The Golf Equipment Industry is Exploring New Roads

Written By: Tony Covey

For all the talk of innovation, the golf equipment industry moves slowly. Actual change happens with all the expediency of a round of PGA Tour tournament golf.

So considering the pace of play within the industry, I didn’t really think too much of it two PGA shows ago when an industry contact of mine mentioned his belief that big changes were coming to the golf equipment world over the next several years.

To put the timing in context, this was the show following TaylorMade’s summer of R1, R1 Black, SLDR, and finally JetSpeed. The evidence suggested that the flood and discount sales models wasn’t working anymore, and so TaylorMade became preoccupied with trying to Hack Golf while Chip Brewer and Harry Arnett were into their second year of trying to steer Callaway’s pirate ship away from the rocks.

There were already big changes happening within the industry, but my contacts offered up 3 specifics that he thought might happen over the course of the next few years:

• CEO Mark King could step down at TaylorMade
• CEO Wally Uihlein could retire from Titleist
• President Cindy Davis could leave Nike Golf

Any one of those things would have an impact on the equipment industry. All three…we’re talking about the potential for a major shift.

And now here we find ourselves…less than 2 years later, 2 of the 3 predictions have come true, and the industry is still very much in a state of flux. While the average consumer may not have noticed anything different, over the last few weeks I’ve had occasion to reflect on that conversation and consider not only how things are different now, but also where the industry is headed. I’ve come to believe that we’re witnessing the dawn of a new era in the golf equipment industry.

Here are a few of the things to keep an eye on:

The Direct to Consumer Pre-Volution

Direct-to-Consumer Sales haven’t reached revolution level yet, but we’re creeping ever closer.

Seemingly direct to consumer golf products have been around as long as the equipment itself…or at least for as long as it took for The Golf Channel to launch Morning Drive, but within the last few years, the landscape had changed dramatically. Mostly gone are Peter Kessler and his Perfect Club, the Face Forward Wedge, and an entire bag full of crap from Warrior “Custom” Golf.

Knuth Golf, Renegar Wedges, Bombtech, Hopkins Golf, PowerBilt, the new Ben Hogan, Snell Golf and others are emerging to continue what Scratch Golf started.

They’re brands that aren’t simply alternatives to the big golf companies, they’re competitive, and in a few cases, arguably superior. Sometimes they cost less (sometimes they cost more), and as consumers become more and more comfortable buying before trying – and trying new logos, there’s potential for growth.

While not a single one of them has yet to carve out a sizable (or even measurable) slice of the pie, as a group they’re beginning to have an impact, and that’s pushing the big guys towards more direct to consumer sales as well. As the big OEMs make a bigger push to eliminate the middle man (your friendly neighborhood retail shop), a true direct-to-consumer revolution could take hold.

In many respects the current crop of direct-to-consumer brands is slowly replacing component brands as the alternative to mainstream. That alone makes their emergence noteworthy.

Contraction

At the risk of being overly-brutal (and overly-obvious) in my assessment: Adams Golf and Cleveland Golf ain’t what they used to be.

While the most recent incarnation of the Adams brand is supposed to focus on recreational golfers, the blue push has tailed significantly since launch (and since David Abeles replaced Ben Sharpe as CEO). Not much of anything is happening right now.

The brand has been slowly twisting in limbo since the TaylorMade acquisition, and while blue suggested that Adams might finally have found its focus, you won’t find many in the industry who believe Adams will outlive its current Tour commitments. I’ve been hesitant to say this before, but the doomsday clock is ticking, and it’s probably too late to stop it.

For its part Cleveland has dramatically scaled back its operations. The company is largely focused on the short game (where its market share remains strong), and has dramatically reduced its wood and iron offerings to exclusively target slower swing speed players. It’s not a move that sits particularly well with long-time Cleveland loyalists (particularly those still playing Launcher and Hi-Bore products), but it allows the company to spend money where it actually makes sense, while making room for the Srixon, and to a smaller extent XXIO, brands to make inroads to the US market.

