While most of Nike, the $9 billion-a-year athletic-gear marketer, is experiencing single-digit growth, one of its businesses is enjoying gigantic leaps in sales. That's Nike's (NKE) golf division, which markets balls, shoes, bags, and clothing. Tiger Woods often models the company's wear on the golf course.
Nike is unveiling its newest product category, golf clubs, the week of Jan. 21 at the PGA Merchandise Show in Orlando, Fla. BusinessWeek San Mateo Correspondent Louise Lee recently talked with Bob Wood, president of Nike Golf, about the product launch and the potential for the company's golf business. Edited excerpts from their conversation follow:
Q: What kind of growth is Nike Golf projecting?
A: Worldwide, we grew 50% in fiscal 2001, and grew 73% in the U.S. In fiscal 2002, we'll grow 50% globally and 70% in the U.S., and in fiscal 2003, it's possible we'll grow 30%. There's incredible potential in the U.S., where there are 26 million golfers, and in Asia -- especially in Japan, and in Southeast Asia, in Singapore, Korea, and Malaysia.
Q: What kind of dollar figures are we talking about?
A: I can't break out actual numbers, but we're not talking about just $10 million growing to $15 million. Golf trade publications have estimated Nike Golf's size to be about $300 million, and [that figure] is not that far off. Every single one of the categories we're in -- apparel, footwear, balls, gloves, and bags -- is seeing at least 20% growth per year.
Q: What's the potential for golf clubs?
A: It's a big opportunity. Clubs represent annual sales of $1.5 billion at the wholesale level in the U.S. We think we can be No. 5 in clubs in our first year. No. 5 now is probably Cleveland Golf Clubs, doing $70 million to $80 million a year.
Q: How important are clubs in the golf business?
A: Incredibly important. Golfers care most about equipment. Plus, for us, when you've got brand heat and got a great club product going, it helps sell everything. We'll leverage other products by selling golf clubs successfully. We'll sell more balls because we have hot clubs. There's no question the credibility you get when a hot product casts a positive halo over other products.
Now, with the introduction of clubs, we cover the full spectrum of golf products, so this is the final frontier for us, but there's tons of potential for all the products. We aren't even close to tapping out in any category.
Q: What sort of marketing plan do you have in store for the clubs?
A: We're spending a total of $30 million for the launch over six to eight months. That compares to $15 million for the launch of our golf balls in 1999. For clubs, there'll be endorsements by [2001 British Open winner] David Duval, marketing over the Internet, retail promotions, point-of-purchase promotions, and media -- including print, cable TV, and some broadcast networks. Broadcast will be centered around golf-oriented shows. That way you can target golfers very effectively.
Q: Is Nike going to get Tiger Woods to start using the clubs?
A: We're trying. He already uses our balls, but it's a long process with clubs. Changing clubs means changing 14 clubs, and it takes time, so we're patient.