2002: Business - More companies pitch into wedge category
Wednesday, November 2, 2011
By JOHN STEINBREDER
Drivers are making most of the news these days, but wedges are just as active – and interesting – a segment of the golf club market. That’s largely because several of the game’s biggest equipment companies have decided to challenge the long-standing hegemony of the category’s largest players, Cleveland and Titleist.
Perhaps the most apparent sign of the trend can be found in the sleek, forged wedges introduced by Nike Golf at the 2002 PGA Merchandise Show. Not long after that, TaylorMade announced it was bringing out its Tour Preferred wedges, and Callaway and Ping are developing specialty products that likely will appear in stores and pro shops later this year.
“There is definitely something happening with that segment,” says Bob Vokey, who designs the popular Titleist line of wedges. “All the majors are getting in, and in a much bigger way.”
They are getting into it for a number of reasons, and the effects are quite apparent: The wedge business, which produces roughly $70 million in annual sales, is more competitive than it has been in years. That means a wide range of offerings for consumers, and perhaps some very aggressive pricing, as the big clubmakers work their way into yet another battle for all-important market share.
To understand the state of the wedge category today, it is important to know where it has been. “For the past five years, we have seen two companies dominate,” says John Hoeflich, senior director of product marketing for TaylorMade-Adidas Golf. “First there was Cleveland, which built a great brand and now has an on- and off-course share somewhere in the mid-30s. Then there was Titleist, which is in the mid-20s. And no one else even has double-digits. The other equipment companies have always made wedges, but they were pretty much used to round out sets of irons. None of them were really making specialty clubs.”
That, however, has started to change. “Wedges were an underpenetrated, under-appreciated category for a long time, but the more competitive the equipment business became, the more companies began looking for those segments that were relatively untapped and had a dominant company,” says Casey Alexander, special situations analyst for Gilford Securities, a New York investment firm. “That sort of action is endemic in an industry that is not growing, because in order to make it grow under those conditions, you have to find markets not everybody is in, and then grab your share.”
At the same time, golfers of all ages and abilities have become more interested in the short game. “Players started placing greater emphasis on scoring clubs, and on the scoring shots,” says Tom Stine, co-founder of Golf Datatech, a Kissimmee, Fla., research firm. “So companies started developing more and more clubs for the different distances within 120 yards of the green.”
Vokey saw much the same thing.
“Consumers began realizing that they didn’t make many birdies with their 2-irons, but they made a lot with their wedges,” he says. “So they started putting an extra wedge – or two – in their bags.”
One of the reasons for that, says Cleveland Golf president Greg Hopkins, is that recent wedge innovations have induced golfers to look at the category in a different light. “Wedges became more like putters,” he says. “They became specialty clubs that people tried and switched to depending on different conditions and feels.”
Nike club designer Tom Stites agrees with those premises and adds a couple of his own.
“I also think the new interest in making and selling wedges is simply a case of equipment makers wanting to fill out their lines and have more complete offerings,” he says. “In addition, they saw the successes Cleveland had and the way that company built a very nice business essentially on wedges and felt they could do something themselves.
“And remember, this is a very competitive business, and no company likes to get beat in any category.”
Which, of course, leads us to another rationale for the sudden – and increasingly intense – interest in that business: Big club companies such as Callaway and TaylorMade got tired of seeing their tour professionals using their rivals’ wedges. So they jumped into the game as well. And Nike’s much-anticipated introduction also helped move things along.
“The fact that Nike was bringing out wedges certainly heightened industry and media interest in that category,” says Hopkins. “New products and new entrants can create topics of conversation just by their presence.”
They also can create newly competitive market conditions, and those seem an inevitable byproduct of this trend.
“TaylorMade, Callaway, Nike and Ping all bring a lot of muscle into the wedge category, and they will make it a whole different ballgame,” says Hoeflich. “It will be a hard-fought business, and the market share numbers you see a year from now will be different from what they are today. Instead of just two big players, you will more likely see three or four.”
The impact of that newfound competition could be felt in many ways. “The price of wedges could drop with so many new players,” says Stine. “But remember, the overall selling price of putters has increased as that category has heated up, and wedges are much more analogous to putters than they are, say, to drivers, where prices are under great pressure.”
The company that will feel much of the pressure in this brave new world of wedges is the market leader, Cleveland Golf. “But we welcome the competition, because competition has been good for us,” says Hopkins. “Our wedge sales have more than doubled since Titleist came in with its Vokey line, and our market share has nearly tripled in the past five years. The new entrants will bring new attention to the category, and we will end up doing well because we know how to make that type of club better than anyone else. And we have some tricks up our sleeve.”
So might the competition, which should make for an active and interesting segment indeed.