GM: How is your company faring in today’s economy?Ramsbottom
: Relative to the industry and our competition, very well. Obviously expectations are tempered in this environment. But as other companies lose sales or market share we are actively growing our business through acquisitions and new product introductions. We re-launched the Datrek Golf Company with eight new models this summer. Our re-introduction of the Burton Golf Bag Company is underway and new product is shipping. We also added the leading towel brands, Devant and Sir Christopher Hatton, to our company this past year. This economy has brought about a lot of opportunity and we are looking to take advantage of it.
Very well, actually. We have remained aggressive and continued to bring new products with exciting new technologies to the market. The result has been record market shares for us in metal woods, irons, balls, putters, footwear in apparel.
Revenues are growing and we are gaining market share. We are starting to see a turn in the economy and the golf business.Fiorini:
The economy in 2009 was difficult for many companies in the golf industry. In 2010, Golf Pride has seen a slight recovery in both the OEM side of our business, grips we manufacture for major golf equipment brands, and in our consumer business. Golf Pride is recognized for the value we deliver; value that is measured by high-quality, broad selection and performance of our products. These attributes are validated each week by our leadership position on global professional tours.Lucas:
True Temper Sports had a great 2010. The growth we’re experiencing is based on four primary factors: Steel shaft share growth in Japan/Asia with our GS (Gold Series) product line, which includes GS75, GS95 and now GS85; Global graphite share growth by leveraging our dual branding strategy for Grafalloy, which includes our ProLaunch family of shafts, and Project X, which includes Project X graphite wood and hybrid shafts; Replenishment of the entire value chain since retailers and golf equipment manufacturers significantly reduced their inventory levels in 2009; The “year of the wedge” has significantly increased our year-to-date wedge shaft shipments for Dynamic Gold and our wedge shaft, DG Spinner.
2009 was a challenging year but 2010 has been very good for Adams Golf.
Early on we joked that there may be a recession but we choose not to participate! We’re fortunate to report that we’ve done very well through the difficult times. We really took off in 2008 with some strong new product and have three consecutive record sales years since including 2010. Knock on wood!
Actually, things have been exciting for us and we are experiencing a resurgence in worldwide business. This success has been product driven and tied directly to our irons and golf balls.
We are actually outperforming our expectations in 2010. The first half of the year was particularly strong and while the second half has not been quite as strong, we are still way ahead of our performance in 2009.MacNeill
: With the way the economy has been lately, CHAMP has held it’s own in a very tough time. The last two years have been challenging as golf is a luxury sport. However, our replacement business has been solid in the aftermarket, which has kept us going strong. In addition, the golf market is growing in the Asia Pacific region, allowing us to expand our brand presence.GM: Have you done anything in regards to pricing or changing your marketing strategy in response to the economy?Ramsbottom:
We definitely focus on value when developing products. We realize within this economic climate consumers are looking for deals, but a deal doesn’t have to be a low price, it can be a great product for the right price. Our new Datrek Assault bag is a great example. The Assault retails for $179 but has done exceptionally well because the features of the bag warrant a price of $199 or $209.Toulon:
We have continued to offer products at various price points to the golfer. But, in the end, the consumer has remained the same. If you bring compelling value to the consumer, they will buy.
