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Home Drivers Wanted!

As stated earlier this week, Callaway Golf’s turn around is still a work in progress. However, it quite likely is tied to a couple of specific product categories. Its putter business enjoyed a very strong start in the first quarter. Where the company really needs to make a difference is the metal woods category, which is where it made its considerable reputation in the good, old days of the brand.

A sluggish economy and heightened competition, especially from its friends at TaylorMade has made the category challenging to state it nicely. The driver category in particular has been very difficult lately for all companies unless you’re TaylorMade. According to Golf Datatech, a U.S.-based organization that charts golf industry sales, TaylorMade’s metalwood market share, measured in terms of dollars spent at on and off course locations for the month of December 2011 was 42.36%, fueled then by the fully adjustable, white R11. According to TaylorMade, citing Golf Datatech research, the R11 was the #1 selling driver in 2011 based off on unit and dollar market share in the combined On and Off Course channels. The momentum spilled into last year as TaylorMade reported it would sell over one million white metalwoods by end of the first quarter. It said that it accomplished the feat in the second quarter in 2011. As revealed in the May 6th edition of the Web Street Golf Report, TaylorMade’s sales appear to be slowing down, according to its corporate parent. Backing out the aid of foreign exchange rates and the addition of Adams Golf (acquired in 2012), TMaG’s sales grew by 5% versus the 13% it reported in the first quarter of 2013. It may mean an opening for other equipment companies or it may not. Time, as they saw, will tell.

Nevertheless, history isn’t any guarantee of future performance, as Wall Street is fond of saying. Callaway Golf saw its first quarter metal woods sales increase by 10%. The double-digit growth rate may not exactly take many by notice, however the sales increase came in at $8.8 million. In 2012, metal wood sales were down 5% in total from 2011, which represented a drop of $10.6 million in sales. The first quarter alone nearly made up for the previous year’s shortfall, even with a slow start thanks to Mother Nature. “Domestically, year-to-date our market results have not been where we want them to be but they are better than they have been in the last 5 years,” stated Jason Finley, Director of Marketing for Woods & Irons at Callaway Golf. “Our fairway metals are up significantly, year over year.” he added. “The metal woods business is healthy for us fueled by the full X Hot line and RAZR Fit Xtreme. The fairway metals are a different product with a good story and good results. We are focusing on this year dedicating a certain amount of marketing dollars behind it. We haven’t spent significant dollars in fairways in a long time,” he noted.

According to Finley, the fairway metals have incorporated some technology from the driver segment to build off an old catch phrase the company popularized, “Demonstrably Superior and Pleasingly Different.” Finley said Callaway’s Tour staff has made some unusual requests when it comes to fairway metals. “Several players have wanted less loft since the have been hitting it too far,” said Finley.

Recently the company covertly introduced its 3Deep model at retail. The person that has been singing its praises the most is none other than Phil Mickelson. Back at the Shell Houston Open, he started with a driver and abandoned it for a 3-metal. “ Yesterday (first round) I carried a driver, and then today (second) I carried a second 3-wood (Callaway X Hot 3Deep) that's more like a driver. As windy as it is, the idea was a little less loft to keep it lower and get it running on the fairways,” he revealed after 36 holes. “I have a 3-wood that is a little hotter, that's a driver, essentially. So I have two 3-woods.” In the fourth round, Mickelson drove it to the back fringe on the 12th hole (Par 4, 302 yards and yes he made par) with his secret weapon. Perhaps as a sign of how Callaway Golf is treating this precious category, it had something else planned for its star player the next week at Augusta. “We have a special club we're making that I'll be hitting on Monday (of Masters week). So, we'll see,” he teased.

As avid golf fanatics now know, Phrankenwood came to life at Augusta with the help of Mickelson and Callaway. Last week at the Wells Fargo Championship, Lefty carried a cross section of Callaway’s metal products in his bag. He used an X Hot Phrankenwood driver, 8.5* (new shaft at the Wells Fargo: MRC Diamana Kaili 60 XX flex), Callaway X Hot 3Deep, 13*, Fubuki K 70x shaft and a Callaway RAZR Fit Xtreme 5-wood (17*), with a Fubuki K 80x shaft. For those wondering whether Callaway has plans of bringing Phrankenwood to retail, Finley said, “It’s a Tour specific product and even within that it’s really a Phil specific product. He compared it to 3Deep after hitting it and loved it. The reality is for most golfers it won’t help them.”

With the help of Mickelson, Phrankenwood, 3Deep and others it’s generated attention back on Callaway’s metal woods business.  “Luke List went without a driver at the Zurich Classic. He used 3Deep instead and had 3 or 4 bombs (drives in excess of 300 yards), Finley pointed out. Callaway seems pleased with its product offerings. “When Chip (Brewer) came in he wanted us to be best in class and made a point to our R&D department,” said Finley.

Despite a slow start to the year for most companies, due to the weather, Callaway recognizes it still has work to do. “We’ve have a good start and we’re optimistic going forward. But its still a tough marketplace,” Finley stated. If a strong second quarter for rounds played happens as summer temperatures come online, it would help everyone’s’ cause. It would also give Callaway a chance to see its metal woods business reverse its past trend and start to grow again!