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State your business II: athletic industry executives talk about the present and the future.

The athletic business, particularly when it is reliant upon high school and college athletic directors and coaches, can be fickle. The economy, participation numbers, budget restraints, customer satisfaction, and personal preference all have a lot to do with the final buying decision. * And there is no one more conversant with the trends and vagaries of the business than the key executives of the sports-related companies. * That said we asked a new, select group of industry leaders to once again, "give us the business."

ENERGY BEVERAGES/FOODS

What's the state of the market?

The sports drink category is growing and, more importantly, the "active thirst" category, which consists of beverages active people reach for when they're hot and sweaty, is also growing. The growth is partially due to our continued education efforts about the need to be properly hydrated.

Gatorade is still the overwhelming sports drink leader (80% + double-digit expected growth for 2003) despite multiple entries in the category. More importantly, we only have a 10% share of the larger, "active thirst" market, so there is far more runway ahead of us than behind us.

Propel Fitness Water has also been a great addition to the Gatorade portfolio and has added to our share of the "active thirst" pie.

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What's the next great advance?

There are few brands out there that enjoy the level of trust that our constituents have for Gatorade. We take this very seriously, and intend to always do everything in our power to reinforce and continue to earn that trust. It's still all about the science of hydration. Through the Gatorade Sports Science Institute and university-partner research, we continue to add to our expertise in hydration and sports nutrition. Propel Fitness Water was a great addition to our beverage portfolio and we will continue to innovate with new products and packaging.

Where's the business going?

We will continue our commitment to sports science education for coaches, athletic trainers, nutritionists, doctors and everyone who works with athletes. There's a lot we know and it's our job to make sure that athlete influencers are armed with the performance and safety information to pass on to their athletes.

We will also continue "of the athlete" product offerings; new Gatorade flavors and packaging to continue to bring variety to the category plus exploring some new offering ideas beyond the Gatorade you know and love.

With childhood obesity/inactivity on the rise, we feel it's our responsibility to be on the forefront of making sports accessible for all kids and to offer solutions to fight the trend of obesity in this country.

Coming upon the 20th Anniversary of the Gatorade Player of the Year program that we started with Scholastic Coach in 1985, we are so proud of the thousands of athletes who have won these awards as they are truly role models as student-athletes.

Vanessa Wagar, Manager of Corporate Communications/Brand Affairs, PowerBar, Inc.

What's the state of the market?

Following PowerBar's 1986 introduction of the Original Performance Energy Bar[TM], sales of energy and nutrition bars amounted to approximately $160 million. According to industry research firm Information Resources Inc., in 2003 sales figures skyrocketed to approximately $600 million, making energy bars the fastest growing segment of the snack bar industry.

With more than 2,000 bar SKUs now on the market, the category has naturally segmented into "sub-categories" ranging from bars designed to fuel athletic performance to products for nutritious snacking.

Simply speaking, the category now breaks out into 3 divisions: Sports/Athletic Bars (Designed to enhance athletic performance through proper nutrition and energy. Examples include carbohydrate bars for pre-exercise fuel and protein bars for post-workout recovery); Nutritious Snacking Bars (Help consumers meet their daily nutritional needs. Examples include snack bars packed with vitamins/minerals and healthy ingredients such as fiber, soy and whole grains); and Weight Management Bars (Offer consumers a variety of snack and meal replacement options to help them achieve weight and diet goals).

What's the next great advance?

Time-pressured consumers are turning to the convenience of energy bars to keep them going more than ever before. As nutritional needs and lifestyle demands evolve, these consumers will come to demand more from the category. In response, energy bar companies, nutritionists and product development teams will work hard to bring innovative products to market to meet consumers' needs. Athletes, for example, will seek "smarter" energy foods--highly-fortified bars, gels, drinks, etc. that deliver energy, hydration and recovery--and companies will allocate resources to deliver on these demands.

Where's the business going?

As the energy bar business continues to grow, we expect to see increasing segmentation within the category. Companies will bring new products to market that are tailored to meet very specific athletic performance and nutritional needs, resulting in even more choice for consumers.

Bar companies also may look to move beyond the category and pursue growth opportunities, using their expertise to segue into new markets. PowerBar, for example, will venture into the sports drink category this year by introducing the new PowerBar Beverage System. This is in direct response to athlete demand for higher-performance, better tasting, powdered sports drink options.

In 2004, PowerBar will continue to draw from its heritage in nutrition and energy science to support consumers' evolving nutritional demands, and we anticipate another exciting and successful year for the category.

SCOREBOARDS

What's the state of the market?

Our market has seen many changes over the last few years. LED scoreboards are now commonplace. The bright displays, low energy consumption, and lighter weight have made them very popular. The improvements in wireless technology have advanced the ability to communicate with the scoreboard from any location within range and avoid some installation costs. However, some problems still exist with wireless technology in the scoreboard industry.

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What's the next great advance?

Our industry usually adapts technology from other industries to fit our needs, such as LED's. Often using improved versions of older technology. I would think that will be the case with the next wave of improvements in scoreboards also.

Where's the business going?

