Your Guide To The OEMs, Part 3

So far, we’ve examined six of the top original equipment manufacturers in golf today: The Big Three of Acushnet, Callaway and TaylorMade-Adidas, and the Next Three of Cleveland, Nike and Ping. This week, The Bag Drop takes a look at a couple groups of golf companies that find themselves looking up at those six brands.

I’ll split these remaining companies into two groups: Big Names and Foreign Powers. Each company in both groups makes excellent equipment, but finds itself a couple notches below the top in the U.S. marketplace.

The Big Names

Adams

Strengths: History of product innovation, strong presence on the Champions Tour
Weaknesses: Lost momentum, perception of products as “senior” equipment

Adams burst from obscurity to the big time in 1998 and 1999 thanks to the Tight Lies line of fairway woods, and a series of infomercials (with pre-Tiger Hank Haney!) that ran incessantly. Like Orlimar, Adams racked up big sales in a non-traditional way by tapping into the height of the golf boom with its catchy infomercials. The two fairway wood companies looked like they might follow Callaway’s lead and parlay a single smash hit into a long-term, diversified brand with a full line of products. Both Adams and Orlimar went on to learn that the path to the top wasn’t as smooth as Callaway made it look. Orlimar aggressively moved into irons and wedges, and even thought about selling golf balls and going public. But the company couldn’t maintain its mojo, and was eventually sold to King Par Golf, a midwestern retailer that uses the Orlimar name as a house brand.

Adams, meanwhile, had its own troubles. The company signed Nick Faldo to an expensive contract, then proceeded with an initial public offering. After an initial rise in stock prices, Adams shares quickly bottomed out and were eventually suspended. The company was taken private again, Faldo and his fading game were gone, and Adams was forced to retool.

In the past couple years, Adams has improved its fortunes a bit. Company founder Barney Adams has shifted his attention from running the business to coming up with new design ideas, and Adams was ahead of the curve on the hybrid craze with its Idea clubs. The company also has a full line of well-regarded drivers, woods, and irons, with senior stars like Tom Watson, Allen Doyle, and Larry Nelson using the clubs on the Champions Tour. But that has been a double-edged sword for Adams, as some golf retailers claim that customers now associate the Adams brand with seniors. The company’s new composite/titanium driver with moveable weights has also had a very slow start at retail.

It’s difficult to see what the future holds for Adams. They could end up back where they started, as a niche maker of fairway woods. Or they could be acquisition fodder for an investor looking to get into the golf business (and there are always plenty of those). But as a standalone company, Adams has a muddy future.

MacGregor

Strengths: Name, history, strong new products
Weaknesses: Recent history, strong competitors, distribution

MacGregor is one of golf’s oldest brands. It was also one of the most successful, until a series of acquisitions left it floundering in the late 1990s. A foreign ownership group, at the height of the golf boom, tried to make MacGregor into a department store-level brand. When the company was bought by an investment group headed by Barry Schneider, it had sunk to a low point in terms of product and reputation.

Schneider has shrewdly reclaimed MacGregor’s heritage as a high-quality brand while positioning the company as a relatively small entity. Compared with the other well-known brands in the business, MacGregor has a relatively small workforce. But this lean operation is essential to helping the brand compete in today’s tight marketplace.

MacGregor is currently focused on becoming a technology-based brand with an eye on performance. All the company’s irons are forged, but with intricate designs aimed at better players and high-handicappers alike. After acquiring MacGregor Japan, which was formerly a subsidiary, the company is adapting many successful products from Asia for sale in the U.S. That includes the MACTEC drivers and woods, which were first launched in Japan. And the company’s Bobby Grace-designed line of milled putters has also been a strong addition.

There’s no doubt that MacGregor has vastly improved its product line in the last few years. But the company still has extremely low market share, which is a reflection of how competitive the golf equipment market is today. Once you lose share, it’s even tougher to get it back. MacGregor’s name has been attached to a bid to buy Callaway Golf, which would solve a lot of market share and distribution problems for the brand. But industry sources think that deal is unlikely to happen. Instead, look for MacGregor to import more cutting-edge equipment from Asia, while aiming at players who want forged irons.

Wilson

Strengths: Name, history, strong new products
Weaknesses: Lack of buzz, possible lack of corporate backing

Many of MacGregor’s problems are paralleled by Wilson’s predicament. After decades as one of the leading brands in the business, Wilson has stumbled over the last decade. The golf division of the huge Wilson Sports company got lost in the corporate shuffle, disbanded its staff of tour players (including Vijay Singh) and retired the beloved Wilson Staff brand.

After a long line of lackluster products under the Deep Red sub-brand, Wilson is trying to reclaim the Staff name and return it to prominence. Padraig Harrington and Jesper Parnevik represent the company on tour, and this year’s pro-line products have been very well-received. The problem is that Wilson also does a lot of business in department store clubs and balls, and that hurts them as a performance golf brand. No doubt there’s a buck or two to be made in selling $199 boxed sets of clubs at Target, and 18-packs of distance balls for $12.99. But this hurts the chances of Wilson ever regaining the buzz around its brand that it had back in the days of Sarazen, Snead, and Palmer.

The Foreign Powers

Bridgestone

Strengths: Golf balls, tour presence
Weaknesses: Unfamiliar name, small hard goods presence

Bridgestone is one of Japan’s top golf brands, doing much business under its Tour Stage premium brand. In the U.S., the company has mainly had a presence in the golf ball market. Until recently, most of the company’s U.S. products were marketed under the Precept name, including the successful EV and MC Lady golf balls and a small line of woods and irons.

The company has changed the focus to the Bridgestone name in the U.S., and is being much more aggressive in establishing itself as a full-line hard goods company. Fred Couples and Stuart Appleby are two of the PGA Tour pros representing the brand.

But the company still has a relatively small presence in the U.S., and it would have to invest a great deal of money to dramatically grow its market share here. I foresee Bridgestone continuing to be a top-5 golf ball brand in the U.S., with clubs that are largely unknown to all but equipment buffs.

Mizuno

Strengths: Forged irons, global brand strength, technology
Weaknesses: Small market for best products

Unlike Bridgestone, Mizuno has had a U.S. presence for some time. The company’s forged irons and wedges compete with offerings from Titleist and Ben Hogan for the hearts (and money) of blade fanatics. For many years Mizuno could claim to have the most-played irons on the PGA Tour, but companies like Titleist and TaylorMade have elbowed their way into the picture.

Mizuno has launched several high-profile drivers in the U.S. over the past several years, but none have helped the company become a major player in the category. And the gorgeous forged irons the company makes appeal to a fairly small segment of the overall U.S. equipment market. Without a major change in strategy, I think it’s safe to say that Mizuno will remain a favorite among avid golfers, and a curiosity to the majority of the market.

Srixon

Strengths: Golf balls, good buzz, reasonable prices
Weaknesses: Brand unfamiliar in U.S., small distribution of clubs

Another big player from Asia, Srixon entered the U.S. market in the late 1990s as a ball-only brand. They’ve had modest success with both tour-level and distance balls, and the company has sharp marketing and advertising skills. Srixon has long made some of the hottest drivers in the world, and the company is trying to get a foothold in the U.S. club market. But Srixon faces the same hurdles as Bridgestone and Mizuno in the States. Look for Srixon to continue building ball share and overall brand buzz, but moving up to the level of a Cleveland or Ping is a long ways off.

Conclusion
This concludes our tour of the major OEMs in the U.S. market. What do you think? Did we leave anyone out? Where’s the business headed? Write a comment and let us know!