

(CBI).5

 

• Segment-specific market and trending information helped to refine annual growth rate estimates in 

the forecast models. 

• An overall compound annual growth rate (CAGR) was calculated to demonstrate the overall 

growth rates for each segment. 

Internal review of the forecasting also provided a cross-check of the forecast foundations and outputs. 

 

5

 CBI was separated from other information collected, stored at an EPA-approved CBI storage facility 

located at the prime contractor, EC/R, Inc., and is being handled in accordance with the EPA/OAQPS 

Clean Air Act Confidential Business Information Security Manual (EPA 450/B-03-001). There is no CBI 

contained in this report. 
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Definitions 

Wood heaters, fireplaces, and hearth products have historically represented a relatively small, but integral 

part of the North American HVAC products market. 

Product Segmentation 

The total North American wood heaters, fireplaces, and hearth heating products market is segmented by the 

following product types: 

• Wood Stoves 

• Pellet Stoves 

• Masonry Heaters 

• Fireplaces (with and without inserts) 

• Outdoor Fireplaces 

• Hydronic Central Heating Systems 

• Biomass-based Stoves 

Product Definitions6

Wood Stoves

A wood stove is a heating appliance that burns wood fuel. Generally, a wood stove is made of cast iron, 

steel, or stone, and consists of a solid metal closed fire chamber and an adjustable air control. Some wood 

stoves are not equipped with an adjustable air control and operate with a single burn rate. Wood stoves are 

connected to a chimney or flue which fills with hot combustion gases once the fuel is ignited. These units 

are typically intended for domestic space heating and do not need electricity to operate. Both non-certified 

and EPA-certified wood stoves are currently in use in North American homes. 

Wood Pellet Stoves

A pellet stove is a stove that burns compressed wood pellets to create a source of heat for residential 

spaces. Some pellet stoves may burn other pellets (e.g., grasses or corn). Pellet stoves create a constant 

flame by pouring pellets into a hopper which feeds automatically into the stove. Pellet stoves are similar in 

appearance and work on the same principles as a wood stove, but they burn more efficiently and are more 

convenient. Most pellet stoves do not require EPA certification because most of these stoves do not meet 

 

6 Sources: United States Environmental Protection Agency and Frost & Sullivan 

(http://www.epa.gov/burnwise/appliances.html) 
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the air-to-fuel ratio limits required by the NSPS definition of wood stoves. A disadvantage of pellet stoves 

is that, unlike wood stoves, most of these stoves need electricity to operate, but some are equipped with a 

battery backup. 

Masonry Heaters

A masonry heater is a site-built or site-assembled device for warming a home or any interior space. It 

consists of a firebox, a large masonry mass, and heat exchange channels that provide additional surface 

area to absorb heat from the hot exhaust gases before they exit into the chimney. A masonry heater captures 

the heat from rapidly-burning fires, and then radiates that heat throughout the day at a fairly constant 

temperature. These heaters are made of masonry, rather than steel. Since the firebox is masonry, fires can 

burn much hotter than in a metal stove. A masonry heater is free-standing and requires a significant support 

structure to bear the weight. The masonry exterior can be brick, tile, stone, stucco, or a combination of 

these materials. Masonry heaters currently do not require EPA certification. 

Fireplaces

A fireplace is a hearth and fire chamber that can hold an open fire and is often built in conjunction with a 

chimney. Fireplaces are currently exempt from EPA certification. There are two major types of woodburning fireplaces: traditional masonry fireplaces and factory-built fireplaces. This analysis will focus on 

wood fireplaces that are engineered and prefabricated in a manufacturing facility prior to installation. In 

order to make factory-built fireplaces more efficient and less polluting, some homeowners use fireplace 

inserts. Fireplace inserts, unlike the EPA-certified wood stoves that are sometimes inserted into the 

masonry chamber, are not included in this analysis. 

Outdoor Fireplaces

An outdoor fireplace is a device for building fires outside of the home. Similar in construction to an indoor 

fireplace, it often consists of a firebox and a chimney. An outdoor fireplace is often simply used as a 

decorative element, allowing homeowners to enjoy a fire while entertaining in the backyard. Currently, 

outdoor fireplaces are also exempt from EPA certification. 

Hydronic Central Heating Systems

A hydronic central heating system uses a heat generator to raise the temperature of water. The heated water 

is then circulated from the boiler through pipes to heat emitters, such as radiators, convectors, and 

underfloor heating coils, through which the water loses its heat to the room. The cooler water then returns 

to the boiler for reheating. These systems are also called outdoor wood heaters or outdoor wood boilers. 

Although most hydronic heaters are located outdoors, some may also be installed indoors. 

Biomass-based Stoves
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A biomass-based stove is a stove that burns biomass fuel other than wood and wood pellets to create a 

source of heat for residential spaces. These stoves can burn biomass fuels such as agricultural crops, plants 

(including aquatic plants), grasses, residues, and fibers. Biomass-based stoves are similar in appearance and 

work on the same principles as pellet stoves. 

End-user Segments 

For the purpose of this project, wood heaters, fireplaces, and hearth heating products covered in this report 

are only used in residential applications. 

Geographic Definition 

This project analyzes the wood heaters, fireplaces, and hearth heating products market in North America, 

including the United States and Canada. The scope of this project excludes Mexico. 

Revenue Definition 

Revenues for the North American wood heaters, fireplaces, and hearth heating products market are in 

current U.S. dollars. The revenues represent the sale price at the manufacturer’s level in 2008; secondary 

sales figures would be higher. Pricing at the manufacturer’s level is used to avoid the price fluctuations that 

occur once the system enters the different distribution channels used in this market. Depending on contracts 

and volumes in each distribution channel, the price for the same product can vary significantly upon 

leaving the different channels available. All revenues not resulting from the actual product sales such as 

installation and maintenance fees are excluded from the revenue figures. 

Summary of Key Findings 

Following is a summary of key findings and a list of factors identified by manufacturers and industry 

representatives: 

• The North American residential wood heaters, fireplaces, and hearth heating products market 

experienced exceptional growth in 2008, with a 16.4 percent revenue growth over 2007. 

• The economic crisis, along with the slowdown in the residential construction market and the lack 

of available credit, is expected to have a negative impact on this market in 2009 and 2010. The 

pellet stoves and the fireplace product segments were most affected by the economic downturn in 

2009. 

• Although interest in these types of appliances has increased due to the federal energy efficiency 

tax credit for biomass stoves, the impact of the credit has not been as big as expected because it 
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took some time for the government to announce the efficiency requirements and advertising was 

inadequate. 

• The market is expected to witness positive growth driven primarily by the volatile prices of natural 

gas and heating oil after 2010. However, the high initial cost and competition from alternative 

heating appliances are expected to restrict growth in the market. 

• The wood stoves product segment is the largest segment in terms of revenues, while the fireplaces 

product segment is the largest segment in terms of units. The outdoor fireplaces product segment 

was the smallest in terms of revenues, and the masonry heaters product segment was the smallest 

in terms of units. 

• The market segment for unbranded/non-regulated products currently sold in the United States by 

Asian manufacturers is a small but growing segment of the market. 

• The main reasons for switching to alternative fuel sources are the price of alternative fuels and the 

availability of wood and other solid biomass-based fuels. 

• Emission regulations that are too strict and difficult to attain would require manufacturers to 

redesign their products and spend large amounts of money on research and development, which 

would likely drive unit prices up. In addition, because some companies may not be able to make 

the investment, manufacturers could potentially go out of business. 

• There is a need to create a testing procedure that accounts for the way appliances are used at 

home and tests the units the way they are going to be used by the homeowner. 

• The lack of a comprehensive national standard is a concern for participants in the industry because 

the variations in the emission standards in different regions has made it more difficult for 

manufacturers to create products that meet these different standards and can be sold across 

the country. While most areas in North American have adopted the emission standards set by 

the EPA, some areas have set their own standard in order to reduce air pollution. 

• There is a need for a testing protocol for masonry heaters that will allow end users to compare 

the efficiency and emissions of masonry heaters with other wood-burning and solid biomassbased appliances. 

• Most manufacturers and industry representatives advocate for increased focus on replacing old 

appliances in order to reduce air pollution, as well as educating consumers about proper moisture 

content for cordwood and the correct way to operate their appliances. 
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• Although demand is expected to increase across all of North America, the greatest demand for 

these products is expected to continue to be in the Northeast region of the Unites States and the 

East region of Canada. 
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2

Total Market Analysis 

Market Overview 

The North American wood heaters, fireplaces, and hearth heating products market generated revenues of 

$509.9 million in 2008, growing at a rate of 16.4 percent over 2007. This is primarily due to the soaring 

prices of heating oil and natural gas in 2008, which resulted in tremendous growth in the market. However, 

the weak economy and the slowdown in new residential construction activity in the region halted sales 

toward the end of 2008. As the economic troubles continue, the market is anticipated to witness declining 

growth in 2009 and 2010. However, the residential wood heaters, fireplaces, and hearth heating products 

market is expected to witness an upward growth trend as the economy and new construction market 

recover. The North American market is estimated to grow at a compound annual growth rate (CAGR) of 

4.1 percent from 2009 to 2015. For more information on revenue growth rates, refer to the Market Analysis 

and Revenue Forecasts section. 

One of the main factors driving the growth in this market is the increasing concern about the fluctuating 

prices of fossil fuels. Volatile natural gas and heating oil prices are driving end users to look for alternative 

fuels to heat their homes. Given the potential to substantially reduce the cost of heating their homes by 

using biomass fuels such as wood, wood pellets, and corn, homeowners are more inclined to switch to these 
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fuels. The overall demand and growth conditions for this market are therefore directly tied to the prices of 

fossil fuels such as natural gas, propane, and heating oil. 

The growing need to reduce pollution in order to clean the air is causing a shift toward high-efficiency and 

cleaner-burning wood and other solid biomass-based appliances. The increasing concerns of 

environmentally conscious customers have compelled the manufacturers to design equipment that not only 

offers higher efficiency levels, but also cleaner performance. The market has thus far migrated from the 50 

to 60 percent efficiency of older woodstoves to the new appliances that can offer up to 78 percent 

efficiency. The movement toward high-efficiency and clean appliances in the North American market is 

also being driven by the state and local governments’ efforts to regulate these products and establish the 

needed regulations as well as the EPA’s voluntary wood stove changeout programs. In addition, some local 

and state governments are playing a greater role in the movement toward cleaner appliances by providing 

incentives to replace old appliances and creating their own emission standards. 

As the demand continues to move toward high-efficiency and cleaner-burning products, the average price 

for these appliances is expected to increase. However, although they are interested in cleaner-burning and 

efficient appliances, homeowners are anticipated to continue to look for cost-effective solutions to address 

their heating needs. As a result, the majority of homeowners are expected to make some efforts to reduce 

air pollution but without having to pay too much. 

