2004: Acushnet Australia under new management

Under new management.

That’s the situation at Acushnet Australia, which markets Titleist, FootJoy, Cobra and Pinnacle products in the Outback.

For years, such tasks were handled by International Brands, a company controlled by Greg Norman. But amid concerns about brand management, Acushnet ended the relationship with the distributor last summer, and on Oct. 1 established a wholly owned subsidiary to run its Australian operations.

Though instigated primarily by Acushnet’s dissatisfaction with International Brands, the switch marks a growing trend among equipment companies to rely less on third-party distributors and assemble their own teams to boost sales in foreign markets. Creating a subsidiary has its financial hurdles, but if feasible, provides companies significantly more flexibility and control to pursue their sales and marketing objectives.

For Acushnet, that meant an opportunity to better extend its domestic philosophy overseas – devote more attention to Australia’s roughly 500 green-grass accounts and nurture relationships with club professionals. Increased ties to such key influencers, officials say, enhance their chances to court up-and-coming world-class golfers in Oz or “the next generation of Adam Scotts.”

Creating a subsidiary also made fiscal sense for Acushnet because the Australian market – which has roughly 1 million golfers who play eight or more rounds annually – can yield sufficient sales to justify the additional expenses of running such an operation.

“Looking specifically at Australia, it was simply time for a change,” says Acushnet chief executive Wally Uihlein, who initiated the transformation following a trip to the country this past summer. “But it also happens to be part of an overall strategy. Having your own subsidiary ensures that the people work for us and not someone else . . . (And) we can make sure that business in those markets is conducted in a way consistent with our business elsewhere in the world.”

It was not that long ago that Acushnet’s fortunes in Australia hinged in many ways on the company’s relationship with Norman. He had owned the distribution rights to Cobra Golf prior to its 1996 acquisition by Acushnet’s parent company, Fortune Brands. Four years later, Norman became an endorser for Titleist balls and clubs, and expanded his duties to market those goods as well as FootJoy products.

That relationship had deteriorated, and Acushnet ended it this past summer.

“The previous agent for Acushnet had a real turnover mentality,” says Bill Exten, head professional at the prestigious New South Wales Golf Club in Sydney. “They looked to build their numbers and appeared to concentrate support to the off-course chains. It seemed club professionals never had enough Pro V1s, for example, while the off-course stores had plenty. It got to the point that I had to buy balls from off-course outlets to keep my golfers supplied as opposed to getting them directly through the distributor.”

A spokesman for Norman’s Great White Shark Enterprises declined to comment about the discontinuation of the distributorship agreement in Australia.

Changes in the market landscape also prompted Acushnet officials to go the subsidiary route. “There was a recognition that some of our competitors in Australia, like Callaway and Spalding, were wholly owned and therefore had a competitive advantage, not only in being in better control of their brand positioning but also in not having some of their margins going to a third party,” says Nick Arnold, managing director of the new subsidiary.

Acushnet simply could have changed distributors, which generally buy product at a cost below wholesale and mark it up to cover overhead and earn profit. But it opted for starting a wholly owned subsidiary, a more complicated and more expensive task requiring a sales force, credit and customer service departments, and a warehouse crew.

Only a few months have passed since the new venture was launched, and it will be a while before financial returns can be measured. But Acushnet officials say they already have received positive

feedback from pro shops and select off-course retailers.

Says Richard Hatt, head professional at the Royal Melbourne Golf Club: “What Acushnet has done has already helped me, and it is helping the brand.”

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