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The Osprey Packs story: Its roots, success, sale and its future in Cortez

Cortez-based Osprey Packs Inc. has agreed to sell its business to consumer products company Helen of Troy for $414 million in cash.(The Journal file)
No major changes planned at company headquarters

Osprey Packs headquarters will remain in Cortez, and no major changes in operations are expected under new ownership by Helen of Troy, a publicly traded consumer products company, according to company officials.

Osprey announced Monday it has agreed to sell its business to Helen of Troy for $414 million in cash.

“They are taking care to learn all about us, and believe we are the specialists and need to learn from us,” said Osprey Packs founder and lead designer Mike Pfotenhauer. “They are 10 times bigger than us, they invest in their employees like we do, and will help Osprey grow.”

Osprey Packs has developed a worldwide market for its product line, which includes high-end backpacks and daypacks for hiking, mountaineering, skiing, climbing, biking, trail running, adventure travel, commuting and school. It has sales in 74 countries.

The manufacturing company was founded in 1974 by Pfotenhauer, who is the lead designer. He and his wife, Diane Wren, along with a group of investors, own the company.

Current offices will remain in place, company officials said, including the Cortez headquarters; a distribution center in Odgen, Utah; a European market office in Poole, United Kingdom; and the offices and manufacturing operations in Ho Chi Minh City, Vietnam.

Osprey Packs CEO Layne Rigney will continue to lead the company, according to a Helen of Troy news release.

Mike Pfotenhauer, Marilyn Jones and one unknown person at the Dolores factory circa 1990. (Journal file)

In an interview with The Journal, Pfotenhauer reflected on the business and its sale.

“I’ve thoroughly enjoyed the venture from beginning to end, I love designing packs, and the company has grown steadily,” he said.

Nearly 50 years ago, he learned to sew from his mother and a former girlfriend, and started making packs.

“The first ones were pretty awful,” he said, laughing. “But over time you learn and improve, and it became my life ambition. In those early days, I did not have an inkling it would become this successful.”

His motivation has been designing durable packs that fit people well and transfer the load to the body efficiently and comfortably.

Osprey specializes in technical adventure packs that can stand up to the rigors of backcountry travel. The design team is known for pushing the envelope and coming up with innovative designs, Pfotenhauer said.

“Pack design continues to evolve, and now involves 3D printing, thermal forming and advanced welding techniques,” he said.

Helen of Troy expressed interest in the company a few years ago, then COVID-19 hit, shutting down Vietnam factories, supply chains and retail stores worldwide.

“To their credit, they did not waver on their interest,” Pfotenhauer said.

Investor overview reveals details of merger

Transaction highlights for the purchase of Osprey Packs by Helen of Troy reveal a merger intent on increasing product growth for both companies, including internationally.

Osprey Packs will be added to Troy’s major brands, which include Hydro Flask, OXO, Braun, Honeywell, Pur, Vicks, Revlon, Hot Tools Professional, Bed Head, Sure, Pert and Drybar.

Key points from the investor overview include:

– Osprey net sales for 2021 are expected to be $155 million to $160 million.

— Osprey’s popularity enhances and diversifies Helen of Troy’s outdoor portfolio. In the U.S., Osprey is rated No. 1 in the technical pack segment, No. 1 in travel packs, No. 1 in the everyday backpack segment, and No. 2 in hydration packs. Internationally, Osprey is rated No. 1 in specialist packs and No. 1 in Nordic packs.

— Osprey’s senior leadership team will add about 150 years of outdoor industry expertise to Helen of Troy.

— Osprey has a strong global footprint, with 51% of its sales outside the U.S. Its products are sold in more than 8,000 stores globally, which make up 73% of sales. E-commerce sales account for 27% of sales.

— The total addressable market for technical packs, travel packs and daypacks is $12 billion, including $3 billion for technical/outdoor sports packs, $4 billion for travel packs and luggage and $5 billion for everyday packs.

— The merger expands Helen of Troy’s reach across durables and soft goods with best-in-class pack-making capabilities (packs, totes, lunch, camp). Osprey, Hydro Flask and OXO portfolios will benefit from cross-selling opportunities

— The purchase of Osprey adds a Vietnam design and operation center to Helen of Troy, and accelerates diversification of manufacturing sources. Opportunity exists to co-locate Helen of Troy’s planned Southeast Asia office in Osprey’s Vietnam center.

“This acquisition is the classic story of two companies better together,” said Troy CEO Julien R. Mininberg, in a phone conference announcing the sale Nov. 29. “Combining capabilities and credibility of Osprey with our global footprint and scalable global shared services creates opportunity for new and efficient and growth. We believe Osprey is well positioned to capitalize on market growth.”

Helen of Troy’s extensive shipping infrastructure, IT and worldwide market presence will expand the pack brand even more, he said.