The North American wood heaters, fireplaces, and hearth heating products market is a mature market and is 

very competitive. Due to the high levels of competition, price remains a very important factor for end users 

when determining what type of appliance to purchase. Price is particularly important in the residential 

market where consumers tend to be more price-sensitive. However, homeowners are particularly interested 

in a product that will offer them the most heating cost savings. Therefore, purchasing decisions are also 

affected by the availability of fuel in the region where the appliance will be used and the efficiency of the 

unit. 

Overview of Product Segments 

The North American residential wood heating, fireplaces, and hearth heating products market consists of 

wood stoves, pellet stoves, biomass stoves, fireplaces, outdoor fireplaces, masonry heaters, and hydronic 

central heating systems. Wood stoves have been in the market for many decades, while pellet and other 

solid-biomass stoves have been more recently introduced to the market. 

The wood stoves product segment consists of two types of stoves: catalytic and non-catalytic stoves. 

Catalytic stoves makeup the smaller subset of this segment and include catalytic combustors that burn 
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combustion gases at lower temperatures.7

 Although there were some issues with catalytic stoves in the past, 

improved design and a better understanding of the technology have made these units more reliable and 

efficient. Non-catalytic stoves have also been improved over the last 30 years. These new units have lower 

emissions and higher efficiencies. 

A major advantage of wood stoves is that they are less expensive than pellet and other solid biomass-based 

stoves. While the average manufacturer’s price for a pellet or a biomass stove was more than $1,200, the 

average price of a wood stove was $848 in 2008. Particularly in a soft economy, end users look for costeffective solutions to address their heating needs. Another advantage of wood stoves is that they do not 

require electricity to operate. In addition, the fact that some homeowners have access to free or very 

inexpensive wood is supporting steady growth in the wood stoves product segment. 

Pellet stoves are cleaner-burning appliances and can reach efficiencies above 80 percent. Most pellet stoves 

do not meet the air-to-fuel ratio limits required by the NSPS definition of wood stoves, and this exempts 

them from the standards. The most important drivers for this product segment are efficiency and 

convenience. While these stoves are very efficient and pollute very little, another reason that consumers are 

purchasing these appliances is because they are very convenient to operate. Pellet stoves have a hopper that 

stores the pellets until they are needed for burning. The convenience of just pouring pellets into a hopper 

that feeds automatically into the stove is driving more homeowners to buy pellet stoves. Additionally, some 

homeowners want to get away from the work that is involved in gathering and cutting wood. The 

technology in pellet stoves also allows end users to get a longer burn cycle at a lower output. 

Biomass stoves are very similar to pellet stoves, but they can burn corn kernels, nutshells, and pellets made 

from agricultural crop waste and other biomass fuels. Growth in the biomass stoves segment is mainly 

driven by the need to reduce heating costs. Since most of the demand for this type of appliance is supported 

by locally-grown products that can be used as fuel, the availability of the fuel is a key factor in this market. 

Another driver for this product segment is the increasing number of homeowners that are using biomass 

fuels to reduce their impact on the environment. 

Fireplaces are largely designed as decorative pieces, and most are not very efficient because they draw the 

heated room air for combustion and send it up the chimney. This has led many homeowners to install a 

high-efficiency fireplace insert in order to increase the efficiency of their fireplace. However, new 

fireplaces have been introduced into the market with lower emissions and somewhat higher efficiencies as a 

result of the EPA-qualified wood-burning fireplace program. 

A major driver for the wood fireplaces product segment is the homeowner’s desire to have a fireplace in the 

home. According to the National Association of Home Builders, fireplaces ranked among the top features 

desired by new home buyers. The variety of sizes and designs of wood fireplaces available in the market 

 

7 Source: U.S. Department of Energy 

(http://www.energysavers.gov/your_home/space_heating_cooling/index.cfm/mytopic=12570) 
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also supports demand for these units. On the other hand, the outdoor fireplace product segment is primarily 

driven by the desire for homeowners to improve their outdoor space and entertain in a more inviting space. 

Another driver for these products is the fact that a fireplace can potentially increase the value of the home. 

Well-designed masonry heaters can be very efficient, generally reaching efficiencies up to 90 percent. On 

average, masonry heaters are more efficient than wood stoves and fireplaces. A major advantage of a 

masonry heater is that it does not need to be loaded with fuel as often as other types of wood-burning 

appliances. Another advantage of these appliances is the fact that they do not require electricity to operate. 

The homeowner’s desire to avoid being dependent on electric power for heat during a power outage is thus 

expected to drive more people to purchase masonry heaters. Although prices range from $5,000 to $35,000, 

masonry heaters are a growing segment of the market in North America. This is primarily due to the 

efficiency of these heaters and the fact that these units are arguably the cleanest-burning appliances in the 

market. Well-designed masonry heaters can potentially generate more heat and, more importantly, produce 

less pollution than any other wood-burning or other solid biomass-based appliance.8

 

Hydronic central heating systems have also been improved over the last several years. The primary factor 

driving growth in this market segment is the desire to reduce heating bills by using less expensive wood to 

heat the home. Although both indoor and outdoor units are available in the market, most of these systems 

are outdoor units. 

Market Dynamics 

Industry Challenges 

Figure 2-1 shows the impact of the top challenges facing manufacturers ranked in the order of impact for 

the North American residential wood heaters, fireplaces, and hearth heating products market from 2009 to 

2015. Each of these challenges is discussed further below. 

 

8 Source: U.S. Department of Energy 

(http://www.energysavers.gov/your_home/space_heating_cooling/index.cfm/mytopic=12570) 
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Figure 2-1 

Residential Wood Heaters, Fireplaces, and Hearth Heating Products Market: Industry Challenges 

Ranked in Order of Impact (North America), 2009–2015 

Rank Challenge 1-2 Years 3-4 Years 5-7 Years 

1 Forecasting demand presents major challenge for 

manufacturers 

High High High 

2 Inconsistency of standards in different regions 

presents challenge for manufacturers 

High High Medium 

3 Intense price competition challenges 

manufacturers 

Medium/High Medium Medium 

4 Competition from Asian manufacturers presents 

challenge for North American manufacturers

Low/Medium Low/Medium Medium 

Note: All figures are rounded; the base year is 2008. Source: Frost & Sullivan 

Forecasting Demand Presents Major Challenge for Manufacturers 

Gas and electric hearth heating products directly compete against wood-burning and other solid biomassbased appliances. Because the demand for wood-burning and other solid biomass-based appliances is 

strongly tied to the price of alternative fuels, forecasting demand for wood-burning and other solid 

biomass-based appliances has become challenging for manufacturers of these products. 

As the price of heating oil and natural gas increases, the demand for wood and other solid biomass-based 

appliances also follows an upward trend. When the price of heating oil and/or natural gas is low, it does not 

make economical sense for a homeowner to switch to a wood-burning or other solid biomass-based 

appliance. However, when the price of gas and/or heating oil is high, switching to a wood-burning or other 

solid biomass-based appliance can substantially decrease the cost of heating the home. As seen recently, the 

prices for natural gas and heating oil can fluctuate greatly and even spike at very high levels. This 

fluctuation in the price of fossil fuels has made it very difficult for manufacturers to determine and 

accurately forecast the demand for their products and to effectively adjust their production capacity to meet 

the market demand. The impact of this challenge is expected to be high throughout the forecast period. 

Chart 2.1 shows the average price of natural gas in the residential sector of the United States from 2006 to 

2011. 
Frost & Sullivan 19 Prepared for EC/R Inc. 

4/26/2010 

 Source: U.S. Energy Information Administration

Chart 2.2 shows the average retail price of heating oil including taxes in the residential sector of the United 

States from 2006 to 2011. 

 Source: U.S. Energy Information Administration

Inconsistency of Standards in Different Regions Presents Challenge for Manufacturers 

The variations in the standards adopted by different regions are posing a challenge for manufacturers in 

North America. While most states and provinces in the United States and Canada have adopted the 

emission standards set by the EPA, other areas, such as the state of Washington, have set their own 

standard in order to reduce air pollution. In order to be able to sell their products in Washington, 

manufacturer’s have to ensure that all their wood-burning devices meet both the EPA’s standards as well as 

Washington’s stricter standards. As a result, a few manufacturers are not able to sell their products in areas 
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that have set stricter standards. On the other hand, according to the Hearth, Patio & Barbecue Association, 

over 85 percent of all EPA-certified wood stoves sold in the United States already meet the stricter 

Washington State emission limits. 

In addition to state requirements, some towns and cities are using zoning and other laws to set their own 

standards. Some regions in both the United States and Canada are imposing restrictions on wood-burning 

appliances. Hampstead, Quebec, has banned the installation of wood stoves and ordered all existing wood 

stoves to be removed within the next seven years. In Colorado, the Colorado Air Quality Control 

Commission Regulation No. 4 forbids the use of uncertified appliances on air quality action days from 

November to March.9

 

The EPA has set voluntary qualification levels for fireplaces and hydronic heaters and some areas have 

made these voluntary qualifications into requirements in their jurisdiction. This is helping to address the 

inconsistencies of standards in different regions. The impact of this challenge is expected to be high in the 

short and medium term. As the industry moves toward a single North American standard per type of woodburning device, the impact of this challenge is expected to decrease. 

Intense Price Competition Challenges Manufacturers 

One of the main challenges that the market is facing is price competition. Homeowners have always 

demanded the best products at the lowest price possible. Therefore, manufacturers have to deliver quality 

and efficient products at competitive prices. Especially during difficult economic times, price becomes an 

important factor for many homeowners, compelling manufacturers to price their products competitively. 

Maintaining such pricing while maintaining profitability is a challenge for manufacturers, as they attempt 

to develop products that can meet emission requirements. Since larger companies can compete better on 

price because of their economies of scale, smaller companies are particularly affected by this challenge. 

Furthermore, manufacturers are challenged to deal with increasing prices for raw materials such as steel 

and still make a profit. The high price competition in the market makes it difficult for manufacturers to add 

higher material costs to the price of their products and simultaneously maintain their profit margins. Part of 

this challenge also includes addressing the price sensitivity issue without selling inferior quality products. 

Maintaining a strong foothold in the market, while not compromising on the quality of the equipment, is 

thus critical for manufacturers. 

The impact of this challenge is expected to remain medium/high in the short term and decrease to medium 

in the medium and long term. 

Competition from Asian Manufacturers Presents Challenge for North American Manufacturers 

 

9 Source: Colorado Department of Public Health and Environment 

(http://www.cdphe.state.co.us/ap/woodlocal.html)
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The North American market continues to face a strong degree of competition, with some wood stove 

manufacturers even adding manufacturing operations in China. The challenge is intensified by the 

introduction of lower-quality and low-cost products manufactured in Asia. These manufacturers target end 

users who are primarily looking for price-competitive appliances. 