Based on our results, the consumer believes that we have.Hubbard:
The tough economy over the past three years forced us to cut back on advertising and marketing but that’s about it. Because of the tough economy, club manufacturers do not have a lot of pricing power. Rising production costs and consumers and golf retailers who are pinched for dollars prohibit manufacturers from making a lot of price adjustments right now.Fiorini:
Despite the challenging economy, we have continued to focus on designing and manufacturing high-performance, innovative grips like the Tour Wrap 2G and the new VDR. In order to deliver the increased value and innovation consumers expect from Golf Pride, we have diligently invested to enhance our world-class research and development capabilities.Lucas:
Our marketing/communication strategies have certainly changed in response to the economy and the ever-changing ways consumer’s want to be educated. In 2009, we took a really hard look at who our core audience was and how we could efficiently reach and engage them. We used that information to create more effective and dynamic marketing strategies, such as our Truth in Numbers campaign which we introduced early in 2010. The campaign tells the story of our overwhelming presence and success on the global tours on a weekly basis and across multiple channels, such as print, online and through social media. Brewer:
Yes. First of all we had to react to competitive promotions on several product lines. This lowered our margins at first and made us work even harder to differentiate our products so we can be more immune to these going forward. For instance, our Idea Super Hybrid and Idea Pro Black hybrids sell for premium prices now and are receiving rave reviews from both consumers and trade. Consumers don’t mind paying extra they just demand that it is worth it. Murphy:
Regarding pricing, no. Many of our competitors discounted heavily this year. There were lots of “2 for 1” type deals in the market. Even the market leader of golf balls sold “old” versions of their popular model--which was a roundabout form of discounting. But we did not. We had enough brand momentum to stay out of that mess. In terms of our overall marketing strategy, we successfully delivered a value message in terms of performance. We found that consumers are willing to pay for premium golf balls if they deliver real performance that benefits their game. The recession really changed consumer attitudes. They’re less willing to buy product based on ego or status alone. Now that disposable income is tight, consumers demand real value, which means getting a golf ball that serves their needs rather than blindly following what Tour players may do. I think the recession accelerated that consumer learning curve. Clarke:
We have maintained our pricing structure because we feel we are where we need to be. We are sticking to an 18-month to two-year product cycle because we feel that is what our customers want in this economy.Simpson:
We have a strong brand, great performance and good pricing. We have stayed with this strategy as it continues to provide great value, in good times and bad and it works well.MacNeill:
Yes, CHAMP has held our pricing the last couple of years so that our partners and customers did not have to incur a price increase during these tough economic times. Our marketing strategy continues to be offering high quality products at a tremendous value.GM: Can we expect new, cutting edge products from your company in 2011.Ramsbottom:
Definitely, that is where the growth is going to come from and that is what we have to do to gain market share and entice the consumer to increase their purchasing. We have some new, cutting edge products coming in 2011 that we anticipate will change a product category. We also have some new fresh views of existing technology.
Toulon: Yes, 2011 will be a year that we believe will be one that golfers remember as one that changed the equipment landscape. We have breakthrough technologies that are launching in virtually every product category. It is our best work ever and we cannot wait to share it with golfers all over the world.Hubbard:
I am really excited about the Exotics XCG-4 super ultra light driver. The XCG-4 driver is our most advanced design to date. It features a lightweight carbon crown, two carbon sole inserts, two heavy tungsten sole inserts and a titanium cup face and body. We’ve really moved a lot of weight from the crown and to the rear of the sole with the carbon and the resulting performance gains are substantial. It has the highest rebound rate and moment of inertia (MOI) of any Exotics driver yet. Plus, it will be one of the lightest drivers on the market weighing in at only 276 grams. The high MOI added to the design features make it really easy to hit straight and long. Early reviews show very positive results from our customer base. Fiorini:
We’re very excited about Golf Pride’s new grip product line for 2011 called VDR. The VDR is an innovative grip that combines a unique surface design with textural depths, designed to improved feel and traction, along with a proprietary rubber material that minimizes the transfer of uncomfortable vibrations caused by miss-hits. The new VDR continues a long tradition of innovative grip designs that enhance performance by delivering a combination of benefits in a single grip. Lucas:
Absolutely. “Innovation drives opportunity” is one of our driving principles at True Temper Sports. In 2011, we will introduce the following new steel and graphite technologies to the marketplace: GS85 is our newest super lightweight steel shaft to join the GS family, which already includes GS75 and GS95. It is the ideal shaft for someone seeking the performance benefits of steel, such as consistency and accuracy, and the enhanced distance of graphite; DG Spinner is a wedge shaft we designed with a specially engineered section just beneath the grip to increase ball spin during wedge and approach shots; and ProLaunch AMP (Advanced Material Performance) is the latest addition to Grafalloy’s hugely successful ProLaunch family. With this shaft we are introducing our new Flight Trajectory Technology to ensure consistent launch and peak trajectory. This is combined with our proprietary Axis Technology to produce longer and straighter drives each time you tee is up. BooYah is our new Grafalloy superlite design that features ultra-premium carbon fiber materials combined in a unique design and bend profile for a significant increase in distance.Brewer:
Absolutely. 2011 is going to be one of the most exciting years in the history of our company. We have a breakthrough new technology coming in fairway woods, one of the best irons we ever produced in the Idea Tech V3 hybrid iron set, and a 5th generation Speedline driver, which will move aerodynamic designs to a whole new level.Murphy:
Yes. We have some very exciting products coming. We’ll launch several models at the PGA Show and have high hopes for another good year. Clarke:
We’ve got a great line wine of products and with the DI 11 irons being the longest and most accurate irons we have ever produced. Our FFG irons are enormously popular in the UK and we continue to attract players who know the Wilson brand from 40 years ago back into the fold with great new products.Simpson:
We have a tremendous new product we have just introduced for 2011--the ATTAS-T2. It’s the second shaft offering in our premium International Series line and was jointly developed with our development team in Japan. Already a success on Tour worldwide, the new shaft takes distance and control to an all new level. The ATTAS-T2 features our latest technology platform--Enhanced Linear EI. Our design engineers have refined the flex curve for is shaft, which creates a smoother transfer of energy at impact.MacNeill:
Yes, you sure can. We have some very exciting products coming out in 2011. We will be launching a brand new Performance line of Golf Tees called the Zarma Fly Tee. The performance golf tee category is growing and CHAMP will be a major part of it. We have so many Tour players wearing our spikes it seemed like a logical progression to offer them a performance tee, and with our new Fly Tee they can expect straighter ball flight with greater distance over traditional wooden tees.GM: What is your prediction for the marketplace in 2011?