As mentioned, the scoreboard industry has just seen major changes in technology allowing product improvements. Continuing improvements in hardware and software that enhance the scoreboard and its features will play a significant role in our future. We are a technology driven industry where our lifeblood rarely changes. The game hasn't changed, but the way we report and inform has.

What's state of the market?

The scoreboard market remains an extremely competitive marketplace, especially with current economic conditions. Our customers face some tough buying decisions as funding for municipalities and educational institutions tightens. Product education, then, becomes even more important. We devote ourselves to global education on scoreboard features that best meet our customers' needs. Athletic directors, administrators and coaches must understand the full value of the equipment they're purchasing--beyond the initial price tag.

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For 70 years, Fair-Play has strived to provide the features customers expect and demand at a fair, competitive price, without compromising on the quality of our equipment.

What's the next great advance?

My crystal ball tells me that inexpensive messaging products will be the next great advance. Our fast-faced society now expects instant information, and the scoreboard market is no different. Our challenge is providing that information easily and in a variety of formats. We're already integrating scoreboard data with message displays and other external devices. Prices will go down as the industry continues to enhance these applications.

Fair-Play continues to provide more features such as our wireless scoreboard products. Soon we'll be able to control sports message centers--as well as scoreboards--via wireless operation. This will decrease the installation hassles and expense of control cables for our customers while still enabling the instantaneous display of messages, animations and graphics.

Where's the business going?

The scoreboard and message display business continues to be a customer service-driven industry. The investment a customer makes in equipment is a major budget factor and important to participants and spectators alike. For 70 years Fair-Play has built its reputation on providing quality products and dedicated service. Much of our business comes from satisfied customers and their referrals--and we believe the best way to maintain our leading position in the industry is by continuing to provide worry-free operation, maintenance and servicing for all our customers.

TEAM SPORTS

What's the state of the market?

The market continues to be burdened by high levels of competition and pricing pressure. Participation in team sports has not increased over the last five years and we've seen new entrants into many categories that historically were well defined in terms of manufacturers. That competition has spurred a new products revival that is offering consumers many different offerings and has reduced product lifecycles from a few years to a year or less.

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What's the next great advance?

Innovation is the only logical path to long-term success. Whether that means innovative new products, innovative warehousing solutions, or customization programs, innovation is the only way to clearly differentiate one's product and company position in the marketplace.

Where's the business going?

The business is going to continue being competitive with consolidation being the greatest single factor in the future, both on the vendor and retailer side of the business. Fewer manufacturers servicing fewer retailers strongly suggests that strategic alliances, innovative distribution models, and enhanced customer service will be differentiating factors to see who survives for the long run.

What's the state of the market?

The team sports market continues to be extremely vibrant and competitive. On the positive side, reputable sporting goods manufacturers such as Baden continue to develop higher quality and innovative products facilitating improved play by athletes of all ages and ability levels. Growth in the team sports category results particularly from the dynamic explosion of youth sports leagues and the continued expanded participation of girls and women in a wider variety of competitive sports.

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Kids have begun to specialize in a chosen sport that they will play through high school at an increasingly younger age, driving an increased focus on higher quality performance products such as authentic game balls in youth sizes and for use at earlier stages of development. More adults also join adult sports leagues. These trends will continue to fuel increased participation and associated growth in the team sports category.

Tightening school budgets represent the biggest potential threat to the team sports market. Reduced funding continues to force schools to scale back or even discontinue their sports programs. While more affluent families can afford to pay participation fees in the private sports leagues, many student athletes lack the means to "pay to play." Importantly, some of our most at-risk youth, who benefit from the positive life lessons that organized team sports provide, may be vulnerable to alternative gang-related activities and role models.

Recognizing the importance of the budget challenge, Baden Sports is developing programs to help schools and even youth leagues raise money to save their sports programs and ensure broader participation. Baden's unique position as a game ball manufacturer, with a wide variety of promotional and premium products that can be customized for a school or team, enables Baden to provide effective solutions for fundraising.

Moreover, as budget cuts result in teachers serving as coaches without any experience, Baden will continue to offer coaching clinics that benefit both new and seasoned coaches alike. The clinics feature renowned 800-win NCAA coaches, including Pat Summitt, Jody Conradt and Bob Knight, who enthusiastically endorse Baden and its products.

What's the next great advance?

On the product side, innovative manufacturers such as Baden will continue to investigate new materials and designs that improve the performance of their products. In 2003, Baden introduced the Lexum Elite basketball featuring Baden's patented CCT technology that raised the standard for the industry, receiving rave reviews for its feel, resistance to moisture and durability. Baden has some extremely exciting new product projects with revolutionary benefits, but it is premature to discuss them here. Stay tuned!

On the supply and distribution side, trends initiated by other industries will increasingly impact the team sports market. The most significant example involves distribution efficiency and pricing. Given the tight school budgets and limited youth and adult league sports budgets, coaches and athletes will seek the best quality product at the most competitive price.

Manufacturers and dealers will need to cooperate more than ever to ensure both high service and efficiency, delivering the most competitive price possible. Increasingly, schools and teams will likely follow a more rigorous purchasing process that objectively reviews the products and pricing to maximize the dollars they spend. While these trends will be more demanding on sporting goods suppliers, Baden looks forward to the challenge such scrutiny will provide. All we ask is: "Put us to the test!"

