Adidas's ( ADDYY) TaylorMade Golf division has managed to grow this year as the rest of the golf-equipment industry struggles. In March, TaylorMade controlled 19% of the irons market, up 30% from a year earlier, according to market-research firm Golf Datatech. It held 31% of the metal woods market, a 25% increase. TaylorMade also produced the three best-selling drivers that month. TheStreet.com spoke to TaylorMade Chief Executive Officer Mark King by phone from the company's Carlsbad, California, headquarters. Is this a TaylorMade story or is there optimism for the golf-equipment industry more generally? King: We've been on a 10-year run. When you bring out new and exciting products that work better, you sell them. When the new products don't work better, you don't sell them. The optimism is only in new technology. Is it a market-share game going forward? King: I don't see much spending growth in the foreseeable future, the next one to three years. I don't think there's going to be any significant decreases, either. The category right now is down about 17% this year. But it's not down 17% in units, it's down in dollars. We've enjoyed the first five and a half months of the year, moving a lot of high-margin new product and gaining market share with promotional activity at lower price points. I think that's going to be the future. The middle is going to go away. Any brand that's positioned in the middle is going to struggle. Is there room for new players? King: I don't think so. One of the disappointing aspects of the industry today is that it's going to be dominated by the top three or four players, for the obvious reasons: They have more resources, more technologies, bigger distribution and more marketing clout. And new technologies are harder to find as the USGA has put more limitations on equipment.
Where do you see growth coming from TaylorMade? Will it be internally, or via acquisitions such as your October purchase of the Ashworth apparel company? King: The Adidas group isn't looking for more golf acquisitions. We're focused on the brands we have. We believe we can grow in the next three to five years if we do things right, especially in balls, in putters, and we know we have a big upside in apparel with the Ashworth brand. If we use the momentum and distribution we have around the world, we can continue to drive our business forward. Was the Ashworth purchase strategic or just opportunistic? King: We were looking at Ashworth for several years. The price made it easier to acquire when it got so attractive, but the Adidas apparel brand is very performance-oriented, and we thought the Ashworth brand was more about the style of golf. We thought the two went together really nicely. Was there one big idea that turned TaylorMade's fortunes around? King: The first thing was that we had gotten away from being what we call an authentic golf company. Founder Gary Adams had talked about building a company by golfers, for golfers. We went back out and recruited golf people to run our company. We had smart business people from different consumer-product categories, but they weren't really connected to the soul of the game. The second thing was to connect to the people that drive the business: the PGA Tour pro, the club professional, the top amateurs. The dedicated golf loyalists. We needed to make equipment that they wanted to play. All of our R&D is geared to making performance products for the world's best players. And the last thing, the biggest driver of our business, was that we said we needed a new, hot product every 12 months. We changed the product lifecycle from two to three years to 12 months. That's challenging, but that's what I believe has led our market-share charge in nearly every category this past decade.