Heating, fireplace and other hearth heating product manufacturers, especially those of fireplaces, are 

largely impacted by the availability of low-cost imports from Asian manufacturers such as China. North 

American manufacturers are finding it increasingly more difficult to compete with Asian manufacturers as 

the latter benefits from lower overheads and access to low-cost labor. In addition to this, the residential 

customers are more price conscious and, hence, are more likely to settle for an inexpensive appliance even 

if it is less durable and less efficient than a more expensive appliance. 

Because they offer low-end products, the stiff competition from Asian manufacturers is anticipated to 

continue to exert downward pricing pressure. Therefore, this challenge is anticipated to have a low/medium 

impact in the short and medium term and increase to medium by the end of the forecast period. 

Market Drivers 

Figure 2-2 shows the market drivers ranked in the order of impact for the North American residential wood 

heaters, fireplaces, and hearth heating products market from 2009 to 2015. Each of these drivers is 

discussed further below. 

Figure 2-2 

Residential Wood Heaters, Fireplaces, and Hearth Heating Products Market: Market Drivers Ranked 

in Order of Impact (North America), 2009–2015 

Rank Driver 1-2 Years 3-4 Years 5-7 Years 

1 Perceived potential of products to reduce heating 

costs increases demand in the market 

High High High 

2 Perceived environmental benefits of burning 

biomass fuels support growth in the market 

Medium Medium/High Medium/High 

3 Programs supporting use of these products drive 

sales in the market 

Medium Medium Medium 

4 Reduced emissions and higher efficiency increases 

market demand

Medium Medium Medium 

Source: Frost & Sullivan 
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Perceived Potential of Products to Reduce Heating Costs Increases Demand in the Market 

The desire to reduce the cost of heating the home is motivating homeowners to look for alternative fuels. 

The fact that using wood-burning and other solid biomass-based appliances has the potential of reducing 

heating costs has generated interest in these products. 

Given the volatility and the fluctuations in the price of natural gas and heating oil, switching to a woodburning or other solid biomass-based heating appliance has the potential of reducing the cost of heating the 

home. Although the cost savings depend on the cost of the wood and other solid biomass-based fuels and 

the cost of the appliance, when the price of gas and heating oil are high, the heating cost savings can be 

substantial. The cost savings also depend on the availability of the fuel in the region where the appliance is 

being used. When homeowners have “free” and easy access to fuel such as wood and corn, the cost savings 

from using a wood- or corn-fueled appliance can dramatically increase. In addition, homeowners can 

expect to use up to one-third less wood with an EPA-certified wood appliance than with an older appliance, 

further reducing heating costs.10 

The impact of this challenge is expected to be high throughout the forecast period. 

Perceived Environmental Benefits of Burning Biomass Fuels Support Growth in the Market 

Consumers are increasingly conscious about the impact of their lifestyles on the environment. Sustainable 

living and minimizing one's carbon footprint are growing trends amongst consumers. An increasing level of 

environmental concern among end users in North America has led many to adopt wood-burning and other 

solid biomass-based heating technology as a more environmentally sustainable option. 

End-user awareness about environmental issues is an important contributing factor to this market. With the 

government and the media encouraging the use of greener technology, an increasing proportion of 

consumers are willing to switch to renewable energy on the basis of environmental concerns. Because 

wood, corn, and other biomass fuels are renewable fuel sources, wood-burning and other solid biomassbased appliances are perceived as more environmentally friendly than gas, oil, and electric appliances. 

Although burning wood and other solid biomass fuels emits small amounts of pollutants into the air, when 

used properly, wood is often perceived as a better fuel option compared to fossil fuels such as oil, gas, and 

coal, whose consumption leads to global warming. In addition, wood-burning and other solid biomassbased appliances do not deprive the earth of nonrenewable fossil fuels, and using biomass for energy can 

potentially cut back on greenhouse gas emissions. 

The impact of this challenge is expected to be medium in the short term and increase to medium/high by 

the end of the forecast period as end-user awareness about the environmental benefits of using biomass 

fuels increases. 

 

10 Source: United States Environmental Protection Agency 

(http://www.epa.gov/burnwise/faqconsumer.html) 
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Programs Supporting Use of These Products Drive Sales in the Market 

As local, state, and federal agencies evaluate ways of improving the air quality, new programs to reduce 

pollution and encourage the use of cleaner-burning appliances are emerging. As these agencies continue to 

encourage citizens to use cleaner-burning appliances to fight the growing pollution problems, changeout 

programs, low interest loans, sales tax exemption, and tax credits are being used as incentives to drive 

citizens to use these appliances. 

One of the most recent programs is the Federal Tax Credit, which provides a tax credit for 30 percent of the 

cost (up to $1,500) for the purchase and professional installation of a qualified wood-burning or other solid 

biomass-based stove or fireplace insert bought between January 1, 2009, and December 31, 2010. In order 

to qualify, the stove must have a thermal efficiency rating of at least 75 percent.11 Changeout programs that 

offer consumers financial incentives to replace older appliances with newer or EPA-certified wood-burning 

appliances have also helped to drive growth in the market. 

For example, the state of Idaho offers taxpayers who buy new wood stoves or pellet stoves for their homes 

a tax deduction to replace old, uncertified wood stoves. Other regions offer other types of incentives to 

encourage homeowners to purchase wood-burning and other solid biomass-based products. The Canadian 

province of Prince Edward Island offers low interest loans and a sales tax exemption on alternative heating 

systems, such as wood stoves and pellet stoves, to low-income citizens.12

Because these programs are often brief, the impact of this driver is expected to be medium throughout the 

forecast period. 

Reduced Emissions and Higher Efficiency Increases Market Demand 

Wood heater, fireplace, and hearth heating product manufacturers are expected to offer appliances that are 

cleaner-burning and more efficient. Working towards that goal, many, but not all (e.g., hydronic heater 

manufacturers), manufacturers have reduced particulate emissions and increased the efficiency of their 

products. 

With increasing awareness levels for improved air quality, government agencies and homeowners are 

increasingly demanding cleaner-burning and higher-efficiency appliances. An EPA-certified wood stove 

can emit approximately 70 percent less pollution than an older wood stove. In addition, hydronic heaters 

that meet the EPA's Hydronic Heater Voluntary Program can emit 70 to 90 percent less pollution than units 

that are not qualified by the EPA.13 Also, more efficient appliances reduce the amount of fuel needed to 

heat the home, further reducing air pollution and providing additional fuel cost savings to the end users. 

 

11 Source: United States Environmental Protection Agency (http://www.epa.gov/burnwise/appliances.html) 

12 Source: United States Environmental Protection Agency 

(http://www.epa.gov/burnwise/ordinances.html)

13 Source: United States Environmental Protection Agency (http://www.epa.gov/burnwise/how-toguide.html) 
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The trend toward cleaner-burning and higher-efficiency appliances is expected to increase demand in the 

market. 

Efficiency and particulate emissions are becoming a greater concern for manufacturers and will continue to 

drive this market. The impact of this driver is thus expected to have a medium impact until the end of the 

forecast period. 

Market Restraints 

Figure 2-3 shows the market restraints ranked in the order of impact for the North American residential 

wood heaters, fireplaces, and hearth heating products market from 2009 to 2013. 

Figure 2-3 

Residential Wood Heaters, Fireplaces, and Hearth Heating Products Market: Market Restraints 

Ranked in Order of Impact (North America), 2009–2015 

Rank Restraint 1-2 Years 3-4 Years 5-7 Years 

1 Competing appliances restrict the growth rate of 

solid biomass-based products 

High High High 

2 Economic downturn and slowdown of residential 

new construction limits short-term revenue growth

High Medium/Low Low 

3 High initial cost of products impacts sales Medium Medium Medium 

4 Misconceptions about wood-burning appliances 

limit revenue growth 

Medium Medium Medium/Low 

Source: Frost & Sullivan 

Competing Appliances Restrict the Growth Rate of Solid Biomass-Based Products

With gas, propane, and electric heating appliances, such as gas stoves and electric fireplaces, gaining 

popularity, manufacturers of wood-burning and other solid biomass-based appliances are facing tough 

competition. Therefore, the growth of competing technologies has remained one of the major 

restraints in the residential wood heaters, fireplaces, and hearth heating products market. 

Gas stoves and fireplaces have been gaining popularity in recent years because of their convenience. 

Unlike wood-burning appliances, which often require the homeowner to cut wood and load the fuel 

into the appliance, gas and electric units may only require the homeowner to flip of a switch to ignite 

the fire. Gas and electric appliances require little maintenance and clean up is not required for upkeep. 

Another advantage of gas products is that they are efficient and emit very little pollution. In addition, 

gas stoves are easily installed, can be installed almost anywhere in the home, and do not require a 
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chimney, which makes them ideal for retrofit applications. Due to these advantages, the demand for 

heaters, fireplaces, and other hearth heating products has been split between the different technologies 

depending on the end-user’s preferences. This is thus limiting the growth of wood-burning and other 

solid biomass-based products. 

The impact of this restraint is expected to be high during the entire forecast period. 

Economic Downturn and Slowdown of Residential New Construction Limits Short-term Revenue 

Growth 

The slowdown in the North American economy has had a major impact on the purchasing decisions 

made by homeowners. Due to the difficult economic times, homeowners are scrutinizing all expenses 

and cutting back on their purchases. This has resulted in a decrease in demand for residential wood 

heaters, fireplaces, and hearth heating products. 

The United States economy is experiencing difficulty due to challenges in the housing market, the lack 

of lending, and the high rate of consumer debt. Although Canada is faring somewhat better than the 

United States, it continues to feel the effects of the American economic struggles. The residential 

construction market in North America, particularly in the United States, has been witnessing a steep 

decline over the last three years. This has greatly affected the sale of wood-burning appliances, 

particularly fireplaces, as they are generally installed in new homes. 

End users’ speculations of slow growth are also keeping them from investing in home improvements 

or building new homes. Even though homeowners recognize the potential benefits of using welldesigned and well-operated wood-burning and other solid biomass-based appliances, they are refraining 

from investing in these systems in light of the soft economy. In addition, the economic situation has 

tightened lending practices, making it more difficult for homeowners to be able to afford these 

appliances. 

This restraint is expected to have a high impact on the growth of the market in the short term. Its 

impact is likely to decrease to medium/low in the medium term and to low in the long term as the 

North American economy rebounds. 

High Initial Cost of Products Impacts Sales 

One of the hurdles to rapid growth in the residential wood heaters, fireplaces, and hearth heating 

products market is the high initial price of the units. While the perceived benefits of using woodburning and other solid biomass-based products are becoming more apparent to homeowners, the large 

initial investment continues to limit the demand. 

