Callaway, Dick’s Sporting Goods score with growth of golf
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Buckets of golf balls at the driving range at the 2021 TOUR Championship on September 03, 2021 at the East Lake Golf Club in Atlanta, Georgia.
Icon Sportswire | Getty Images
Golf surged in popularity in 2020 by nearly every metric, as people sought out the socially distanced outdoor activity amid the pandemic.
According to the National Golf Foundation, more than 24.8 millions Americans played golf in 2020. This is an increase of over 2% from the previous year and the biggest net gain in 17 years. The sport also saw the largest percentage increase in beginner golfers and youth golfers since 1997 — the year a then-21-year-old Tiger Woods won his first major championship at the Masters.
Now almost two years since the pandemic first hit the U.S., and even as other activities have opened back up, golf has continued to grow in 2021, providing long-standing golf brands like Callaway and Titleist a boost. This has encouraged companies to take advantage of the evolving demographics and trends in the game.
Golfers continue to flock to courses
For many in the golf industry, it was unclear if the growth seen in 2020 was a function of the pandemic or a new inflection point for the sport.
Through the end of July — the peak of golf season in the U.S. — the number of rounds played in 2021 was up 16.1% compared to 2020, according to data from the NGF. The July figures are down by 3.1% when compared with 2020. However, 2021’s numbers were significantly more than the previous year.
While those increases are being mainly driven by older, already passionate golfers — the average number of rounds played by golfers grew to 20.2 in 2020, an all-time high since NGF started tracking that statistic in 1998 — younger golfers, and especially female players, saw significant upticks.
David Maher CEO, Acushnet Holdings golf conglomerate, stated, “New participants in the game are becoming more youthful; they’re addicted to the game and want to improve,” during Acushnet Holdings’ second-quarter earnings conference with analysts. “A lot of the energy is coming from avid dedicated players who are simply playing more and consistently; more juniors, more women, more younger [players], and more families.”
NGF data shows that the number of female golfers increased by 8% between 2015 and 2020. It was the biggest increase in five-years. According to NGF data, 44% of those who played a round on a golf course in 2020 were younger than 40. Nearly the same number of people playing golf in their 30s as in their 60s was also playing, with 40% of them being under 40.
Golf equipment companies seeing growth in sales
That increase in new golfers has been a boon for Acushnet, which owns golf brands like Titleist and FootJoy.
Acushnet saw a 2Q2 increase of 117.1% in net U.S. sales, thanks to a 98.1% rise in Titleist’s golf balls sales and an 111% jump in Titleist’s golf clubs sales. Sales in the U.S. increased by 75.2% during the first half 2021 fiscal.
Callaway has seen growth in its apparel and golf brands, including the eponymous brand of clubs and balls.
The company’s financial outlook was raised earlier this month for both its third quarter and the entire of 2021. It cited Callaway’s brands overperformance as well mitigation of supply chain disruptions.
“More people are joining golf courses, [there are] more entrants into the game, more consumers and we think the long-term trends are going to be quite attractive,” Callaway CEO Chip Brewer said on CNBC in June. “The pandemic will make the market larger than when it entered.”
Dick’s Sporting GoodsAdditionally to selling golf products in stores, the company also sells Golf Galaxy golf-specialty retailers. In recent quarters, it has cited golf as one its key growth drivers.
On August 25, Dick’s Sporting Goods’ CFO Lee Belitsky stated that the company has seen consistent growth in its golf business. We are very proud of the golf business.
The company doesn’t break down the results of Golf Galaxy stores’ sales in its earnings reports, but Lauren Hobart, the CEO said that “the golf business has been phenomenal at Dick’s as well as Golf Galaxy.”
Hobart explained that the company had “invested into talent and elevated its in-store service model so they can become trusted advisers to golf enthusiasts at all levels.” Recently, it opened its first prototype Golf Galaxy store in Boston. The Golf Galaxy Performance Center is where golfers can shop for products and also take lessons. They can also practice hitting in the bays and get custom fittings.
South Korean private equity group Centroid Investment Partners purchased TaylorMade Golf, making it the largest purchase in golf’s goods sector. TaylorMade, which produces clubs, balls, and apparel, was sold to KPS Capital Partners by Adidas in 2017 for $425 million.