The Callaway Media Phenomenon

Okay…phenomenon might be a bit hyperbolic at this stage of the game, but there’s no denying that Callaway has fundamentally shifted how it does golf. Perhaps lost to many among the frequent product releases was the launch of an entire division of the company devoted to producing in-house media. Callaway Media Productions (CMP) produces an abundance of product videos, Callaway-centric content, and has even recently launched a live talk show.

Inside the bigger picture, it’s an approach designed to speak directly to consumer and control as much of the message as it possibly can. While the company still relies on guys like me (though not to the extent of some of its competitors) to help inform the public about new products, it’s doing what it can to regulate the flow of information.

Certainly we have no cause to question the quality of Callaway’s equipment and its related performance, but the company has become as much about messaging as it is about products. Complain about marketing expenditures all you like, but the change in approach may not be a bad thing, as recent success suggests that performance and aggressive marketing are far from mutually exclusive. Just because you hype the hell out of the products doesn’t mean they’re not good.

If the company continues to succeed, it’s safe to assume others will try and adopt similar models.

Nike’s New Approach

To be sure, Nike hasn’t sent out a press release informing the media that they’ve tweaked the way its golf division operates, but if you look hard enough, signs are there.

For all the push with Covert and Vapor series over the last few seasons, apparel has always been the driving force at Nike Golf, and it likely always will be. High margin golf apparel is a massive money maker for Nike. Why not embrace it?

While the perception persists that Nike is still nowhere in the golf industry, that usually comes from people too focused on bulk hard good sales. Recently a source inside Nike told me that the golf division is just a few years away from be a billion dollar company on its own. Billion…with a B. You can argue that shirts and shoes don’t count as much as clubs, I’ll argue that the money is every bit as green…and there’s a lot more of it.

When Daric Ashford (formerly vice president and general manager of Nike’s Jordan Brand) stepped in to replace Cindy Davis as President of Nike Golf, we wondered if the golf division would start to operate a bit more like the Jordan brand. The early returns suggest it will.

We’ve already seen a bit of that with things like the Club Collection, Rory’s Lunar Controls and the Jordan Flight Runner Golf Shoes, and I suspect we’ll see similar lines ones or twice a year. I fully expect Nike will do the same with its golf clubs. Whether it’s Vapor irons from the oven, Rory’s putter, or a limited run of drivers (Michelle’s Vapor Volt, Tiger’s bonded Vapor Speed), smaller quantity releases with higher demand will likely play a larger role in Nike’s golf plans moving forward.

The reality is that Nike’s athlete-centric philosophy has never aligned well with golf’s buy this now and be instantly better mindset. Nike is about athletes working hard, and that doesn’t gel with a majority consumer that still believes a new club will fix everything. Small quantities with direct tie-ins to Nike’s athletes fit better within the scope of the larger brand.

That doesn’t mean I expect Nike to get out of the mainstream completely. The company has spent the last couple of years quietly retooling its R&D roster, and with the talent that company has pilfered from the rest of the industry, the club division has never been stronger. With Nike the larger question centers around who it’s actually designing clubs for.

In my estimation no company in golf is more focused on designing clubs specifically for its athletes than Nike. The Vapor Pro was designed FOR Rory. The Vapor Flex was designed FOR Tiger (even if he didn’t end up playing it). What that means is that the average Nike product is probably not as well suited for the average golfer as some of its competitors. There will still be largely consumer lines, but I believe Nike is growing more comfortable with the idea that its high profile products (the ones played on tour) won’t be for everyone.

A Maturing Cobra Golf

Credit: John David Mercer-USA TODAY Sports

It’s going to come as a shock to some of you that played the Baffler in the ’70s, but Cobra Golf is a young golf company just beginning to hit its stride.

It’s been roughly six years since PUMA acquired the brand from Titleist, and in many respects the new company has grown alongside Rickie Fowler. The colors have been toned down (just a bit), and when you look at changes within R&D, you could even argue that Cobra is really only a 3 year old golf company.