Although using a wood-burning or other solid biomass-based appliance can potentially reduce the cost 

of heating the home and offers the environmental benefits of using renewable fuels, price remains an 
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important factor for homeowners. Homeowners are often dissuaded from purchasing these appliances 

due to the high initial cost. Quality appliances range in price from $300 to upwards of $20,000, which 

makes it an expensive proposition for the average homeowner. The cost of a wood-burning or other 

solid biomass-based appliance can also be higher compared to some gas and electric appliances, further 

restraining growth in this market. While the heating cost savings achieved through the use of woodburning and other solid biomass-based appliances can potentially pay for the equipment in a few years, 

potential consumers are still postponing purchases due to the upfront expense. This price-sensitive 

mindset among residential consumers is thus affecting the sales of wood-burning and other solid 

biomass-based appliances. 

Budget restraints and high initial costs are expected to continue to limit the market for new wood-burning 

and other solid biomass-based appliances. This restraint will continue to have an impact until the initial cost 

decreases. The impact of this restraint is expected to be medium throughout the rest of the forecast period 

because prices are not expected to decrease considerably in the long term. 

Misconceptions about Wood-burning Appliances Limit Revenue Growth 

Although numerous changes have been made to the technology in wood-burning appliances, people who 

previously had issues with older appliances continue to hold on to the idea that these appliances do not burn 

clean. While the technology has improved over the last years to make these units cleaner-burning, most are 

not as clean as gas and oil appliances. 

Wood smoke is a major part of the air pollution problem in North America. Because wood smoke can 

increase cardiovascular problems, irritate lungs and eyes, cause headaches, and aggravate respiratory 

diseases such as asthma, emphysema and bronchitis, many local, state and federal agencies are looking to 

restrict the use of wood-burning appliances.14 Although air pollution remains an issue with older 

appliances, newer appliances burn more efficiently than older non-certified models, reducing the particulate 

emissions. In order to reduce emissions, homeowners must use advanced technology and EPA-certified 

appliances. In addition, they have to use correctly prepared and fully-seasoned firewood and the correct 

burn techniques. 15 

The impact of this restraint is expected to be medium in the short term and decrease to medium/low by the 

end of the forecast period as end users become more familiar with the new appliances. 

 

14 Source: City of Fort Collins (http://www.fcgov.com/airquality/wood-burning.php) 

15 Source: United States Environmental Protection Agency 

(http://www.epa.gov/burnwise/faqconsumer.html) 
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Market Analysis and Revenue Forecasts 

The total revenues for the North American residential wood heaters, fireplaces, and hearth heating products 

market were $509.9 million in 2008. From 2006 to 2007, the market experienced declining growth due to 

surplus dealer inventory from 2006, which resulted in fewer orders from the manufacturers. However, in 

2008 the market experienced impressive market growth of 16.4 percent over the previous year. This growth 

was primarily driven by the sudden increase in the price of heating oil and natural gas in North America. 

From 2009 to 2010, the weak economy is expected to have a negative impact on the revenue growth of the 

market. The decline in residential new construction and the lack of credit to both end users and dealers are 

also expected to limit the demand for these products in the United States and Canada during this period. 

With the residential construction market expected to bounce back after 2010 and the price of heating oil 

and natural gas anticipated to continue to fluctuate, the market is likely to witness increasing demand. As 

North America begins its economic recovery, the market is expected to witness an upward trend in revenue 

growth after 2010. In 2012, the market is expected to witness very strong growth as a result of the 

economic recovery and the increase in consumer lending. By 2015, the market revenues are projected to 

reach $413.2 million, with a compound annual growth rate (CAGR) of 4.1 percent from 2009 to 2015. 

A key factor increasing the demand for wood-burning and other solid biomass-based appliances is the 

growing concern about the high cost of heating the home using fossil fuels such as natural gas, propane, or 

heating oil. As a renewable source of fuel, wood and other solid biomass-based fuels are abundant in many 

regions and relatively inexpensive. Therefore, burning these fuels for heat can potentially help homeowners 

take control of high home heating bills. 

Growing concerns and awareness among the public about air quality issues are increasing the demand for 

high-efficiency and cleaner-burning appliances. With EPA-certified wood stoves producing as much as 90 

percent less wood smoke emissions than uncertified wood-burning appliances, more people are purchasing 

these types of appliances in order to reduce their impact on the environment and decrease air pollution.16

Constant efforts from the federal government to enhance the efficiency of the systems and reduce the 

environmental footprint through regulatory measures are expected to continue to shift the demand toward 

high-efficiency and cleaner-burning appliances. 

Figure 2-4 represents the revenue forecasts for the North American residential wood heaters, fireplaces, 

and hearth heating products market from 2006 to 2015. 

 

16 Source: United States Environmental Protection Agency (http://www.epa.gov/burnwise/how-toguide.html)
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Figure 2-4 

Residential Wood Heaters, Fireplaces, and Hearth Heating Products Market: Revenue Forecasts 

(North America), 2006–2015 

 Revenue 

 Revenues Growth Rate 

Year ($ Million) (%) 

2006 591.3 -- 

2007 437.9 (25.9) 

2008 509.9 16.4 

2009 325.6 (36.1) 

2010 312.7 (4.0) 

2011 322.6 3.2 

2012 360.2 11.7 

2013 376.0 4.4 

2014 394.1 4.8 

2015 413.2 4.8 

Compound Annual Growth Rate (2009-2015): 4.1% 

Note: All figures are rounded; the base year is 2008. Source: Frost & Sullivan 

Chart 2.1 shows the revenue forecasts for the North American residential wood heaters, fireplaces, and 

hearth heating products market from 2006 to 2015. 

Chart 2.1 Residential Wood Heaters, Fireplaces, and Hearth Heating

Products Market: Revenue Forecasts (North America), 2006-2015

$0

$100

$200

$300

$400

$500

$600

$700

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Year

Revenues ($ Million)

Note: All figures are rounded. Source: Frost & Sullivan
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Current Market Size By Unit Shipments 

In 2008, unit shipments for the total North American residential wood heaters, fireplaces, and hearth 

heating products market totaled 505,111 units, increasing by 15.8 percent over the previous year. The North 

American market includes both the United States and Canada. In terms of unit shipments, the United States 

accounts for about 87 percent of the total units sold in 2008. Although the Canadian market felt less of an 

impact from the economic downturn, the Unites States market is expected to continue to account for the 

majority of unit shipments. 

Chart 2.2 shows the percent of unit shipments by region for the North American residential wood 

heaters, fireplaces, and hearth heating products market in 2008. 

 Source: Hearth, Patio & Barbecue Association and Frost & Sullivan 

The demand for wood and other solid biomass-based products in North America is directly tied to the 

prices of alternative fuels. The sharp increase in the price of gas and heating oil in 2008 consequently drove 

many homeowners to purchase wood-burning and other solid-biomass heating appliances in order to reduce 

the cost of heating their home. 

In addition, as more end users explore ways to reduce their carbon footprint and look for “environmentally 

friendly” products, wood and other biomass-based appliances have gained popularity. This trend toward 

conserving the environment by using sustainable and renewable fuel sources to heat the home has 

contributed to the increase in sales of wood and other biomass-based appliances. Although unit shipments 
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are expected to decrease from 2009 to 2011, a promising economic recovery is expected to stimulate unit 

shipment growth after 2010. 

Market Analysis – Revenue and Units By Product Type 

In 2008, the pellet stoves product segment was the largest contributor to the North American market in 

terms of revenues. This product segment generated revenues of $166.9 million, accounting for 32.7 percent 

of the total market in 2008. In terms of units, the pellet stoves product segment was the third largest 

segment in the market. This segment sold 130,381 units in 2008, accounting for 25.8 percent of the total 

number of units sold. 

The wood stoves product segment was the second largest contributor to the total market, generating 

revenues of $141.2 million. The wood stoves segment accounted for 27.7 percent of the revenues of the 

total residential wood heaters, fireplaces, and hearth heating products market in 2008. In terms of units, the 

wood stoves product segment was also the second largest segment in the market. This segment sold 

166,527 units in 2008, accounting for 33.0 percent of the total number of units sold. 

The hydronic central heating systems product segment was the third largest segment in the market in terms 

of revenues in 2008. The revenues generated by hydronic central heating systems were $99.5 million, 

representing 19.5 percent of the revenues of the total North American market. While this segment was the 

third largest in terms of revenues, the hydronic central heating systems product segment was the fourth 

largest segment in the market in terms of units. This segment sold 13,385 units and accounted for 2.6 

percent of the total number of units sold in 2008. 

The wood fireplaces product segment was the fourth largest segment in the market in terms of revenues in 

2008. This product segment generated revenues of $81.4 million and accounted for 16.0 percent of the total 

residential wood heaters, fireplaces, and hearth heating products market. While this segment was the 

fourth largest in terms of revenues, the wood fireplaces product segment was the largest segment in the 

market in terms of units. This segment sold 180,966 units and accounted for 35.8 percent of the total 

number of units sold in 2008. Although prices vary, the main reason that this product segment accounts for 

the largest share of the units and not the revenues is because average wood fireplaces are the least 

expensive appliances in this market. 

The biomass stoves product segment was the fifth largest contributor to the North American market in 

terms of revenues. In 2008, this product segment generated revenues of $9.6 million, accounting for 1.9 

percent of the total market. In terms of units, the biomass stoves product segment was also the fifth largest 

segment in the market. This segment sold 6,819 units, accounting for 1.5 percent of the total number of 

units sold in 2008. 
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The next largest segment in the market in terms of revenues was the masonry heaters product segment. This 

product segment generated revenues of $6.6 million and accounted for 1.3 percent of the total market in 

2008. In terms of units, the masonry heaters product segment was the smallest segment in the market. This 

segment sold 730 units and accounted for only 0.1 percent of the total number of units sold in 2008. The 

reason that the masonry heaters product segment accounts for a larger share of the revenues than the unit 

shipments is because average masonry heaters are more expensive than the other appliances in this market. 

The smallest segment of the market in terms of revenues was the outdoor fireplace product segment. In 

2008, this product segment generated revenues of $4.8 million, accounting for 0.9 percent of the total 

market. In terms of units, the outdoor fireplaces product segment was also one of the smallest segments in 

the market. This segment sold 6,302 units in 2008, accounting for 1.2 percent of the total number of units 

sold. 

Figure 2-5 shows the revenues and percent of the total revenues by product type for the North 

American residential wood heaters, fireplaces, and hearth heating products market in 2008. 

Figure 2-5 

Residential Wood Heaters, Fireplaces, and Hearth Heating Products Market: Revenues and Percent of 

Total Revenues by Product Type (North America), 2008 

Product Type Revenues

(Millions)

% of Total

Revenues

Wood Stoves $141.2   27.7%

Pellet Stoves $166.9 32.7%

Biomass Stoves $9.6 1.9%

Wood Fireplaces $81.4 16.0%

Outdoor Fireplaces $4.8 0.9%

Masonry Heaters $6.6 1.3%

Hydronic Central

Heating Systems $99.5 19.5%

 Source: Frost & Sullivan 

Figure 2-6 shows the unit shipments and percent of the total units by product type for the North 

American residential wood heaters, fireplaces, and hearth heating products market in 2008. 