Half of Osprey sales are outside the U.S., according to a Helen of Troy presentation about the acquisition Monday. The company said the Osprey acquisition fits well with their outdoor products line of OXO and Hydro Flask, and its network will help Helen of Troy further expand into the international outdoor products market.

Pfotenhauer will continue to design backpacks under a contract with Helen of Troy for the next year.

World headquarters a ‘source of pride’

Osprey Packs employs nearly 300 people, including almost 100 in the Cortez office, 30 in Ogden Utah, 85 in Vietnam and 80 in Poole.

In 2014, the company had 110 employees worldwide.

The business moved to Dolores in 1990 and to Cortez in 1994. It was previously based in Pfotenhauer’s apartment in Santa Cruz, California, and at a design office in Mill Valley, California.

In 2017, Osprey built its world headquarters in the heart of Cortez on the corner of Empire and Park streets.

The city of Cortez offered an incentive package for the company to stay in town.

In 2016, the company purchased 4 acres from the city of Cortez for $225,000, and another acre for $56,250, said City Manager Drew Sanders on Thursday.

The city also agreed to hold an acre in reserve for Osprey for 10 years until 2026 for continued expansion.

Also as part of the deal, a fiber-optic line was connected to the headquarters for daily global business.

In exchange for the land deal, Osprey agreed to create 45 jobs over five years that paid above the county average. That obligation has been met, Sanders said.

Colorado also wanted Osprey to stay.

In 2014, the Colorado Economic Development Commission approved Osprey for up to $164,000 in tax credits from the state if it hired 34 new employees by 2019 at above-average wage for the county.

In 2018, Osprey earned $84,000 in the tax credits as part of the 2014 deal with the state, said Jill McGranahan, interim marketing manager for the Colorado Economic Development Commission.

To get the tax credit, Osprey hired 18 to 22 employees by 2019 at wages 110% of the average for the area, McGranahan said.

For each new employee, a tax credit was applied to the company tax liability.

After moving to Montezuma County in 1990, 90% of Osprey’s workforce was made up of Navajo employees who sewed the backpacks together. In 2002, the company moved production to Vietnam factories to handle increased volume, Pfotenhauer said.

Factory workers in Vietnam work on Osprey Packs in this file photo. (Courtesy Osprey Packs)

The company contracts with six factories in Vietnam that have thousands of workers, he said. Some of the factories are managed by South Korean companies.

Pfotenhauer said some of his favorite experiences are working with Navajos, Vietnamese and Koreans, and learning about their cultures.

“Without their incredible sewing skills and talent, we would not be where we are today,” he said.

A key for the company’s success has been focusing on one aspect of the outdoor industry, instead of trying to do it all.

“We specialized in quality backpacks and did not get sidetracked into other projects like tents and clothing,” he said. “Because of that focus, we established ourselves as the leader in technical and adventure pack market.”

Osprey has been a economic pillar for Cortez, offering well-paying jobs and donating to dozens of organizations and events every year.

“Everywhere you look people are wearing Osprey packs. They are a real source of pride for Cortez,” said Mayor Mike Lavey. “It has been a good relationship and benefits our economy. Having them here gives us bragging rights, and I hope they stay.”

Osprey Packs regularly donates backpacks to local schools, including to Mesa Elementary. (Journal file photo)

In 2021, Osprey Packs supported 35 nonprofits in the Four Corners, including schools, youth programs, races and conservation efforts. Osprey also donated to more than 90 organizations in Colorado, the U.S. and internationally.

This year, Osprey Packs donated $32,672 in cash, and $51,995 in retail products to community groups, according to JAM Collective, its public relations firm.

“The packs Osprey donates to the kids entices them to get outdoors more by having such cool equipment,” said Kellie Willis, executive director for the Piñon Project. “It makes a big difference. They have been very generous.”

Casey Simpson, director for Southwest Open School, said Osprey donations of backpacking equipment to outdoor programs have been invaluable. They also provide school packs.

“Students love them, they hold up. The original models are still around and have stood the test of time.They’re probably collector items by now,” Simpson said.

Osprey Packs founder Mike Pfotenhauer and his wife, Diane Wren, are planning their retirement after an agreement to sell the company to Helen of Troy. (Courtesy of Osprey Packs)

Pfotenhauer said he has grappled with the decision to sell the company and retire from his life calling.

“I’ve been kind of dreading the decision. I love what I do and the people I’ve worked with all these 47 years,” he said.

After traveling the world designing, manufacturing and selling backpacks, he and his wife have settled again in Montezuma County.

For retirement, Pfotenhauer said he will stay involved in the community, and get back to making artwork, including printmaking and woodwork. He plans to continue his philanthropic efforts for area nonprofits and events.

“We will also continue to support the wildlands around us; after all, the outdoors is the heart of what Osprey does,” he said.