Making Material Gains

    Chip Brewer left the helm of Adams Golf to take over at Callaway Golf two years ago. Speaking to Robin Barwick in Callaway’s tour truck at the BMW PGA Championship at Wentworth, Callaway Golf’s chief executive reflected on his first two years with the company. Pictures: Miles Bossom and Calloway

    What are the differences between working for a medium-sized brand like Adams Golf, and an industry giant such as Callaway?

    The main differences have been of scale and resources. Callaway is truly a significant, global brand, and relative to where I was previously, there are considerably greater resources and opportunities. For me it has been like going from the developmental tour to the majors.

    Screen Shot 2014-06-16 at 12.44.59The return of the Big Bertha was a significant move by Callaway last year, as a brand name that resonates with so many golfers. Do you have personal history with the Big Bertha?

    I remember playing the original Big Bertha in the early 1990s when I was in graduate school. Then I also played the Great Big Bertha, which was a hand-me-down from my dad. My dad won the US Senior Amateur Championship with it, and I played with it for a number of years. I also remember buying the Big Bertha irons. I had Callaway in my bag until the time that I got into the industry. Now I have those Big Bertha and Great Big Bertha drivers in my office at Callaway.

    If you played at any level in the 1990s, the odds were high that you would play a Big Bertha. The Big Bertha was so much better than any other club out there, to the extent that it created the modern golf industry. That is how brands get built.

    Are you confident that Autumn 2013 was the right time to bring the Big Bertha back?

    It is a heck of an opportunity to bring back Big Bertha, but you have got to do it right. If we had brought Big Bertha back by just putting the name on ‘another’ driver, it would have run flat. The Big Bertha name has come back intermittently since the original products that did so well, but no branding is bulletproof over time. If you get it wrong, the brand could be seen as dated, so we had to bring it back in a way that was technology-laden and cutting edge, with energy and a contemporary feel. We had some technology that the Callaway team had been developing with this adjustable perimeter weighting and the gravity core that nobody had ever done before.

    When I came to Callaway we already knew that we would bring Big Bertha back. We confirmed it with some research and the team talked about the idea at length but in fact we brought it back one year earlier that I originally expected. We chose 2014 because we had this technology, and because the brand had resonated a little faster than anticipated. We grew market share and turned momentum around for the brand in 2013.

    In the second half of 2013 in the UK and in Europe, X Hot was red hot. We saw significant market share growth in every market, and the brand quickly went from being a little bit stale and tired to having energy and momentum. That helped to set-up the return of Big Bertha. It is a significant card to play and you don’t want to play it at the wrong time and you need to make sure you have the right technologies.

    Why did the launch of Big Bertha follow so soon after the launch of X2 Hot?

    We have always gone with a premium range alongside a super premium range, with different technology packages and prince points, and in recent history these have been launched at similar times, often in January and February. So we followed a familiar playbook with X2 Hot and Big Bertha, but in retrospect I would say that was probably a mistake. I think we could use more time between launches.

    This is the first time anyone has asked me about having the launches near to each other, and it is interesting to consider creating more space between launches, and that is something we are discussing internally

    How satisfied are you with Callaway’s upturn in first quarter results this year?

    They have been stellar. Global revenues were up 22%; market shares were up 30% or more, which are close to all-time highs in all the major markets. We are showing all the signs of moving in the right direction.

    Can you see the trade as a whole picking up this year? 

    Absolutely, and there are many reasons why we can expect to have a stronger second half of the year. Weather is a factor, and certainly in the United Sates weather remained a negative factor through much of April. Bad weather conspires against us, but on the positive side, there is fantastic product out there and economies are moving in the right direction, in the UK, Europe and in the US. There are some good opportunities.

    Is it fair to suggest you have installed a new philosophy at Callaway?

    We have changed the direction Callaway was going, although in many ways what we are doing is returning to the roots that established the company in the first place. Fundamentally, what we have done is re-commit to being the world’s best golf equipment manufacturer, focusing first and foremost on clubs and balls. That is job number one every day. The company had got a little bit diverted from that principle, and had expanded into other brands and into other businesses, and the company was run by a guy who was not a keen golfer, and he viewed the company as a lifestyle opportunity. We are now going back to being more technical, and in my opinion, more of an authentic and contemporary golf company. That is not a new idea, but it is effective and it is a change in direction.

    Is this reflected in Callaway’s growing staff of tour professionals?