Figure 2-6 
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Residential Wood Heaters, Fireplaces, and Hearth Heating Products Market: Unit Shipments and 

Percent of Total Units by Product Type (North America), 2008 

Product Type Units % of Total Units

Wood Stoves 166,527 33.0%

Pellet Stoves 130,381 25.8%

Biomass Stoves 6,819 1.5%

Wood Fireplaces 180,966 35.8%

Outdoor Fireplaces 6,302 1.2%

Masonry Heaters 730 0.1%

Hydronic Central

Heating Systems 13,385 2.6%

 Source: Frost & Sullivan 

Chart 2.3 shows the percent of revenues by product type for the North American residential wood 

heaters, fireplaces, and hearth heating products market in 2008. 

 Source: Frost & Sullivan

Chart 2.4 shows the percent of unit shipments by product type for the North American residential 

wood heaters, fireplaces, and hearth heating products market in 2008. 
Frost & Sullivan 33 Prepared for EC/R Inc. 

4/26/2010 

 Source: Frost & Sullivan

Market Size for Unbranded/Non-regulated Products 

In 2008, revenues from the sale of unbranded/non-regulated products that are currently sold in the United 

States by Asian manufacturers were approximately $39.6 million. Although this segment of the market is 

small compared to the total North American residential wood heaters, fireplaces, and hearth heating 

products market, manufacturers and industry representatives believe this segment has had a 

tremendous impact on the market. Competition in the market has intensified with the introduction of 

lower-quality and low-cost products manufactured in Asia. 

These products are typically sold through big box retailers, such as Home Depot and Lowe’s, and are 

targeted toward end users who are primarily looking for inexpensive appliances. North American 

manufacturers are therefore finding it increasingly difficult to compete with these Asian manufacturers, as 

they benefit from lower overheads and access to low-cost labor. In addition, the fact that residential 

customers are more sensitive to price and are more likely to settle for an inexpensive appliance—even if it 

is less durable and less efficient—is adding to the pressure on North American manufacturers. While this is 

a small segment of the total market, it is expected to continue to grow, further intensifying its impact on the 

market dynamics in North America. 
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Installation Costs of Average System By Product Type 

Figure 2-7 shows the installation costs of an average system by product type for the North American 

residential wood heaters, fireplaces, and hearth heating products market in 2008. 

Figure 2-7 

Residential Wood Heaters, Fireplaces, and Hearth Heating Products Market: Installation Costs of 

Average System by Product Type (North America), 2008 

Product Type   Installation Cost

Wood Stoves $500  

Pellet Stoves $300  

Biomass Stoves $300  

Wood Fireplaces $600  

Outdoor Fireplaces $350  

Masonry Heaters $6,000  

Hydronic Central

Heating Systems $2,000

 Source: Frost & Sullivan 

The installation cost only includes the installation of the appliance and does not include the cost of 

installing a new chimney, the cost of a blower system or the cost of additional accessories such as mantels 

and other stone exteriors. An average installation includes installing floor and wall protection, connecting 

pipes to the unit using the proper material and construction clearances, ensuring proper ventilation, and 

testing the unit to make sure it is operating properly. 

The price of installing a pellet or other biomass-based stove is lower than that of a wood stove because 

most of these stoves can be direct-vented, making the installation easier. In addition, a wood stove has to 

terminate above the roof, but a pellet stove does not, making the installation of the wood stove more 

expensive. The installation of the hydronic central heating system is more elaborate, and therefore, it is also 

more expensive. Although some installations can include piping, the installation cost shown above does not 

include piping. The installation cost of masonry heaters is the highest because the installation includes the 

masonry exterior and most installations are custom projects. 
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Manufacturer’s Price By Product Type 

 

Figure 2-8 shows the manufacturer’s price by product type for the North American residential wood 

heaters, fireplaces, and hearth heating products market in 2008. 

Figure 2-8 

Residential Wood Heaters, Fireplaces, and Hearth Heating Products Market: Manufacturer’s Price by 

Product Type (North America), 2008 

Product Type Average Price Price Range

Wood Stoves $848 $200 to $2,800

Pellet Stoves $1,279 $300 to $3,500

Biomass Stoves $1,403 $350 to $4,000

Wood Fireplaces $450 $150 to $5,000

Outdoor Fireplaces $755 $250 to $6,000

Masonry Heaters $9,041 $4,000 to $15,000

Hydronic Central

Heating Systems $7,433 $5,000 to $35,000

 Source: Frost & Sullivan 

The manufacturer’s price is the price of one standard unit and does not include installation, shipping 

charges, or accessories. The price of a unit can vary depending on the size, efficiency, and the aesthetics. 

Prices are also influenced by raw material prices and intense competition. The price represents the price at 

the manufacturer’s level. Pricing at the manufacturer’s level is used to avoid the price fluctuations that 

occur once the unit enters the different distribution channels used in the market. Depending on contracts 

and volumes in each distribution channel, the price for the same product can vary significantly upon 

leaving the different channels. In contrast to other product segments where manufacturers are primarily 

selling to distributors and dealers, manufacturers in the masonry heaters products segment sell primarily to 

the end users. 

Trends in Regional Variation in Purchase Price by Product Type 

The purchase price at the manufacturer’s level is the same across North America and does not vary by 

region. Most manufacturers have a suggested retail price that is not impacted by regional variations. The 

only difference in price is due to the impact of transportation expenses. Therefore, dealers and distributors 

that are close to a manufacturing facility or a warehouse often pay less than other dealers and distributors 

because of the shipping cost and distance. Because most of these units are large and/or heavy, shipping 
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costs can range from about $150 to $400. To reduce price differences, some manufacturers have plants all 

across North America. In addition, some manufacturers look for carriers that can keep reasonable shipping 

rates in order to minimize price differences. 

Unlike manufaturers in other product segments, most manufacturers in the masonry heaters product 

segment sell directly to end users. Some manufacturers also provide the installation, in which case, the 

price of the unit does not vary for different regions, but the price of the installation can increase depending 

on how far away the mason has to travel and if he has to pay for lodging. 
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3

Analysis of Market Trends 

Fuel Consumption 

Fuel consumption refers to the amount of fuel that a unit consumes over the span of a year, largely during 

the winter months. The amount of wood consumed by a unit is measured in cords of wood, and a cord of 

wood is a stack of 48-inch logs (or cut logs equaling 48 inches) that is 4 feet high and 8 feet wide. The 

amount of pellets consumed by an appliance is measured in tons, and one ton of pellets is equal to 50 40-

pound bags of pellets. 

Typically, hydronic central heating systems have the highest average fuel consumption in this market 

because they are often used to provide heat to the entire house. Due to the fact that outdoor fireplaces 

are only used occasionally, they have the lowest average fuel consumption as compared to the other 

appliances in the market. 

Figure 3-1 shows the fuel consumption by product type for the North American residential wood 

heaters, fireplaces, and hearth heating products market in 2008. 
Frost & Sullivan 38 Prepared for EC/R Inc. 

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Figure 3-1 

Residential Wood Heaters, Fireplaces, and Hearth Heating Products Market: Fuel Consumption by 

Product Type (North America), 2008 

Product Type Average Consumption Range of Consumption

Wood Stoves 3 to 3.5 cords of wood 1 to 6 cords of wood

Pellet Stoves 2.5 to 3 tons of pellets 1 to 4 tons of pellets

Biomass Stoves 2.5 to 3 tons of pellets 1 to 4 tons of pellets

Wood Fireplaces 0.1 to 0.5 cords of wood Maximum 0.5 cords of wood

Outdoor Fireplaces 0.1 to 0.4 cords of wood Maximum 0.4 cords of wood

Masonry Heaters 2.5 cords of wood 1.5 to 4 cords of wood

Hydronic Central

Heating Systems 9 cords of wood 6 to 15 cords of wood

 Source: Frost & Sullivan 

The amount of fuel that is consumed over a year varies depending on whether the unit is being used as a 

primary source of heating, a secondary source of heating, or for recreational use. Units that are used as a 

primary source of heating consume more fuel than when they are used as a secondary source of heat or for 

recreational use, since end users rely on these units to provide heat to their homes. 

Figure 3-2 shows the fuel consumption by motive of purchase for the North American residential wood 

heaters, fireplaces, and hearth heating products market in 2008. 

Figure 3-2 

Residential Wood Heaters, Fireplaces, and Hearth Heating Products Market: Fuel Consumption by 

Motive of Purchase (North America), 2008 

Product Type Primary Secondary Recreational

Wood Stoves 5‐6 cords of wood 3‐4.5 cords of wood 1‐2.5 cords of wood

Pellet Stoves 3.5‐4 tons of pellets 2‐3 tons of pellets 1‐1.5 tons of pellets

Biomass Stoves 3.5‐4 tons of pellets 2‐3 tons of pellets 1‐1.5 tons of pellets

Wood Fireplaces N/A 0.5 cords of wood 0.1‐0.4 cords of wood

Outdoor Fireplaces N/A N/A 0.1‐0.4 cords of wood

Masonry Heaters 3‐4 cords of wood 1.5‐2.5 cords of

wood N/A

Hydronic Central

Heating Systems 9‐15 cords of wood 6‐8.5 cords of wood N/A

Source: Frost & Sullivan

Other factors that affect fuel consumption are the size of the home or space being heated, the efficiency of 

the unit, and climate. Fuel consumption is high in colder regions such as the Northeast and the Midwest due 

to the greater need for heat in those regions. While in the Northwest region fuel consumption is medium, 
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fuel consumption in regions such as the South and Southwest are low due to the moderate temperatures in 

those areas.

Figure 3-3 shows the level of fuel consumption by region for the North American residential wood heaters, 

fireplaces, and hearth heating products market in 2008. 

Figure 3-3 

Residential Wood Heaters, Fireplaces, and Hearth Heating Products Market: Level of Fuel 

Consumption by Region (North America), 2008 

Region17 Average Temperature     

(Dec. to Feb.)

Fuel

Consumption

Northeast 10°F to 30°F High

Midwest 0°F to 30°F High

South 30°F to 60°F Low

Northwest 10°F to 40°F Medium

Southwest 20°F to 60°F Low

 Source: Climate Prediction Center and Frost & Sullivan 

Usage Rates 

Figure 3-4 shows usage rates by product type for the North American residential wood heaters, fireplaces, 

and hearth heating products market in 2008. 

