“This year is our second year. In our first year of marketing we did $38 million in sales. To me, that was incredible. This year, there is a good chance that we will crack $100 million and be profitable. I never expected this thing to ever be profitable.”
– Bob Parsons, PXG
Bob Parsons, dressed as always in black from head to toe, pulled the wrought-iron handle and closed the sliding wooden door to the conference room in Scottsdale National Golf Club. The billionaire owner of the club, and of Parsons Xtreme Golf, sat at the head of the 20-foot boardroom table. It was early March, and a small group of writers and PXG employees were outside waiting for dinner.
The company had just revealed its next generation of drivers, fairway woods and hybrids, and when those clubs became available a month later, as promised, they were among the most expensive clubs in their respective categories.
In the years since the economic downturn of 2008, golf equipment companies looking to introduce a new driver not only needed to nail the performance, they had to be spot on with price, too. A few drivers sold for around $350-$400, but $299 was the magic number. Companies worked hard to pack exciting features into clubs while hitting that price point, but many golfers rode out product cycles waiting for ensuing discounts.
In 2015, numerous industry insiders and golf lovers thought Parsons, the founder of GoDaddy.com, was crazy for starting a golf equipment company that unapologetically promised to make expensive gear. Their prediction: Parsons will lose tens of millions of dollars on PXG, pull the plug on it after a few years and leave the industry.
That’s not happening, and PXG and several other brands are diving deeper into the small but growing ultra-premium market.
“The top end of the golf market, I believe, is huge and there is no way that I’ll service all of it,” Parsons said. “No matter what I try to do, there is no way I’ll reach all of it.”
He’s right, and today PXG has company in the ultra-premium market.
• In April 2016, Titleist released 1,500 C16 drivers at $1,000 apiece and 1,500 C16 iron sets at $2,700 each. They sold out, and the irons were re-released in early 2017 at the same price.
• In a press release, Callaway said that it asked its head of research and development to create an iron that delivers maximum performance without any limits to the cost or engineering. The result is the Epic and Epic Pro irons, with each model costing $2,000 for an eight-club set.
• TaylorMade has an area on its website called The Vault where, while supplies last, it sells limited-edition products and Tour-issue clubs like the Arc1 putter used by Justin Rose (which was never made available at retail).
• Xxio (pronounced zex-ey-oh), a sister brand of Cleveland/Srixon, is positioned as the ultra-premium brand within the organization. The Japanese company’s new Prime driver sells for $849.99. Company insiders say demand is high.
“If you go to any country club around the country and looked in the parking lot, it is full of Lexus’s, BMW’s and cars like that,” said Justin Rae, vice president of research and development for Cleveland/Srixon/Xxio. “Those people are willing to pay whatever it takes to get the best. For years we’ve been catering to the guy at the public golf course driving a Toyota or a Mazda or something like that who is more price conscious. For us, with Xxio, we are catering more to the country club guy and hitting him with stuff that he’s never seen before.”
That is one of the key points to understanding the surge in ultra-premium products: consumers in this category do not want something that looks and feels like things their playing partners already have. They want things that are scarce, loaded with the latest technologies or advanced features and that are cool to see. They also want customization options and the highest levels of service. Words like “no” or “sorry, we can’t do that” are almost never part of the buying process.To understand what makes these golfers tick, consider the first player to go through the new $2,000, three-hour JP Harrington wedge experience at the Titleist Performance Institute in Oceanside, Calif. After flying into town for the fitting, the early-50s man arrived with a limited-edition Scotty Cameron golf bag that had matching driver and fairway wood headcovers.
His irons were PXG 0311Ts, in the more-expensive Extreme Dark finish, and he had black-finished Vokey Design SM6 wedges. Under that driver head cover was a Cobra King LTD driver, trimmed in orange. “I have the black version too, but I left it at home,” he said.
After getting fit for his customized wedges, which feature CNC-milled soles, brushed titanium backs and polished tungsten weights, he had only one question. “When can I get them in black?”
Think about that. Here was the first golfer to go through a $2,000 wedge fitting with Titleist’s new wedge guru, and he asked whether it was going to be weeks or months before he could get a non-standard finish.
Nick Sherburne, a co-founder and master builder with Club Champion, a premium custom fitting company based in Chicago, has seen players like this before.
“To me, this is not about a market that was missing,” he said. “It’s about a market that has been underserved.”
In some ways the growth of the ultra-premium equipment market mirrors what has taken place in the automobile industry and other business sectors.
For example, Mercedes-Benz has made great cars for decades, but for people who want and can afford more, the company has nurtured Mercedes AMG, a more exclusive sub-brand that specializes in motorsport-inspired cars for enthusiasts who want bonus power and performance.
“People buy jewelry from Cartier or Van Cleef & Arpels, and they pay a hell of a price for it, but the workmanship is incredible,” Parsons said. “That’s what we do. If other companies do the same thing, it will only help us all.”
In the world of social media, where anonymity often breeds snark and bravado, the reactions to ultra-premium equipment tend to fall into two camps. Some people lust for the new gear while others decry that selling new technologies at such high prices shows brands are out of touch with “regular golfers” and bad for the game.
That’s the point. PXG, Xxio, Muira, Honma, Bettinardi and other ultra-premium brands are not trying to make equipment for regular golfers, just as Louis Vuitton and Hermès are not making handbags for every woman.
There is plenty of room in the golf world for ultra-premium clubmakers, and maybe those of us who are not in market for it are just starting to realize it.
(Note: This article appeared in the June 2017 issue of Golfweek.)