After being relegated to the B-tier for the better part of the last several years, golfers are rediscovering the brand and the company is starting to find itself in the same conversations at TaylorMade, Callaway, Titleist and PING.

There are still some areas that need improving, but if Cobra continue to produce products like FLY-Z, it will find itself well-positioned to be a significant player moving forward.

A Brand New TaylorMade

And what of TaylorMade?

Over the  last two years the company has suffered from a slow hemorrhage of talent that finally ruptured into a full-on bloodbath earlier this year. Thus far there are few signs that the company has figured out how to completely stop the bleeding entirely, but on paper the company is still among the biggest in golf.

What I’m suggesting is that we draw a line in the sand today. Starting now, TaylorMade is a brand new golf company – one being reinvented out of necessity.

I won’t claim to know what this new company is going to look like when things finally settle down, I can only tell you that nearly every piece of the old TaylorMade has been dismantled.

Let’s look at the recent history.

Just over a year ago CEO Mark King moved on to run adidas North America. Whether that was a promotion or simply a lateral move intended to pacify a man who presumably knows where each and every one of the bodies is buried has been the topic of much discussion. Either way, the man who shaped the empire is gone.

King’s replacement, Ben Sharpe, had big plans, most of which were centered around managing inventory and restoring the integrity of the TaylorMade brand. Sharpe didn’t last long enough to accomplish much of anything, as he was gone less than one year into his tenure.

Along the way several VP-level executives, a multitude of mid-level guys, and a substantial portion of the PR and marketing departments left (or were asked to leave) the company.

Most recently Executive Vice President, Sean Toulon, one of the few bonafide TaylorMade guys remaining from the King era, announced his retirement. Toss in the R&D guys who moved on to greener pastures, and well…sufficed to say, we’re a far cry away from the Mark King led company that dominated an industry.

Because of size, reputation, and market share, what this next generation TaylorMade proves to be will have an impact on the industry. The early signs and rumors suggest a company that still plans to try and compete largely on volume.

Time will tell.

The Titleist Wildcard

There’s an element of comedy in framing the steadiest force in the golf industry as a wildcard, but with an IPO in the works, Titleist could be just that. What would a wholly independent Titleist look like? It’s hard to be certain, but my guess is it probably won’t look much different than it does now. Still, we’re moving closer to what will certainly be an exciting time for the company.

Apart from the IPO, there are some other things to keep an eye on. The company has recently introduced its MOTO program, which features exclusive models, custom fit and built to spec. Will the program become a larger part of the Titleist repertoire?

James Patrick has been quietly lurking in Bob Vokey’s shadow for the last couple of years. How much longer will it be before his influence trickles to the consumer wedge line, and what will that ultimately mean for the industry-leading Vokey brand?

And of course there’s the question of how long Wally Uihlein will stay at the helm. While there’s no indication he plans to step down anytime soon, ushering the company he’s led for the last 15 years through an IPO would make for one hell of a swan song.

The Next Generation of PING

If there’s a victim in the story of Parsons Extreme Golf, it’s PING. In addition to senior R&D guys Brad Schweigert and Mike Nicolette, PING lost members of its tour department and sales staff to PXG.  That’s noteworthy because, while the G30 driver has been dominant at retail for the better part of the last several months, it’s also the last driver that was developed with Schweigert  supervising the R&D team. Mike Nicolette, for his part, was heavily involved in PING iron designs, including the S55 iron currently played by Bubba Watson.

Even with the losses, PING’s talent pool remains deep, and the company maintains an extensive knowledgebase that helps ensure that individual expertise becomes team expertise. Nevertheless, it’s extremely difficult for any company to lose two senior-level engineers and not miss a step. PING is as equipped, if not more equipped than anyone in the industry to handle it.

Toss in the possibility that Chairman and CEO, John A. Solheim could turn the reigns over to his son John K. Solheim, and we’ve got another reason to keep an eye PING.

Have Your Say

Your perspective may be different than mine. As a consumer, what changes have you noticed over the last couple of years, and where do you think the industry is headed?