Figure 3-4 

Residential Wood Heaters, Fireplaces, and Hearth Heating Products Market: Usage Rates by Product 

Type (North America), 2008 

 

17 The regions are defined according to the U.S. Census Bureau definition of Regions of the United States. 

However, the West region is divided into Northwest and Southwest for this analysis to account for climatic 

differences.
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Product Type Usage per day Usage per year

Wood Stoves 4 to 5 hours 3.5 to 4 months

Pellet Stoves 4 to 5 hours 4.5 to 5 months

Biomass Stoves 4 to 5 hours 4 to 4.5 months

Wood Fireplaces 3 to 4 hours 10 to 20 times

Outdoor Fireplaces 2 to 3 hours 10 to 15 times

Masonry Heaters All day 4 to 4.5 months

Hydronic Central

Heating Systems All day (as needed) 5 to 5.5 months

 Source: Frost & Sullivan 

In general, hydronic central heating systems are used for a longer period of time during the year, while 

outdoor fireplaces are generally used the least because they are purchased for recreational use. 

The usage rates vary depending on whether the unit is being used as a primary source of heating, a 

secondary source of heating, or for recreational use. Other factors that affect usage are the cost of the fuel, 

the outside temperature, and how long the winter is in the region where the appliance is being used, among 

others. Usage is high in colder regions such as the Northeast and the Midwest because cold temperatures 

are conducive to the use of these appliances. While in the Northwest region usage is medium, usage in the 

South and Southwest regions is low due to the higher average temperatures in those areas. 

Figure 3-5 shows the level of usage by region for the North American residential wood heaters, fireplaces, 

and hearth heating products market in 2008. 

Figure 3-5 

Residential Wood Heaters, Fireplaces, and Hearth Heating Products Market: Level of Usage by 

Region (North America), 2008 
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Region18 Average Temperature     

(Dec. to Feb.) Usage

Northeast 10°F to 30°F High

Midwest 0°F to 30°F High

South 30°F to 60°F Low

Northwest 10°F to 40°F Medium

Southwest 20°F to 60°F Low

 Source: Climate Prediction Center and Frost & Sullivan

Motive of Purchase 

Because stoves and fireplaces are more effective in heating a room, these appliances are not typically 

used as a primary source of heat. These appliances are most often used to heat the areas of the home 

most frequently used by its occupants. By turning down the furnace thermostat and using a woodburning or other solid biomass-based appliance to heat a specific zone in the home, end users can 

lower their heating costs and help conserve energy. 

Almost half of the people who purchase wood stoves use them as a secondary source of heat, while 

only about 20 percent purchase these appliances for recreational use. Pellet stoves are also primarily 

purchased to be used as secondary sources of heat. However, due to their efficiency and convenience, 

a larger percentage of these are purchased as a primary source of heat compared to wood and biomassbased stoves. Compared to wood and pellet stoves, biomass-based stoves have the highest percentage 

of people who purchase them as a secondary source of heat. 

Indoor wood fireplaces are primarily purchased for recreational use and are typically used on 

weekends or special occasions. However, about 12 percent of these units are purchased as secondary 

sources of heat, and many are used with a fireplace insert to increase efficiency. Outdoor fireplaces 

are strictly purchased for recreational use and are typically used on weekends, special occasions, or in 

the fall when it starts to get cold outside. Masonry heaters are almost evenly purchased as a primary 

and a secondary source of heat, while the hydronic central heating systems are mainly purchased as a 

primary source of heat. 

Figure 3-6 shows the motive of purchase by product type for the North American residential wood 

heaters, fireplaces, and hearth heating products market in 2008. 

Figure 3-6 

 

18 The regions are defined according to the U.S. Census Bureau definition of Regions of the United States. 

However, the West region is divided into Northwest and Southwest for this analysis to account for climatic 

differences.
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Residential Wood Heaters, Fireplaces, and Hearth Heating Products Market: Motive of Purchase by 

Product Type (North America), 2008 

Product Type Primary Secondary Recreational

Wood Stoves 34% 46% 20%

Pellet Stoves 39% 45% 16%

Biomass Stoves 33% 52% 15%

Wood Fireplaces 0% 12% 88%

Outdoor Fireplaces 0% 0% 100%

Masonry Heaters 54% 46% 0%

Hydronic Central

Heating Systems 86% 14% 0%

 Source: Frost & Sullivan 

Chart 3.1 shows the percent breakdown for the motive of purchase of wood stoves in North America 

in 2008. 

 Source: Frost & Sullivan 

Chart 3.2 shows the percent breakdown for the motive of purchase of pellet stoves in North America 

in 2008. 
Frost & Sullivan 43 Prepared for EC/R Inc. 

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Source: Frost & Sullivan 

Chart 3.3 shows the percent breakdown for the motive of purchase of biomass-based stoves in North 

America in 2008. 

Source: Frost & Sullivan 
Frost & Sullivan 44 Prepared for EC/R Inc. 

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Chart 3.4 shows the percent breakdown for the motive of purchase of wood fireplaces in North 

America in 2008. 

 Source: Frost & Sullivan 

Chart 3.5 shows the percent breakdown for the motive of purchase of masonry heaters in North 

America in 2008. 

 Source: Frost & Sullivan 
Frost & Sullivan 45 Prepared for EC/R Inc. 

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Chart 3.6 shows the percent breakdown for the motive of purchase of hydronic central heating systems 

in North America in 2008. 

Source: Frost & Sullivan

Regional Trends 

The demand for wood-burning and other solid biomass-based appliances in a specific region largely 

depends on the price of alternative fuels in the area, as well as availability and access to the fuel. 

Access to the fuel means having physical access to the source, and having the right to gather wood or 

the necessary space to collect the fuel. However, access to fuel can be restricted due to limitations 

imposed by local jurisdictions. For example, governmental bodies have restricted the use of wood in 

areas such as California, Colorado, and Montreal. Others restrict the installation of wood-burning 

appliances in new construction. Such restrictions have an enormous impact on the wood-burning 

products market and force end users to switch to other types of fuels. 

In general, rural areas, the Northeast region of the United States, and the East region of Canada are the 

biggest markets for wood-burning products. The demand for wood-burning products also comes from 

the Northwest and the Midwest in the United States. Although these units are used throughout North 

America, wood-burning appliances are also used in areas where wood is readily available, such as 

Washington and Alaska. 
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The wood fireplaces product segment is tied to the residential construction market, and the recent 

decline in residential new construction has affected the demand for these appliances. With a number of 

home builders recently offering fireplaces only as an upgrade and a few not offering them at all 

anymore, the demand for wood fireplaces in the Southwest and Southeast regions of the United Sates 

has severely declined. 

Masonry heaters are mostly used in the Northeast region of the United States and the East region of 

Canada. In Quebec and Ontario, particularly in the Toronto area, the masonry heaters product segment 

is growing. The hydronic central heating systems are mostly used in the Northeast and the Upper 

Midwest region of the United Sates and the East region of Canada. More of these appliances are also 

being used in states such as Ohio, Iowa, and Indiana. In addition, the hydronic central heating systems 

market segment has increased in Alaska, North Dakota, and South Dakota. However, there was a 

decline in demand in some regions of the Great Lakes area due to the economy. 

The biggest market for pellet stoves is in the Northeast region of the Unites States and the East region 

in Canada. According to the Hearth, Patio and Barbecue Association, 47 percent of the pellet stoves 

sold in the United States, from 1999 to 2008, were sold in the East. The demand for pellet stoves is 

also affected by the location of pellet manufacturing plants. The market for biomass stoves is fueled 

by locally produced fuel sources. For corn stoves, the biggest market is in the Midwest, particularly 

the Corn Belt region of the United States. The Corn Belt region includes Iowa, Indiana, Illinois, and 

Ohio, and parts of South Dakota, North Dakota, Nebraska, Kansas, Minnesota, Wisconsin, Michigan, 

Missouri, and Kentucky.19 

Influences on Buying Styles, Customer Approval, and Other 

Psychographic Information 

Many factors influence consumer preferences that are attributed to psychographic variables such as 

personality, values, attitudes, interests, or lifestyles. According to manufacturers and industry 

representatives, in the North American residential wood heaters, fireplaces, and hearth heating 

products market, price, efficiency, aesthetics, and the unit size are the key factors homeowners use 

when considering buying one of these appliances. Other key purchase criteria include payback period, 

warranty, brand, and durability. 

Because most end users purchase these appliances to reduce the cost of heating their home, price is 

one of the most important factors in the purchasing decision. Price is also important because 

residential end users are often more price-sensitive than commercial end users. In addition, 

 

19 Source: Wikipedia (http://en.wikipedia.org/wiki/Grain_Belt) 
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homeowners are increasingly concerned about the environment and their carbon footprint. This has led 

them to look more closely at the efficiency of the unit when making a purchase. Aesthetics and unit 

size are also very important to end users, since the size of the unit determines the heat output that end 

users can expect. 

Convenience is also an important factor when considering what type of appliance to purchase. 

Typically, homeowners who are not willing or are unable to cut their own wood choose to purchase a 

pellet or other solid biomass-based appliance because it is more convenient to buy a bag of pellets and 

requires less work. In the wood fireplace and outdoor fireplace product segments, aesthetics are often 

more important to homeowners because these appliances are primarily purchased for recreational use 

and not as primary sources of heat. 

In the masonry heaters product segment, the benefits of efficiency and a cleaner-burning appliance are 

more important than price. Aesthetics and the versatility of the design are other key purchase criteria 

for masonry heaters. While price and efficiency are key factors in the buying decision, homeowners 

purchasing a hydronic central heating system are also looking for dealers who can provide quality 

service. In addition, warranty has become very important in the hydronic central heating systems 

product segment. 

Chart 3.7 shows the key purchase criteria in the North America residential wood heaters, fireplaces, 

and hearth heating products market in 2008. 

Source: Frost & Sullivan
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The chart above shows the top four purchase criteria in the market and their importance based on the 

manufacturers’ perception. The criteria were ranked on a scale of 1 to 10, with 10 being most 

important, and a weighted average was taken to determine the overall rank. 

Reasons for Switching to Alternative Fuel Sources 

The primary reason that a homeowner would switch to an alternative fuel source is if that fuel source 

is cheaper than wood or other solid biomass fuel sources. The primary reason that homeowners 

purchase wood-burning and other solid biomass-based appliances is to reduce their heating costs. 

Therefore, if an alternative fuel source is less expensive and can offer heating cost savings, a 

homeowner is likely to switch to using that fuel. Another reason that homeowners would switch to an 

alternative fuel source is if burning wood was banned in their area. With a number of local, tribal, and 

state jurisdictions restricting the use of wood-burning appliances, many end users are being driven to 

alternative fuel sources. 