    You can see it in multiple ways. On tour we have increased our spend and presence considerably over the last two years. Numerous young players on the PGA Tour are now with our brand and we will continue to do this in Europe too. Our European team on tour has always done a great job, but we have added some fresh new blood, like Matteo Manassero and Henrik Stenson, and also now have Patrick Reed, Harris English, Chris Kirk, Gary Woodland, Ryo Ishikawa and Lydia Ko. These players represent major investments and we need to make sure that when they make their transitions to Callaway, they become better players, which is what I am really proud of.

    Just before we started this interview we were talking to Chubby Chandler here in the tour truck, because he has got players that he is comfortable converting to Callaway. The biggest risk with managing tour golfers is converting them to an equipment company, only to see their game disappear off the planet.

    We are making nice progress on tour and it is all part of a concerted plan at Callaway to improve. This has included changes Neil Howie and his team have made on the sales side of the business, in terms of making sure we are servicing big and small accounts alike, and changes we have made on the operations side to make sure our custom-fitting deliveries are world class and hopefully the best in the industry, which it was not here in Europe last year due to supply issues. It was not in the US either when I took over. It was pathetic, but has now changed a lot.

    Another critical factor must be Callaway’s R&D.

    We have re-energised our R&D team and we are using it in the way it was intended. You know, we spend $30 million a year on R&D and I am highly confident that we spend more on R&D than any other golf company in the world, but previously we were not using it effectively. We were half-committed. We were spending the money but we weren’t getting R&D to really push the limits, or holding them accountable for that, and when I took over we had some very open conversations about that. I am the biggest fan of Callaway R&D, but we need to have some pretty high expectations about what we are doing and at what pace, and on the aggressiveness of product performance. When I started at Callaway, the company was not even competitive in fairway woods in my opinion. We made some nice fairway woods but TaylorMade RocketBallz changed the game, setting a new standard for high COR fairway woods.

    At Callaway we finally acknowledged that and back in April 2012, our R&D said they would get onto it for 2014, but that was not acceptable. We needed to be competitive in fairway woods in January 2013 and our R&D had to go and figure out how to achieve that. They did it, and they also feel good about it, because that is why these people came to the company in the first place. They literally are rocket scientists, metallurgists and aerodynamicists and they came from companies like Boeing and defence contractors and from the auto industry, and they didn’t come to Callaway to save 50 cents per club with a certain manufacturing technique, or to make ‘me too’ product. They wanted to be challenged and now we have a new approach to R&D.

    I believe Callaway is now the technology leader in metal-woods and that has transitioned over the past two years. If you look at our Cup-face technology in hybrids and fairway woods, I believe we are second to none and you are seeing that now in market shares and in performance on tour. It does not mean that we are number one in every category just yet, but the trend and the technological performance is there now.

    Again in drivers, with adjustable perimeter weighting and gravity core I think we have the high ground in technology. Fitting is the way golfers are going to improve their driving performance the most, with hosel adjustability and CG locations, and we can do that better than anybody.

    What’s next for Callaway?

    We have a lot of cool stuff in the pipeline for 2015. We are aggressive right now and we are proud of the product we have in the field – we think it is the world’s best – but we are also going to be ‘obsceleting’ it over the next 12 months or so. We are going to bring out some equipment that I hope is going to be groundbreaking. Stay tuned on that; I have seen the early prototypes of some irons and other clubs that are awesome.

    TaylorMade believes other manufacturers will have to follow its lead with ‘low-forward’ technology. What is your take on that?

    ‘Low and forward’ technology is a way of getting lower spin, but the problem with it is that you lose MOI – you lose forgiveness. There have been low-spinning products from Callaway, TaylorMade and others in the past, but we think our Big Bertha Alpha driver is a far superior product. With that gravity core we have the ability to make a low-CG, low-Spin product that will out-perform anything we are aware of in the marketplace.

    They do a great job at TaylorMade, as they do at Titleist and Ping, but we are going to chart our own course and lead with our own technology. We are going to be able to do things with our technology that other companies will not be able to do, and the reason for that is that our driver chassis is lighter. With a lighter chassis we are able to position the CG where it needs to be while also maintaining MOI forgiveness. We are putting more adjustability into drivers.

    The market shares bear out that Callaway is more competitive than it was a few years ago. We keep score in this business.



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    Miles is the Owner and Managing Director of Robel Media, and the award winning GOLF RETAILING Magazine. With over 25 years in the media business, Miles has a wealth of experience in magazine publishing, digital media and live events. HANDICAP - 7.2