We anticipate small growth for 2011, and we expect full price sales for the retailer to be more prevalent than discounted sales. The past couple seasons, retailers have been managing their inventories, and manufacturers have been doing the same. The industry is poised for growth, but significant growth may not occur until the golf professional and retailer gain confidence that they can turn their inventory.Toulon:
We predict that we will gain substantial market share in all categories in 11. Today we have a share in the high 30’s to near 40 percent. With what we are about to launch we will see that rise substantially. Overall, we think the business will be better and we will have our most successful year ever.Hubbard:
I don’t have a crystal ball but I am expecting a slow and steady recovery. The depth of this recession is going to require time for everyone to get back to previous levels.Fiorini:
While we are optimistic that the positive momentum in consumer buying will continue into 2011, the current economic environment is very difficult to predict.Lucas:
Irons and wedges were the focus in 2010, but I think we will see increased attention on woods in 2011. We are predicting a big year for our new Project X Graphite wood shaft, which will be offered as a stock option with three top-tier OEMS in 2011. On Tour, Project X won The Open in Scotland and became the winningest driver shaft on the 2010 PGA TOUR and we expect the success to only increase in 2011.Brewer:
I think 2011 will be an up year for the industry and for Adams Golf.Murphy:
Overall it will be a long slow slog back to where we were in 2006/2007. We don’t expect a quick recovery for the overall economy nor for golf. Within that context we will be very aggressive to take share in a zero growth market. We’re ready to compete. Overall we don’t expect industry growth. It will be a very hard fought battle for share, especially domestically. If an individual company expects growth they will need to be better, smarter or faster than their competitors. Clarke:
From a pre-book standpoint, we are up substantially this year over last and that is a good sign. Our key indicators in five areas around the world are all up at the same time and that usually doesn’t happen. We feel there will be momentum for our brand that will be able to sustain in 2011. The United States is a challenge. We are seeing more course closings than openings.Simpson:
We expect the economy to be about the same in 2011, so the industry’s performance will remain in this sluggish mode at the retail level. Hopefully, with some of the exciting new products coming, golfers will see new equipment benefits and be drawn to the new technologies.MacNeill:
Our opinion is that the golf business will pick up over the next two years for sure. We think we will see an uptick in the economy for 2011, with a little more consumer spending confidence. That could lead to more golf rounds being played and money being spent at on course and off course facilities for merchandise.GM: Are there new opportunities arising in the global marketplace?