Jinhyeok Jeong (founder and CEO of Centroid Investment Partners) stated in a press release that the industry was experiencing “high demand”, increased participation, and strong long-term possibilities around the globe. South Korea, after the U.S.A and Japan is the third largest market for golf worldwide.
Overall, golf equipment sales have slowed in recent months, according to NPD data — sales across June, July and August 2021 are down 2% compared to 2020 after the first half of 2021 doubled what was seen in 2020. The June, July, and August 2021 numbers for sales are still up half a percent compared with the same months in 2019.
Matt Powell, a senior industry advisor at NPD Group, stated that more people will embrace healthier lifestyles after the pandemic. This should include a rise in outdoor and sports activities which could benefit golf.
It is not clear how other industries’ supply chains will affect golf equipment. This could hinder growth.
Both Acushnet executives and Callaway officials cited Vietnam’s ongoing supply chain problems as potential roadblocks. Callaway and Acushnet declined to comment.
Powell explained that while inventory is a problem, businesses have plateaued when looking at the majority of the categories we track. “But, [golf sales] are resetting at a new higher level and while we’re not getting massive growth, it’s a much bigger business than it was two years ago.”
Golf expanding beyond the course
The rise of interactive golf experiences that go beyond the typical 18-hole course has also helped golf grow, especially to new audiences.
One of the major drivers has been TopGolf’s growing popularity. The company now operates 70 golf courses in six countries, having launched in China this month. TopGolf offers a different experience than traditional golf. TopGolf’s goal is to provide a fun and social experience, as well as food and drinks.
Callaway owned 14% of TopGolf and paid $2.66 billion for the remainder.
TopGolf stated that its 2019 revenue was $1.1 billion and had experienced a 30% increase in sales since 2017. Callaway stated that TopGolf had $325 million of revenue for the second quarter and its same-venue sales in the 90th percentile compared with 2019.
The popularity of virtual golf trainers has increased, which are both entertainment and professional-level.
Full Swing is a producer of golf simulators that can be used for entertainment, commercial and residential purposes. Bruin Capital purchased it for $160 million. The simulators are also available for use in other sports, but the golf function is only used by pros on the PGA Tour like Jon Rahm and Woods. Rahm is currently ranked No. The Ryder Cup European Team’s star player is Woods, who currently ranks No. 2 in the world.
David Abrutyn (Bruin Capital partner) said that there were misinterpretations of how the off-course gamification would impact the game and player participation in the beginning. It’s proven that the off-course gamification of golf is an entry point to the game. The more people who are able to play the sport or experience it at an entertainment venue, it will have a greater impact on the sport’s ability to increase participation.
A total of 24.8 million golfers played on courses in 2020. Another 12.1 millions participated in an “off course golf activity,” which included driving ranges, TopGolf venues, and indoor simulators such as the one Full Swing makes.
Abrutyn stated that the increasing mix of traditional golf and technology is an indicator of how the sport will evolve.
This year, golf’s most important events had greater viewership. The final round of The Masters attracted an average 9.45 million viewers per hour on CBS in April. This is 69% more than 2020. Average viewers tuned in to the PGA Championship on May 31st were 6.58 millions, a 29% rise year-over–year. In June, the U.S. Open final round averaged 5.7million viewers on NBC. This is 76% more than 2020.
This sport also has new coverage. Netflix is partnering with the PGA Tour to develop an episodic documentary series. This series will most likely take inspiration from “Drive to Survive”, the series which focuses on Formula 1 and has attracted many new fans to the sport. Stephen Curry, a passionate player in the NBA and a professional golfer, recently signed a contract with Comcast NBCUniversal for a variety of projects. One of these will be creating content about the Ryder Cup on NBC Sports’ Golf Channel.
According to Curry, “Many people have taken up golf, realizing that it’s not so difficult as they thought.” He added that this is creating a whole new generation of golf lovers, including younger ones, who will become more engaged with the sport. It’s a thrilling time for all those involved in the golf industry.
Disclosure: The Ryder Cup’s broadcast partner is NBCUniversal, the parent company of CNBC.
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