We have a special treat for you today, Readers! This week was our Sales Meeting out here in sunny Southern California and a few of the International brass came over to check up on our American operations. The three representatives were: Leslie Hepsworth (President of Cleveland Golf/Srixon – Europe), Martin Wright (President of Cleveland Golf/Srixon – Australia) and Mike Powell (President of Cleveland Golf/Srixon – South Africa). I was able to take them away from their busy schedules running global companies and talk a little bit about world-wide topics. As you can imagine, I was keen to ask about hot political topics such as… GOLF!
Nick: I would like to start out with the new groove rules and if there is any difference with your locations… How do you see that effecting play in your countries?
Mike: Well, we fall under the R&A so our rules are exactly the same as the USGA, no different.
Leslie: Exactly the same for me.
Martin: The same as the USGA, yeah. The difference in our market though, the success in our market this year, in our opinion is not driven by the change in the wedge rules, its generated because we have a great product. We haven’t seen a lot of impact from consumers going out and buying three wedges just because they want to get them before the end of the year. We haven’t seen that yet and our business is up significantly in wedge sales.
Mike: I think the consumer hasn’t bought into the urgency to go and buy a whole rack of wedges. We have sold a lot of wedges this year and increased our business but sales are still in one or two not three wedges at a time. They haven’t had an urgent sense of needing to change wedges. I think we have been better at how we’ve sold the product; I think the product has been much better. I think we have been much more commercial of how we have invested in how to sell the product, not just in but sell through. I think that’s have the effect of us growing our business, much more than the ruling. However, much we have run the clocks you know when it countdown to you have to get this. We have done many, many different things in lots of different forms to try to promote the fact that these wedges have to be purchased by our retailers at a certain point and most of them, even back ending our business which has been successful in the US have been very difficult for us to get people to buy a bigger quantity to get them to hold the product going forward.
Leslie: We have also found in our market we haven’t been getting multiple wedge sales or guys haven’t been stockpiling wedges because of the groove rule. The groove rule, with the consumer and the retailer has reestablished our leadership in wedges. You know, we have been active and on the cutting edge of this groove story. The retailer has really seen Cleveland as the top wedge even when we have gone through stages when we haven’t necessarily been the number one selling wedge. I think the groove rule thing for us and the laser milling has really reestablished us as the leaders in wedges. That’s made a big difference for us. With all the things we have done, and its hard to judge the results and feedback, you can only look at it in sales. 18 months ago in the UK, not Europe, the UK we only had a 3% wedge share and now we have an 18% share. That’s because, I believe people accept us as the leader in that category. I think we have done that I’m just not sure how good the retailers have been at getting the message across to the consumers. We have a great product with the CG15 and it is demonstrably different to what our competitors are doing visually. It’s how to sell product. If you have something visually different, when a consumer goes to a shop it’ll sell.
Mike: I think, one of the big things for the wedges, it has reaffirmed not only for me but also for my sales team and for my retailers that if you make a great product and the product performs well you can sell it at a premium price. Right now nobody is head and shoulders above everyone else that can demand that $299 price point or the $399 price point. And show that much differentiation, and in wedges we can do that.
Nick: Looking at the current state of golf in all of your territories, what is the “hot” topic? From the tour all the way to beginners what are people talking about the most?
Martin: In Australia, in the industry itself, the biggest issue we have is the lack of new players coming into the game. Whether it be juniors, women, or just 20 or 30 year old men taking up the game there is just a huge void. So, the golfing population is static, as many people leave as there are replacing. So, really that’s the biggest issue facing Australia right now. That’s an issue across most of the world right now. The golfing population is remaining static and it’s getting older. The average age of a club member in Australia is 61 years old. So, unless we get younger people into the game in the next 15 to 20 years it’s going to be a remarkable contract, there will be far less people playing.
