Adidas: Earning Its Stripes in the U.S.
Adidas-Salomon CEO Herbert Hainer, a former semipro soccer player, still has an athlete's single-mindedness. Since assuming the top spot at the German sports brand in 2001, he has boosted sales and profits by nearly 40%. Now, Hainer's goal is to unseat Nike (NKE ) as the world's leading sports brand. Key to that will be improving Adidas' business in the U.S. To that end, Hainer has been spending the last month in the U.S., which he sees as rife with opportunities for increasing market share. As Nike challenges Adidas' dominance in the global soccer market, Hainer is counterattacking, going after Nike's stranglehold on basketball.
The one-on-one should be interesting to watch. For the first time, Nike may have to contend with an Adidas that is run by a German exec who acts and thinks more like an American, thanks in part to the eight years Hainer spent at U.S consumer products giant Procter & Gamble (PG ) before joining Adidas as a hardware-sales director 15 years ago and rising steadily to the top.
Hainer was recently in Portland, Ore., for the semifinals of the Women's World Cup of Soccer, in which the Adidas-sponsored German team beat the Nike-sponsored U.S. team in the semifinal round. Before he left for the Oct. 12 final in Los Angeles, he spoke with BusinessWeek Correspondent Stanley Holmes about his goals for Adidas. Edited excerpts of their conversation follow:
Q: What do you make of Nike's stated aim to unseat Adidas-Salomon as the No. 1 soccer brand in the world? A:
Q: What do you make of Nike's stated aim to unseat Adidas-Salomon as the No. 1 soccer brand in the world?
A:Nike said in 1998 they wanted to be No. 1 in soccer by 2002. And now they say they will be No. 1 by 2006. And I guarantee that by 2006, they will shift it forward to 2010. I don't think they will achieve No. 1 in this market. We understand the game, and I believe we have the better product range. In 2006, [the men's World Cup] will be in Germany, and this is definitely an advantage for us.
Q: How would you assess how Adidas-Solomon has fared so far in North America? A:
Q: How would you assess how Adidas-Solomon has fared so far in North America?
A:When you look to the U.S. market, the most visible sport is professional football, then professional basketball, then baseball, and college football and basketball. I think it's fair to say we have made a lot of inroads in baseball. When you watch professional baseball today, you see many players with three stripes [the Adidas symbol]. We have about 160 players under contract, and more or less the whole [Chicago] Cubs [baseball] team.
The next [market we're going after] is basketball. We started with Kobe Bryant six or seven years ago.... Now, we have widened this portfolio with Tracy McGrady, Tim Duncan, and Kevin Garnett. These three guys are definitely the best guys in the NBA. I definitely believe we have the right players now, and we have to communicate it in North America.... We plan to launch a new shoe [for McGrady] and a major advertising campaign on Nov. 3.
American football is more difficult [for us]. There is no chance to get into American football as a supplier. What we do is we outfit players with cleated shoes -- and we have really good cleated ones [because of our expertise in] soccer. [But] the market for cleated shoes is limited.
But when we say we want to be the leading sports brand in the world, we have to be visible in the U.S. sport that is seen by most of the people here. It's a very important branding issue. And let's face it, the competition is very tough here, especially because of Nike, which is the market leader. They have 35% market share here. As we make it tough for Nike in Germany, where we dominate, they make it tough for us here.
Q: Why did Adidas part ways with Los Angeles Lakers superstar Kobe Bryant last year? He then went on to sign a big endorsement deal with Nike, which has said little since his legal problems regarding an alleged rape. A:
Q: Why did Adidas part ways with Los Angeles Lakers superstar Kobe Bryant last year? He then went on to sign a big endorsement deal with Nike, which has said little since his legal problems regarding an alleged rape.
A:Kobe is definitely one of the best players in the NBA. But we and Kobe had different opinions about direction. Obviously, we want to do things that are good for the brand and our company, and Kobe had more in his head -- things to do which are good for him. We couldn't come to an agreement, and then we said it is better that we separate.
Q: What is Adidas' strategy? A:
Q: What is Adidas' strategy?
A:We have to stick to our mission to become the leading sports brand in the world. This doesn't mean we want to be the biggest one -- but the leader in how we bring products to the markets, in what the products do for the athletes, how we service them. We're a sports-performance brand. Those are our roots. Whatever we do, it has to be focused on sports performance. We definitely won't become a fashion brand or a fashion company.
Q: How is the competition shaping up? A:
Q: How is the competition shaping up?
A:It's more or less a two-way race. You have a gap between Nike and us, and a gap between us and Reebok. But when you look around the world at the big events, the big teams or the big athletes, it's always Nike and us bidding, fighting, and competing.
Edited by Patricia O'Connell