The availability of wood and other solid biomass fuel sources can also have an impact on the decision 

to switch to alternative fuels. For example, if the Department of Forestry decided that the trees in the 

national forest system are no longer going to be available for either a business or an individual to cut 

down and make firewood, the decision would likely force many homeowners to switch to an 

alternative fuel source. 
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4 

Market Conclusions 

Evaluation of Growth Projections and Demand 

Due to leftover dealer inventory, the North American residential wood heaters, fireplaces, and hearth 

heating products market experienced declining growth in 2007 over the previous year. After this decline, 

the market experienced exceptional revenue growth, growing at 16.4 percent from 2007 to 2008. This 

growth was primarily driven by the dramatic increase in the price of heating oil and natural gas in 2008. 

However, from 2009 to 2010, the weak economy, the decline in residential new construction, and the lack 

of credit are expected to have a negative impact on the revenue growth of the market. While the revenue 

growth forecast in 2009 was -36.1 percent, revenue growth forecast is expected to be -4.0 percent in 2010. 

The federal energy efficiency tax credit has helped mitigate some of the impact from the economic 

downturn. However, the tax credit was not as successful in driving demand as expected because it took 

some time for the government to announce the efficiency requirements and advertising has been 

insufficient. The extremely cold weather in the winter of 2009 and the tax credit in the United States are 

expected to drive some demand for these appliances in 2010. 

After 2010, the potential to cut heating costs by using wood and other solid biomass-based appliances, as 

well as the rebound in the residential construction market, are expected to increase market demand. In 

2012, the market is expected to witness very strong growth due to the rebound of the economy and the 
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housing market, and an increase in lending. Although high insurance premiums, regional restrictions on 

wood-burning appliances, competition from other technologies, and the high initial cost are anticipated to 

continue to limit the demand, the total market is expected to grow at a compound annual growth rate 

(CAGR) of 4.1 percent from 2009 to 2015. 

The greatest demand for these products is expected to continue to come from the Northeast region of the 

United States and the East region of Canada, but adoption in other parts of North America where wood and 

other solid biomass-based fuels are available is expected to increase. Although all product segments are 

anticipated to grow, the pellet and other solid biomass-based stoves are anticipated to have the greatest 

growth potential due to the increasing desire to use sustainable fuel sources and the fact that these newer 

technologies are cleaner-burning. 

Potential Market Impacts of New Emission Regulations 

Manufacturers and industry representatives contacted during this project identified several factors that 

they believe EPA should consider in developing any new emissions regulations for the residential 

biomass heating industry. These factors have the potential to affect market conditions for these 

products. 

According to these representatives, one of the most important factors to consider when formulating 

new emission regulations for the North American residential wood heaters, fireplaces, and hearth 

heating products market is the affect that new regulations will have on product price—although 

reducing air pollution must be the primary goal. Stricter emission regulations can potentially require 

manufacturers to redesign their products or develop entirely new products, which can result in high 

research and development costs. This, in turn, can lead to higher prices to the distributors and dealers 

and, ultimately, to the end users. Because residential end users are very sensitive to price increases, 

higher prices can discourage some homeowners from purchasing these appliances. 

In addition, manufacturing and industry representatives assert that the costs associated with 

redesigning or developing a product and going through the EPA certification process can be too high 

for some smaller companies. The testing for each model can cost up to $20,000. Manufacturers who 

are unable to redesign their products to meet new emission standards can potentially go out of 

business since they will not be allowed to sell their existing products. 

Another major factor representatives said should be considered when formulating new emission 

regulations for this industry is the way the appliances are used in the home. It is critical to create a 

testing procedure that accounts for the way appliances are used at home and test the units the way they 

are going to be used by the homeowner. Some manufacturers discussed the value and need to include a 
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test condition at a low burn rate (as opposed to possibly eliminating the low burn rate test.) The reason 

is that these manufacturers feel that this reflects real world operating conditions and, in some cases, 

the manufacturers feel that eliminating that test would give an unfair advantage to certain product 

types. 

The lack of a comprehensive national standard is also a key factor cited by manufacturers and industry 

representatives that needs to be addressed when formulating new emission regulations for this market. 

Due to the lack of a national standard, some state, local, and tribal governmental bodies have 

established their own standards in order to reduce air pollution in their area. While most states and 

provinces in the United States and Canada have adopted the emission standards set by the EPA, 

manufacturers claim that variations in the emission standards in different regions has made it more 

difficult for them to create products that meet these different standards and can be sold across the 

country. Therefore, they say it is necessary to create a national standard that can be adopted in Canada 

to allow manufacturers to design one appliance that can be legally sold throughout North America. 

They also note that creating a national standard has the potential to increase compliance. 

The lack of a testing protocol for masonry heaters is another factor cited by manufacturers and 

industry representatives that should be considered in the development of any new emission standards. 

They state that the masonry heaters product segment needs an emissions testing protocol that is not 

only rational and scientifically sound, but can also be repeated and guarantee low emissions. The 

industry is eager to establish a testing protocol that can allow the efficiency and emissions levels of 

masonry heaters to be compared with those of other wood-burning and solid biomass-based 

appliances. Because some areas only allow the installation of EPA-certified appliances, a 

classification from the EPA and the ability to certify these products would be anticipated to have an 

enormous impact on the masonry heaters product segment. 

The final key factor to consider cited by manufacturers and industry representatives is the distinction 

between different types of fuels. Some manufacturers and industry representatives believe that there is 

a need to create a separate standard for wood and other solid biomass-based appliances. Because the 

emissions test was designed with wood-burning appliances in mind, the test addresses some issues that 

do not apply to other biomass-based appliances. These units require a test that takes into account the 

slight differences between wood-burning and other solid biomass-based appliances. 

Conclusions 

Manufacturers and industry representatives agree that new emission regulations for the North 

American residential wood heaters, fireplaces, and hearth heating products market are necessary. They 
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also agree that the new emission regulations must take into account the impact that these regulations 

will have on the growth of the market and on the participants. Manufacturers are concerned that strict 

emissions regulations will require them to redesign their existing products or develop new products to 

meet the standards. Because developing new low-emitting products and testing each model requires a 

large investment, manufacturers and industry representatives are concerned about the strain this will 

put on manufacturers, particularly smaller manufacturers. There is also concern about an increase in 

prices due to stricter emission requirements. The main concern is that higher prices will dissuade 

many homeowners from purchasing these appliances. An increase in price can therefore become a 

major restraint in the market. 

In order to address this issue, most manufacturers and industry representatives agree that setting the 

particle emissions standards at 4.5 grams per hour, Washington State’s current limit, for non-catalytic 

stoves and 2.5 grams per hour for catalytic stoves would be achievable for most manufacturers and 

still help to reduce air pollution. Given that about 85 percent of wood stoves already meet Washington 

State’s current limit according to the Hearth, Patio & Barbecue Association, the particle emissions 

standards would need to be lowered beyond those of Washington State in order to truly reduce 

emissions, but these standards need to be attainable at a reasonable cost to the manufacturers. 

In addition, because the units not covered by the current New Source Performance Standards (NSPS) 

produce a little more than one-third of the total air emissions from residential solid-fuel burning, 

setting emissions standards for currently exempt appliances, such as fireplaces, hydronic central 

heating systems, masonry heaters, and other solid biomass-based stoves, can help to significantly 

improve air quality.20 However, these emission standards must also be achievable at a reasonable cost 

in order to minimize their impact on the manufacturers. 

Another main concern for manufacturers is addressing the efficiency of the units. Currently, the test 

for efficiency assigns default efficiencies of 63 percent for non-catalytic stoves and 72 percent for 

catalytic stoves, and these default ratings are shown on stove brochures. Most manufacturers and 

industry representatives agree that the efficiency test methods need to be standardized and regulated. 

This would ensure that efficiency ratings reflect the actual efficiency of every model and would allow 

homeowners to compare appliances based on accurate information. In addition, a method to ensure 

that appliances meet BDT for the life of the appliance needs to be developed. 

Because 70 to 80 percent of wood stoves currently used in U.S. homes are older units, replacing these 

inefficient appliances would have an enormous impact on air quality.21 Many manufacturers and 

industry representatives believe that providing incentives for homeowners to replace these older 

 

20 Source: Houck, James E. Houck and Tiegs, Paul. (December 2009). EPA Regulations/NSPS. Hearth & 

Home

21 Source: United States Environmental Protection Agency (http://www.epa.gov/burnwise/how-toguide.html) 
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appliances would have a greater impact on cleaning the air than creating stricter standards. A good 

way to approach this would be to prohibit the use of older stoves, giving end users incentives and a 

time frame for replacing their old appliances. 

Furthermore, manufacturers and industry representatives believe that it is necessary to educate end 

users on the proper moisture content for cordwood and how to correctly operate their appliances. They 

also believe it is necessary to standardize the quality of the fuel. 
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5 

Methodology 

Frost & Sullivan Methodology 

Frost & Sullivan used a combination of primary and secondary research methodologies to compile all the 

necessary information for this project. Secondary research was used to complement the primary research 

efforts and fill any information gaps. 

Step 1: Launch Data Collection Phase

During this step, the analyst team designed the data collection process and implemented the secondary 

research phase. For EC/R, the tasks involved in this project were to: 

• Review all secondary research data based on: 

3⁄4 Frost & Sullivan research database on the North American residential HVAC products market 

3⁄4 Frost & Sullivan corporate library 

3⁄4 Frost & Sullivan customer database 
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3⁄4 Frost & Sullivan competitor database 

3⁄4 Online databases 

3⁄4 Trade journals 

3⁄4 University library affiliations 

• Create filing systems (especially for confidential business information (CBI) received from 

vendors interviewed) 

• Structure research tables, figures, and charts 

• Develop in-depth table of contents 

• Develop competitor database 

Step 2: Select Interview Strategy and Design of Survey for Primary Research

The strategy used to conduct effective interviews is critical to the success of every research project. In 

Step 2, Frost & Sullivan developed dedicated discussion guides for the interview participants in each 

segment with the input and approval from EC/R before initiating primary research. In addition, a predefined contact list of key industry participants was developed with the input from EC/R and the Frost 

& Sullivan research team. This step ensured that the research team asked the relevant questions to 

obtain information to formulate key industry metrics and uncover key market trends relevant to the 

project, including the following: 

• Market trends, challenges, drivers and restraints 

• Market growth, market size, market potential, unit cost, and installation cost 

• Impact of voluntary programs and federal energy efficiency tax credit 

• Regional trends 

• Motive of purchase, usage rates, fuel consumption and purchase criteria 

• Emission regulations 

• Factors driving the switch to alternate fuels sources 

Step 3: Test the Survey Design

Before Frost & Sullivan put interview strategies and surveys into use across the entire market, it tested 

them for efficacy and accuracy. The analyst team corrected all design problems before attempting any 

additional interviews. During this step the analyst team contacted 3 companies to test the survey. 
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Participants reviewed each survey instrument to ensure that the survey: 

• Used readily understandable terminology 

• Took all measurements in the same format 

• Asked all questions in the right order 

• Yielded the desired information 

• Stimulated respondents to cooperate

Step 4: Conduct Primary Market Research

The primary market research is the heart of every Frost & Sullivan study. In Step 4, Frost & Sullivan 

obtained primary data directly from manufacturers, Canadian suppliers, distributors, value-added 

resellers and home improvement channel partners, and industry associations. Its finely honed 

interviewing skills enabled the analyst team to elicit valuable market information from market 

participants. Using Frost & Sullivan's uniquely designed research techniques, the analysts were able to 

obtain masses of information invaluable for identifying trends, market size, and challenges in the 

marketplace. 

