Fortune Brands, which owns the Titleist, Cobra and FootJoy golf brands, said its golf business outside the U.S. has grown 54% over the last five years as the sport has taken off globally with particular strength in Asia. Bruce Carbonari, Fortune Brands's president and CEO, said the U.S. business is not as bad as it seems.
Speaking at JP Morgan's Diversified Industries Conference, Carbonari noted that spend-per-round has been down.
“You see people being much more particular about the discretionary side of the business – which would be clubs,” said Carbonari. “Clubs are a purchase. You have a set of clubs. 'Do you really need to have another set of clubs?' is probably the dialogue that's going in the consumer's head, right now. They may add a putter or a wedge, but obviously they have slowed down on the purchase, there.”
But he also noted that rounds played in the U.S. have been flat in the U.S., “pretty flat” in Western Europe,” and are growing in Asia. He described that overall showing as a “bit of a surprise, I think, for us – because of just the nature of the economy. You'd think rounds of play would be down, and travel being down and whatnot. They basically have been flat.”
Carbonari also said that while the consumables business is declining this year, it's “not down as significantly” as golf equipment, which includes balls, shoes and gloves that he said are used, worn out, or lost that need to be replaced. He noted that consumables, “which we're stronger in, is our heart of our portfolio.” He also said these products are “usually priced on a green-grass basis on the pro shop area.”
He still noted that strong on-course performance still drives the category. The Pro VI balls family “have been a homerun for us since the early 2000s, and continues to gain share in the marketplace.” In clubs, Titleist “has a great set of irons out there that have been growing nicely this year.” He mentioned the AP1s and AP2s, the Vokey wedges, the Cameron putters, and 909 Series of drivers as standouts.
Besides Titleist, Fortune Brands' Acushnet golf portfolio also owns FootJoy, Cobra, Pinnacle, Scotty Cameron putters and Vokey wedges.
Longer term, the chairman noted that demographics continue to support growth in golf participation. He noted that 75 million baby-boomers are expected to retire over the next horizon.
“Maybe a little later than they originally thought. But they will be retiring. More golf is played when you retire,” said Carbonari.
He added that the other big driver long term is an increase in play in Asian markets.
“We've seen a very strong Japanese market,” said Carbonari. “The Korean market has been exceptionally strong over the last five years. If you're a golfer, you saw the PGA and he U.S. Am, and the Women's U.S. Open this year, all won by Koreans.”
He added that “the proposition of golf going into 2016 Olympics is also a favorable global expansion for the category, as well.”
He finally noted that significant investment is being made in bringing golf courses and teaching professionals to both China and India.
“Although I think are more long-term horizons, obviously China is a market that we are investing in ourselves and supporting for the potential growth that's there in that business,” said Carbonari.
