
DATE: Monday, October 6, 1997               TAG: 9710060163

SECTION: SPORTS                  PAGE: C1   EDITION: FINAL 

SERIES: THE BOOMING BUSINESS OF GOLF

        THE EQUIPMENT INDUSTRY
SOURCE: BY RICH RADFORD, STAFF WRITER 

                                            LENGTH:  124 lines

HOW FAR, AND BIG, CAN CALLAWAY GO? BIG BERTHA MAKER IS ATOP THE GOLF INDUSTRY AND STILL GROWING.

When Big Bertha hit the equipment market in 1991, there were undeniable snickers.

Golf's metal-wood industry was still young and already a manufacturer was stretching the envelope, much like Prince did to the tennis racket industry 20 years ago.

This newcomer, though, marched past the jesters on its way to the industry's throne.

Callaway Golf, maker of the Big Bertha driver, has ridden the ``bigger is better'' theory to the top of the equipment industry. Bertha's gotten so big - Have you seen the Biggest Big Bertha yet? - that there's no telling where she'll stop; Callaway is on the verge of becoming the first clubmaker to net $1 billion in sales for a single year.

Last year, Callaway made more than $650 million in club sales to remain the champion. All indications are that the numbers will continue to climb; Callaway reported a 20 percent increase in sales for the second quarter of 1997 in relation to 1996.

So what is it about Big Bertha that's so appealing? Has Callaway hit a home run in the marketing of this club? These, remember, are the guys who put a Big Bertha driver in the hands of rock and roller Alice Cooper and asked him to make a sales pitch. Or is something else driving these enormous sales?

``You can't fool the public,'' said founder Ely Callaway. ``If they are going to buy your product, it has to be better. It has to be right. It has to be truly more satisfying than the existing product.''

``We make a great product, and if you are looking for a reason for our success, you could stop right there,'' said Larry Dorman, Callaway vice president of advertising, press and public relations.

Maybe. But according to Steve Pike, business editor of Golf World Magazine and a trade publication called Golf Shop Operations, it's hard to buy a bad club in today's market.

Thus, the clubs that sell are the ones that market themselves the best.

``The big boys on the equipment market are backed by companies with deep pockets,'' Pike said. ``Take Callaway Golf. They had a good product in Big Bertha drivers. Then they raised an enormous amount of money by going public. Titleist is another company with deep pockets.

``They make money because they put their name out there for everyone to see.''

While there are more than 200 clubmakers worldwide, market studies show only six are true money makers: Callaway, Taylor Made, Cobra, Titleist, Top-Flite and Karsten Ping.

That leaves companies like Mizuno, Tommy Armour, Lynx, Ram, McGregor, PowerBilt, Hogan and Wilson filling golf's middle class, struggling to break even.

Callaway last year made almost double its nearest competitor, Taylor Made, which cleared about $350 million. The other members of the Big Six ranged between $300 million and $100 million.

How big is Callaway? A true measure of hitting the big time came about six weeks ago when U.S. Marshals raided a Phoenix sporting goods retailer and seized more than 100 counterfeit Big Bertha War Bird metal woods.

While Callaway's diverse marketing strategies may turn off the green-grass set that holds its business lunches at the club, it's kept Callaway on the cutting edge. And it's hard to shake the image of Smokey Robinson altering the words to his hit song ``My Girl'' when he croons about his Big Bertha driver.

Now there is talk of Callaway nabbing Jack Nicklaus, who has been seen recently with a Big Bertha 3-wood in his bag, as a consultant. Two months ago, Nicklaus traveled to Callaway's plant in Carlsbad, Calif. Nicklaus has his own equipment company in partnership with Nelson Doubleday, but the 5-year-old venture might be nearing the end of its existence. Rumors of a Callaway-Nicklaus merger recently fueled a one-week, 40 percent jump in price of Jack Nicklaus stock on NASDAQ.

Meanwhile, Callaway threw John Daly a sponsorship life preserver by recently signing the maligned touring pro, who had been dropped by Wilson after his recent travails with alcohol and the breakup of another marriage.

It looks like a good move; the average fan still loves Daly. And even though he threw his Callaway driver over a fence during the PGA Championship, it wasn't a marketing disaster, since he's done worse. Besides, Daly led the first round of the PGA Championship and that flat-top Hogan-style hat with ``Callaway'' across the top was seen by all.

Across the ocean, Callaway already has European stars Colin Montgomerie and Jesper Parnevik in stable.

Through this year's first eight months, sports-marketing surveys show that 52 percent of the players on the PGA Tour were using one version or another of the Callaway driver. That figure goes up to 64 percent on the Senior Tour, 73 percent on the LPGA Tour and 78 percent on the Nike Tour, which shows that the young players coming up are swinging Big Berthas.

Callaway also seems to be getting stronger in its club development, purchasing Odyssey, the hottest line of putters in golf today, and hiring renowned designer Roger Cleveland to lend expertise to the Callaway wedge and iron division.

At the other end of the Big Six rests Ping, once the champion of clubmaking and still the champion of iron-play on the PGA Tour. Ping is an oddity in that it's the only big hitter that is privately held. Market earnings aren't reported, they're guessed.

``We are comfortable not having to make quarterly profit margins,'' said Karsten Ping vice president Doug Hawken. ``We are not driven by market shares and who's in fashion, and we aren't going to change our core beliefs.''

Ping, though, has seen the light that shines on Callaway and has altered some of its strategy, hiring an outside advertising firm, Richmond-based Martin Agency, two years ago.

``We still understand that we have a good product and loyal following,'' Hawken said. ``But we felt it was time to bring someone from the outside to tell the story of what we're about.'' ILLUSTRATION: [Color Photo]

Mark Mitchell

The Virginian-Pilot

With its Big Bertha clubs, Callaway is nearing $1 billion in annual

sales.

AT A GLANCE

What; The Michelob Championship at Kingsmill

Purse: $1,550,000 (winner's share: $279,000)

The event: 72-hole tournament, Thursday through Sunday

Field: Maximum of 156 players

For more info: 757-253-3985

About the field: 26 players in the top 50 on the PGA Tour's money

list are scheduled to play at Kingsmill, including No. 2 money