Definitely, we’re seeing growth to varying degrees around the world; Asia, Australia, South America, even Russia. The global arena that is going to experience the greatest growth is Asia, and particularly China. As the middle class in China continues to grow, there will be more and more expendable income for these people to participate in activities such as golf.Toulon:
Yes, golf around the world is growing. Asia continues to add golfers, china in particular, and Korea has been strong. Latin America is going to begin to grow, and Europe will as well. Hubbard:
The developing countries of the world, such as China, are playing a greater role in the world economy. As the emerging middle class in China continues to grow, golf will gain greater presence. With more than 1.3 billion people in China the country represents a huge potential for golf. Fiorini:
The global golf marketplace in general is very mature. However, there are some growth markets like China that are seeing a tremendous growth curve over the past few years. As more people enter the game in these growth markets, there will naturally be increasing opportunities to grow as we educate golfers on the benefits of re-gripping.Lucas:
Yes, we certainly see continued growth opportunities in Asia, particularly for our lightweight steel products, such as the GS family. We are currently making longer term investments in the China market to ensure we are well positioned as the golf market starts to emerge.Murphy:
There is lot of opportunity for our brands in Europe where we are under represented. In Asia, we’re already well established, being a Japan-based company. In North and South America we expect greater growth and deeper brand penetration as our brand grows in the U.S. market. Clarke:
Golf is always the first into a recession and the last out of it, so we are fighting two key issues, people’s time and the cost factor. But there are always new opportunities that we can take advantage of, and Asia is an area we will see continued growth in the game, what with the course building that is going on. Simpson:
Globally, the Asian market continues to show promise as it is expanding, at least for UST Mamiya. Our Japan team has done a tremendous job both on Tour and in marketing our new line. In fact, the growth of our brand in Asia has been so strong that 2010 is the first year that our Japan branch has performed as well as the U.S. division. Recognizing this growth potential in Asia was the key reason for our company merger with Mamiya-OP’s sports division two years ago, and we couldn’t be prouder of the results. While we expect continued growth in Asia, we expect market share growth in both the U.S. and in Europe next year. Our brand is strengthening in both of those markets, and new opportunities have opened up as a result. MacNeill:
We see new opportunities over in the Asian market; golf is growing in popularity in many countries within that region.GM: What can equipment companies do to encourage growth in the game in 2011? Ramsbottom:
Make golf easier to play from a time and money perspective. I think it’s important we continue to focus on the junior golfers and the new golfers coming into the game--we must minimize the barriers inherent within our game-such as the equipment cost to start the game--manufacturer’s should be offering junior golfers and beginners opportunities to “test” product or purchase product at a discount. Another key barrier is the time it takes to play the game--the entire industry needs to get behind an idea to shorten the game. 18 holes is not necessary, 12 holes is a perfect solution, front 6, back 6. Every 18-hole course in the country could become three 6’s and implement this idea in a short amount of time for very little cost.Toulon:
Continue to gain a deeper understanding of the game and the golfer and offer new innovations that deliver true performance enhancements to the golfer. Companies need to quit complaining about the USGA and R&A and the binding restrictions that stifles their thinking. We have more new thinking, more new products and more performance breakthroughs in the pipeline--and I’m talking serious performance advances--coming than we ever have. It’s a golden age for new technologies and innovations in golf and it is so exciting to be on the forefront. The consumer will have incredible new products available to them very soon from us. And new products that deliver on the performance promises have always delivered growth.Hubbard:
By making the game easier to play club manufactures make the game more enjoyable and draw more participants in. We continue to push the envelope and make golf equipment that is more forgiving and that hits the ball further.Fiorini:
Create products that improve performance and help make the game easier and more enjoyable to play.Lucas:
Education is key. For True Temper, that means educating the consumer about the benefits of custom fitting, which helps people find the right equipment for their game. We think of ourselves as an “education clearing house” and we believe that making our information available to current and potential golfers will grow the game in 2011 and beyond.Brewer:
A recovery in consumer confidence as well as exciting new technology that we will be introducing will help. We need to excite consumers and make the game more fun to play by introducing new products.Murphy:
Understand that the old business models formed in the growth era need to be modified to successfully compete during low growth times. We think a faithful golf consumer wants honest information and real value. If we offer that they will come back, if we don’t they will find another use for their time and money.Clarke:
We truly need a collaborative effort of all bodies in golf, the equipment industry, the PGA, the USGA, golf course owners, the R & A and others to come together to seek ways to grow the game instead of allowing the fragmentation that has taken place in recent years. It sounds easy to set up an umbrella group but it’s like the government, what sounds easy to do often isn’t. There are some nice initiatives out there but we need a unified approach if we are going to make an impact and encourage growth in the game.Simpson:
The market is hungry for new technology. 2011 presents a unique opportunity for those companies that bring forth, real new performance for golfers. And, we have a couple of aces up our sleeve as we expect to do just that.MacNeill:
We would suggest continuing to offer game improving products at great value to make the game more enjoyable to consumers. Golfers that play well enjoy the game more and tend to play more often. We would also like to see equipment companies get involved with schools to promote the game to boys and girls ages 8-12 as part of a physical education program and hopefully get kids interested in the game and become future golfers.