Mike: We are finding the same thing in South Africa, with less and less people signing up to play golf. Our markets, in terms of the way people play golf is very different from the US. In our markets there are all semi-public clubs and there are fewer golfers joining clubs. The dynamic of people who are members is not what it used to be. There are a lot of guys who want to play golf but don’t want to join a club. We are finding a shortage on corporate golf events. They have been less frequent and with less players so that’s obviously had an impact on the rounds from a consumers perspective I guess the hottest talk of the year has been Tiger. There hasn’t been any real stand out product that has been a major topic of conversation from a consumer level.
Leslie: I think, with Europe we sell to over 40 countries so it is very complicated. Everyone has a boarder, a lot of them have different languages and different currencies. Each of those markets are in different levels of development so Eastern Bloc countries are way behind where some of the more advanced countries like the UK are at. In pretty much all of the countries, the market is owned by the weather, we have had very bad weather this year which gave us a late start and that didn’t help. Our average golfer is older: 62 for a male, 64 for a female. I don’t think any products besides our wedges have made a big difference to the trade this year. In general terms, rounds are down. The cake isn’t getting any bigger, which is increasing our share over other brands. Titleist is growing at the same time, as we grow they grow. My worry is that the golfers are getting to old. Most of the foundations for younger players are not getting anywhere at all, there is no investment through the government for young players at all, there is for football and tennis So even if we get people started in golf, it’s how we retain them that is the problem. The biggest issue is getting people to stay in it, there are more people leaving the game that stay in. For every three people in the UK that start to play, two leave every 12 months. Memberships are down, subscriptions are down, there are to many golf courses available and we are in a very difficult retail environment.
Nick: You mentioned the weather, that leads into our next topic. We want to look at our traveling audience… If one of our readers were to go to any of the countries you represent what would you recommend as far as what to pack and when is the best time to go?
Leslie: Well, if you take a golf trip in Europe than people always… (laughs) Rain suit and umbrella. Bring some extra sweaters. But really, if people were interested in traveling to the UK they really have to look at some of the courses in Ireland. They must look at the courses in Scotland. Play the links courses which is what everyone wants to play anyway because they are so unique. Some of the courses outside the UK are beautiful but very limited. The players are not as good outside the UK also. The average handicap in the UK is a 16 for males as where if you go to Germany it is closer to a 30. So the best golf is based out of the UK. Scotland people will call it the home of golf.
Martin: In Australia the best times to come are March and April or September and October. The weather is normally very mild; say mid-70’s and bright sunshine. So, you definitely need sun protection and a sweater for the night. A great thing about Australia though, if you are a member of a golf club in the United States it is pretty easy to get out at the best golf courses. For example, Royal Melbourne is one of the best courses in the world and if you are an overseas visitor and have a letter of introduction you can get on Royal Melbourne. So, it’s not like the US where unless you know a member you can’t get a game. I’m a member at a course called New South Whales, it’s the number two course in Australia and one of the top 40 courses in the world and if you are an overseas member you can probably get a game. Golf is very accessible.
Mike: South Africa I would say from the beginning of January to the middle of April would be the best time to come. It’s pretty sunny and hot, temperatures in the mid-80 are to 90 degrees. The places in South Africa are similar to Australia where we don’t really have a private club model. Most of the courses in Australia have a semi-private model so it’s pretty easy to get on if you phone in advance you can get on pretty much anywhere. The Cape region is obviously the most beautiful region in our country up to an area called George which is kind of like the South Africans version of Myrtle Beach.
Nick: To wrap it up, we are looking at 2011 a lot and what are you all most excited about?
Leslie: I am really excited about the products I have seen. We have been involved in product meetings before now, but we haven’t seen it for real. Now that we have seen the physical product, it is really exciting.
Mike: We are in the best shape we have ever been in… We are very excited, especially in the new wood line. When you add the new wedges to that, and we are already number one in wedges in Australia, it’s going to be great. Like Greg said today, when you think about the new irons, they are a sleeper… The irons are going to be very good for the line.
Martin: In our market we have some really unique stories to tell next year, technically speaking. So we can really stand by our performance in comparison to our price.
Leslie: We did so well in wedges this year, I really look to continue that progress with irons and woods next year. We have a chance to differentiate ourselves from everyone else with the new woods and irons. We now clearly identify where we are as a brand with this new story for our woods line.