All collected data was stored in a Consulting Center database - a confidential electronic database on 

the server for North America. This database houses a protected 'work-in-progress' database that was 

issued specifically for this project, with restricted access rights to the lead analyst and project 

manager. All data, interview notes and secondary material including analysis and writing was done 

directly on this database during the duration of the project. Only Frost & Sullivan staff directly 

working on the project had password protected access to the information during the duration of the 

project. After the project is completed, the Project Manager will lock the database to restrict access to 

the information. Information provided that was claimed to be CBI was either mailed back to the 

manufacturer or directly to EC/R as they are an EPA-certified CBI storage facility, and erased from 

the Frost & Sullivan database. (Note: there is no CBI in this report.) 

Using our proprietary databases, Frost & Sullivan developed a list of potential contacts to be targeted 

for telephone based primary interviews. The tentative number of interviews per product segment was 

established at the beginning of the project and the number of actual interviews was based on the 

response from the target companies. A total of 31 in-depth discussions were held with manufacturers 

and industry representatives. The final group resulted in a viable sample because the interviews were 

conducted with senior level decision makers who have a high likelihood of providing the required 

market information. However, because there are no organized or recorded data sources pertaining to 

unbranded/non-regulated products, this section is a best effort estimation, compiled through feedback 

from interviewed sources. 
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For this project, the below table outlines the number of companies and industry associations 

interviewed by segment: 

Product Segment/Category Number of Interviews 

Manufacturers of wood stoves 4 

Manufacturers of pellet stoves 3 

Manufacturers of masonry heaters 3 

Manufacturers of fireplaces 3 

Manufacturers of outdoor fireplaces 3 

Manufacturers of hydronic central heating systems 3 

Manufacturers of biomass-bases stoves 3 

Canadian suppliers 4 

Distributors 2 

Value-added resellers and home improvement channels 1 

Industry Associations 2 

Cross-Verification of Data 

Cross-verifying the information received is an important part of this step. Frost & Sullivan analysts 

are trained to listen for misleading or incorrect information, to detect when a respondent may be 

purposefully providing incorrect information or is merely guessing. Erroneous information thus almost 

always reveals itself during the cross-verification stage of the research process. 

Frost & Sullivan cross-verified all data from each respondent by interviewing others in the same 

industry, where possible. Furthermore, answers were confirmed by speaking to other manufacturers 

and industry representatives. In addition, Frost & Sullivan leveraged its in-house database and 

ongoing research in the residential heating market in the cross-verification process. Finally, the results 

were corroborated using other market research measurements. The analyst team discarded any 

misleading information that did not integrate with the entire market analysis. 

Bottom-Up Approach 
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Frost & Sullivan prides itself on its use of a so-called bottom-up Market Engineering methodology. In 

a bottom-up method of market measurement, each final market measurement represents the sum of 

many detailed, bottom-rung measurements. 

Frost & Sullivan calculated market forecasts and market sizes by interviewing each industry 

competitor and deriving each company's annual shipments to—or revenues from—the defined market. 

To calculate the total market size, measure its growth rate, and make market forecasts, the analyst 

team first cross-verified all measurements and then added them to derive the final measurement of the 

total market. 

Since some organizations claimed CBI for some company financial information, the team utilized 

Frost & Sullivan's regular market bottom-up analysis and supplemented it with a top-down estimation 

to arrive at an accurate estimate of the market and to account for unavailable information from some 

suppliers. Additional secondary research was undertaken to compile information of key segments 

where data through primary research was not forthcoming. For instance market data from the Hearth, 

Patio & Barbecue Association was used to complement Frost & Sullivan's data regarding the revenue 

breakdown between the United States and Canada, and verify estimates of unit shipments for the 

segments that the association covers. 

Top-Down Approach 

The top-down approach consisted of asking a few industry participants to estimate the total size of the 

market, assess its growth rate, and make a forecast. These numbers were then averaged to make a final 

projection. As mentioned above Frost & Sullivan primarily used a bottom-up methodology and this 

approach was used to fill in any information gaps from companies claiming CBI. 

Step 5: Research Analysis: Finding "Point A"

Once all the information had been collected, the analyst team explored the most important question of 

any market research project: Where is the market right now? In other words, where is "Point A"? 

Companies cannot possibly navigate the marketplace until they have obtained this market "fix." 

Without it, business planning and strategic decision support are not possible. 

Several key measurements, such as the following were used to determine Point A for this project: 

• Market share 

• Historic market growth rate 

• Market size 

• Market segmentation 
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• Pricing 

• Competitive activities 

• Number of competitors 

• Customer base measurements 

• Market maturity 

Step 6: Market Forecasting: Finding "Point B"

Once Point A was accurately identified, the next step was to identify the future position in the market 

(Point B). To determine this, Frost & Sullivan utilizes its proprietary forecasting model which takes 

various factors into consideration. Most market research firms provide forecasts that cite only the 

measurement of market sizes at some future time. In contrast, as with other Frost & Sullivan projects, 

forecasts for this project were influenced by an evaluation of components such as: 

• Market trends 

• Technical trends 

• Regulatory trends 

• Market maturity measurements 

• Market share movements 

The forecast also included many other measurements such as historical growth trends, which when 

taken over time can help support a market forecast or analysis of a certain marketing scenario. In 

addition, Frost & Sullivan analyzed the primary market drivers and restraints and their impact on the 

market in the short, medium and long term before constructing a total market forecast. 

Expert-Opinion Consensus Model 

To improve the quality, accuracy, and depth of its forecasts, Frost & Sullivan used the expert-opinion 

consensus forecasting model of market measurement for this project. We began by analyzing all the 

data collected in the previous steps. From this analysis as well as from many measurements of change 

over time, an indication of the market's pattern and direction emerges. 

Frost & Sullivan then discussed this data with market experts, including company presidents, company 

vice presidents, executive directors, vice presidents of sales, vice presidents of marketing, R&D 

managers, product managers, directors of market research, and others. After reviewing the data, these 

experts often provided significant strategic insights into the direction and velocity of the market. 
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In its more than 40 years of market research experience, Frost & Sullivan has found the expert-opinion 

consensus forecasting methodology to be the most reliable system of forecasting when combined with 

other elements of the Market Engineering methodology. 

Because of the many uncontrollable variables in the marketplace, the accuracy of any forecast is 

almost impossible to guarantee. What can and must be determined with some accuracy, to enable 

companies to plan accordingly, are the direction of the market and its approximate speed. Frost & 

Sullivan finds the expert-opinion consensus forecasting model to be the most reliable forecasting tool 

for this in today's market. 

Forecasting models based solely on statistics often do not adequately describe the high-technology 

markets on which Frost & Sullivan reports. The statistical data underlying these approaches often 

cannot be found, or the markets that are the subject of the forecast are simply moving too fast. 

Moreover, many statistical forecasting models do not adequately incorporate the wide variety of 

market drivers denoting most markets. 

Other Forecast Assumptions 

Frost & Sullivan forecasted the North American residential wood heaters, fireplaces, and hearth 

heating products market by providing independent and economically unbiased information. Frost & 

Sullivan used the following assumptions to support the forecasts for this market: 

• Positive impact from the economic recovery starting in 2010 

• Slow rebound of residential new construction market beginning in 2010 

• Exceptionally cold weather in the winter of 2009 expected to drive additional demand in 2010 

• Stable raw material prices 

• Stable, although slightly increasing, alternative fuels prices 

• Positive impact from tax credit in 2009 and 2010 

• Due to the undetermined time frame and modifications of the impending revision of the NSPS for 

residential wood heaters, including assessment of sources not covered by the current rule such as 

hydronic central heating systems, the potential impact of such new emission regulation on the 

market was not accounted for in the forecast. However, considering the potential impact of such 

impending regulation, the analysis does factor in a conservative growth rate for such product 

segments. 

Indexes are essentially an attempt to summarize masses of data, showing general changes over time. 

In developing forecasts, Frost & Sullivan analysts used those indexes that can have a direct correlation 

to the behavior of markets. 
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The use of and reliance on specific indexes can vary according to the scope of the research study and 

the specific client needs. The following list illustrates the sources used for key indicators in all Frost 

& Sullivan publications, unless otherwise stated. 

consumer price index (CPI): The rate of increase/decrease in prices for consumer goods. Source: the 

Statistical Abstract of the U.S., Bureau of Labor Statistics (BLS). 

gross domestic product (GDP): The total output of goods and services produced by labor and 

property in the United States. Source: the Survey of Current Business by the Bureau of Economic 

Analysis (BEA). 

gross national product (GNP): The GDP plus income derived from U.S. labor and property operating 

abroad. Source: BEA. 

inflation: A general rise in prices for goods and factors of production. It is indicated by various 

barometers: CPI, producer price index, Dow Jones, commodity spot price index, employment cost 

index. 

producer price index (PPI): The average change in price received by producers of all U.S.-produced 

commodities at all stages of processing. Source: BLS. 

factory inventories: A measure of the amount of product residing in warehouses or along the 

distribution channel. Shrinking inventory may signal diminishing supply, increasing demand, rising 

prices, or more efficient distribution methods. Rising inventories may suggest the opposite. Source: 

U.S. Bureau of the Census, Current Industrial Reports. 

population: Census figures used for sizing potential consumer markets. Source: U.S. Census Bureau, 

the Statistical Abstract of the U.S. 

interest rates: Used to forecast the cost of borrowing money for expansion or capital investments. 

They are set by the Federal Reserve Bank. 

The standard economic assumptions for forecasting include the behavior that specific industries 

exhibit in relation to these indexes. As an example, the market for the construction of heating systems 

has historically trailed the market for new construction by a few months. Therefore, the accuracy of 

some forecasts can be increased by understanding and following the appropriate indexes. 

Frost & Sullivan research can provide timely measurement information on market position and related 

trends, providing the basis for the forecast. This is often achieved through an understanding of the 

economic models and conditions that have a potential impact on market development. 

Once market data was collected and analyzed, and the forecasts were developed, the forecasts were 

matched to the appropriate leading economic indicators for each specific industry. Analyst teams 
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checked the relationship to the economic indicators as part of the overall Frost & Sullivan quality 

control process.