2004: Business - ‘Foreign aid’ fuels MacGregor comeback

As divisional merchandise manager for hardgoods at the Golf Galaxy retail chain, John Clouse carries what is sometimes referred to as a “big pencil” – that is, he can make manufacturers smile or frown, depending on whether he decides to write an order.

So it was a bit of a coup recently when MacGregor Golf was able to lure Clouse and two other Golf Galaxy executives from their offices near Minneapolis to the manufacturer’s factory in Albany, Ga., to discuss and test 2005 products.

Clouse acknowledges that he “went down there skeptical” about MacGregor’s plans, but returned to Minneapolis feeling “really impressed” with what he had seen, particularly the MacTec driver and Quadra-Action shaft, which will begin reaching stores by the holidays.

“You could really feel the shaft working,” Clouse says. “It just felt like it had a lot more kick to it. When you took the club back and loaded it up, you could just tell it had a lot of punch to it.” He adds that the $399 price tag might scare off some consumers, but “if people try it, they’ll like it.”

Hoping to elicit such reaction from consumers, MacGregor, a year ago, acquired its joint-venture partner, MacGregor Japan. The MacTec driver and Quadra-Action shaft are among the first products developed by the Japanese division to make their way into the U.S. market.

The closer ties with Japan provided not just a product infusion, but also bolstered MacGregor’s balance sheet. Both will be essential in the company’s continuing effortsto recapture its glory days.

Once one of the most heavily played clubs on the PGA Tour, MacGregor had become a mass-market brand by the time Barry Schneider acquired it in 1998. His rebuilding efforts have been mixed.

MacGregor has rebuilt its distribution, and now can be found in 3,500 domestic golf stores, including 2,600 green-grass shops. The company’s market share in irons and putters has improved this year, but still remains around 1 percent, according to Golf Datatech LLC, which tracks retail sales. Metalwood sales remain under 1 percent.

Schneider, MacGregor’s chief executive, said that the company will finish the year with $85 million in revenues – about half from the U.S. market – and will be “solidly profitable” for the first time in years.

He says that $100 million in annual revenues “is still the critical mass you need” for research and development and marketing, and plainly is optimistic the company can continue to grow with the addition of MacGregor Japan and the Bobby Grace putter line, also acquired a year ago.

Kerry Kabase, sales director for Edwin Watts Golf Shops, says MacGregor has been mired in a “long, hard battle,” but describes the MacTec driver as “by far the best MacGregor wood I’ve ever played with.” He predicted that “the shaft could be one of the biggest stories in golf next year.”

Jim Bode, MacGregor’s vice president of research, says “the shaft actually has a little bit of lag built into the butt end,” which is softer than the rest of the shaft. On robotic testing, Bode adds, the shaft actually moves 3-4 mph faster than the setting.

Among the products that have opened retail doors for MacGregor are Grace’s distinctive MOI (or moment of inertia) putters, which have received heavy tour usage, and recently have been featured in network advertising. Mike Storts, co-owner of the B&G Golf chain in Wisconsin, says “the putters sold through (to consumers) quite well,” adding that “we’re certainly going to go forward with the putter line.”

Over the past year, Grace’s once-utilitarian designs have been MacGregorized – incorporating aesthetic touches that enhance the putters’ shelf appeal.

“I knew what quality was, I knew what innovation was,” Grace says. “Strikingly beautiful? I needed some help with that.”

After Grace presented the 2005 putter line to Clouse, the retailer came away a believer. “That’s going to do well,” Clouse says.

MacGregor is hopeful the same can be said of two new irons it is about to introduce. The V-Foil M455T irons are a slimmed-down version of the company’s M455 irons, thanks to the addition of heavier tungsten weights.

“We modified them to be aesthetically more pleasing to some players’ eyes, but still have the features and benefits of that (M455) club,” says Dave Wood, MacGregor’s senior vice president of product innovation.

Meanwhile, the elegant M675 forged blades, with their satin nickel chrome finish and stylish cloisonné, are billed as more than just eye candy for better players. Wood predicts they will become the irons of choice for MacGregor’s Tour players, but have the playability features that make them accessible for single-digit golfers.

Consumers’ reaction to the 2005 line remains to be seen, but MacGregor has gotten some retailers’ attention.

“Their products are so much better than they were before,” says Kabase. “As long as they keep coming out with good products, we’re going to continue to grow with them.”

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