Where's the business going?

The trends outlined in the State of the Market question will continue to drive the direction of the team sports business. Participation in team sports should grow, fueled by youth and adult sports leagues and the continued participation of girls and women. As an early supporter of women's athletics, including serving as the official sponsor of the Women's Basketball Hall of Fame, and having developed the spec for the women's basketball, Baden welcomes increased participation levels, especially of female athletes.

The resistance of Baby Boomers to change their expectations due to age suggests that senior adult sports leagues should have a positive future. Passive recreational technology such as video games represents the greatest threat to increased participation levels in team sports, especially if compulsory PE classes in schools receive the budget axe.

Innovative applications of newly developed materials from the sporting goods industry, and even outside the industry, provide promise for even better performing products for team sports. As athletes continue to evolve, the products they use will keep pace maximizing their performance and satisfying both athlete and spectator alike.

Coaches, athletes and athletic directors will enjoy having more options than ever for sporting goods. While their budgets may be tighter, they will be able to optimize their budget dollars by scrutinizing their options. Sporting goods manufacturers and dealers that offer proven value (greatest product performance, most reliable and lasting quality, highest levels of service) will enjoy the most success. Celebrating 25 years in the athletic ball industry, Baden demonstrates "Passion for a Better Game" in conducting every aspect of our business.

This passion drives Baden to innovate the design and construction of our products, to provide the highest levels of customer service, to support sports education and instruction, and to support the local and world community. Our passion for a better game should enable Baden to succeed in whatever direction the Team Sports market evolves.

TEAM UNIFORMS

What's the state of the market?

Despite budget cuts that affect schools from coast to coast, teams continue to buy uniforms. Whether they find money from the booster club, or have to wait a year or two, the bottom line is, teams are looking for quality uniforms that last. By providing quality uniforms at fair prices, teams can make their uniforms last longer, thus making their money go farther.

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What's the next great advance?

Over the years, we've seen a combination of function and fashion in team uniforms, but function always comes first. You'll continue to see improvements in weight, body fit, wicking properties, and durability.

Where's the business going?

Again, with budget cuts, most schools need to be able to fill in with a few jerseys every year, rather than buying entire sets. For a lot of schools, that creates a need for a more traditional look to their uniforms. Although high schools would like to emulate the college or pro teams, they are better off buying uniforms that will still exist five years from now. For the high profile schools, this isn't an issue, but for most schools, it is.

What's the state of the market?

The team uniform business is becoming increasingly complicated. Retailers and dealers are consolidating, which is increasing their leverage. New vendors enter the market regularly in an attempt to carve out a unique niche. Schools are becoming more sophisticated in their purchasing, further squeezing margins. And the past two or three years of the struggling U.S. economy seems to have had an impact on school budgets in 2003. Thus, overall, I'd say the business is flat, with slightly declining margins.

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What's the next great advance?

From a product perspective, I believe you'll continue to see dramatic advancements in performance fabrics that provide clear benefits to the athlete. For example, our new Stretch Mesh football jersey is a lightweight, but extremely durable, four-way stretch fabric that fits tightly over the athlete, reducing the possibility that excess fabric will be a hindrance.

We're also incorporating moisture management fabrics into many of our uniforms and protective products. Our Dri-POWER fabrics help the uniform stay lighter, drier and more comfortable, all of which enhance the athlete's performance. Within the Bike brand, our Aeroskin technology is a patented, spiral-woven fabric lining used in our neoprene products (e.g., braces, sleeves) that channels moisture away from the athlete's skin to reduce slippage, weight buildup, skin irritation and odor.

Lastly, we continue to develop innovative braids, trims and graphic packages for our uniforms that appeal to those teams who desire a little more fashion.

Innovation often also occurs in service models. For example, we've had wonderful response to our "in-stock express" initiative (RAISE), where we deliver same-day shipments on all orders received by 2 p.m. Anything that can be done to simplify the ordering process for customers will often be a unique source of competitive advantage.

Where's the business going?

The big will get bigger. Whether that takes the form of consolidation of retailers and/or vendors, or simply increased sophistication of purchasing decisions throughout the demand chain, in my opinion, the ultimate winners will be those companies who consistently deliver on three key criteria: first, they must have an authentic, athletic brand that consumers want.

With barriers to entry being relatively low in this market, what differentiates one company from the next is having a brand that has a proven history of on-field excellence. Secondly, they must be extremely reliable. Their products must be durable, their service must be accurate and timely and their sales and customer service teams must deliver on their promises.

Lastly, they must deliver excellent value. This does not always mean low price. Instead, it implies that consumers and customers must feel good about the investment they are making in their purchases, whether through product quality or service enhancements. There are multiple companies in the market that meet two of these standards ... but relatively few who meet all three.
COPYRIGHT 2004 Scholastic, Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2004, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Title Annotation:The 4th Annual Facilities & Equipment Buyer's Guide
Author:Newell, Kevin
Publication:Coach and Athletic Director
Geographic Code:1USA
Date:Feb 1, 2004
Words:3117
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