Cleveland's success from adversity
It's hard to understand how Cleveland traded so well in recent years. Prior to the SRI purchase, Cleveland was bought by Rossignol and then Quicksilver, neither of which are specialist golf companies and neither invested in the brand. Despite this Cleveland grew to a very high level, with a worldwide turnover of over $100 million.
Cleveland did a very good job with limited funds and with the difficulty of being managed by owners who did not understand the golf business. In the UK for example, Cleveland had no stock, no effective head office - just serviced offices - no warehouse facility, no credit control and no customer service of any note, with the entire UK infrastructure based in France. Despite these inadequacies, Cleveland has grown its business in the UK by 30% over the past couple of years due to two factors: first, very topical, strong products, good technical stories and excellent cosmetics; second, passionate and devoted staff who worked through the brand's clear areas of weakness.
Cleveland is the number one wedge brand in the United States, and number five for equipment overall.
Success in two parts for Srixon
Srixon Sports Europe (SSE) had been a sleeping giant until it had its most successful year ever in 2007. It took four years to reach the point when consumers realised we make very good products, and we had our highest ever ball market share last year, almost breaking the 20% barrier. Whereas five years ago Titleist had about 45% of the market and we had about 1%, so far this year we have moved forward at such pace that at one point we had moved within 10% of Titleist's market share and we are not done yet! In 2007 our two-piece business grew enormously, and the AD333 became the best-selling two-piece golf ball in the UK.
In the UK, Srixon is simply the fastest growing golf brand.
The billion-dollar target
Globally, Srixon is the fourth largest golf company in the world, with a number of elements to it, such as Dunlop in Japan, which has a billion dollar turnover (this is separate to Dunlop in the UK, for which Mike Ashley holds the license).
Srixon wants to get to the number three spot. The company doesn't have any debts, it has exceptional technological and design capabilities and the infrastructure capable of moving multiple brands forward.
When you take a 400-strong, California-based company - and they have a dozen people working just on cosmetics at Cleveland - and you link that with Srixon's digital technology in Japan and strong patents, we are going to see improvement across both brands in performance, shelf appeal and technical specifications, and we are really going to upset some of the major competitors.
Also, by purchasing Cleveland we will increase Srixon's American sales very rapidly. The American Srixon subsidiary is reasonably successful but doesn't have anything like the ball share we have in Europe, and because they will amalgamate the Srixon and Cleveland sales forces into one head office, Srixon will immediately find better market share and distribution in the States. Srixon is looking to triple its American ball share over the next three years. The strength of Cleveland in France will give Srixon a similar boost in that market too.
In Europe alone we are going to spend in excess of £1 million on the process of integrating the brands. Cleveland's headquarters will now be next door to Srixon's, and we are fully integrating and increasing our customer service and credit control teams, and we are going to establish the best sales team in the golf business.
Between now and 2011
The master plan is to reach a billion-dollar turnover by 2011 worldwide. We want to double our business at the very least over the next three to four years. To grow a business to such a degree you need to have a huge level of investment and you need people to support that. For that reason we have not made any redundancies.
For example, Cleveland's French management team and branch office will remain in the Riviera, but its systems will be upgraded to operate alongside the UK's new infrastructure advances. This boost to the French office will ensure our continental business has the facilities and support to grow in our direct and distributor-based business models.
Retailers want high quality products with technical stories and they want to make a good margin. We are going to make sure we do that for both brands. We have already had a Cleveland sales meeting and those guys left the building super-charged because the changes taking place are exactly what they have been screaming for. We are going to give them all the ammunition they need to make the right impact.
What is happening at Srixon and Cleveland is the biggest opportunity in the golf business since Callaway grew rapidly in the early 1990s. We are probably the only brands right now investing in infrastructure and marketing: we are going to improve point of sale, we are looking to sign a marquee player for one or both brands and the Tour van is already dual branded. These are all factors that help retailers sell products and give the consumer a good feeling about the brands, but most importantly, retailers are also going to see a huge improvement in service.
At Golf Europe we will have a joint stand for both brands. Srixon's Soft Feel and WR range will be launched, and Cleveland will have a lot of new 2009 products. For the first time there will be products from both brands on display together.
In 2009 Srixon will take a very aggressive, gloves-off crack at the three-piece market.
Srixon to open Centre of Excellence
On January 1 2009 in the UK, Srixon Sports Europe will open its first Centre of Excellence. The fully equipped custom-fit and demonstration centre for the Srixon and Cleveland brands will be at a location yet to be revealed.
"We are very good at Srixon at explaining to golfers that they might be playing with the wrong ball," says Leslie Hepsworth, "and this Centre of Excellence will ensure golfers are playing with the right ball for their clubhead speed and handicap. It will give pros, retailers and their customers the opportunity to be fitted for anything within both brands."
The fully staffed facility will have a driving range, Trackman system, putting green and practice bunker.
