Why Golf Club-Maker Callaway is Moving Away From the Fairway

In 2020, golf saw a surge in new players following the Covid-19 pandemic and social distancing measures. Callaway, the maker of golf balls, clubs, bags and apparel, has been thriving. But with movie theaters, travel and concerts expected to rebound, will golf club makers like Callaway and its rival Acushnet be able to maintain their momentum?

Correction (June 7, 2021): At 00:15 we misspelled Q3 and Q4 2020. At 6:13 the graphic misidentified Acushnet's net sales. Acushnet had net sales in 2019 of $1.68B and in 2020 of $1.61B. At 07:22 we misspelled Q3 and Q4 2020.

With a record number of new golfers teeing off in 2020, Callaway, the maker of golf balls, clubs, bags and apparel, has been thriving.

Callaway announced in May first-quarter net revenue of $652 million, a 47% increase from a year earlier.

“Callaway pre-Covid was already the number one brand in sticks, I call it, which is putters, drivers and irons,” said Jefferies analyst Randy Konik. “They were outpacing industry growth and they were also number two in balls behind Titleist.”

Callaway has made moves off the fairway as well. In March, the company completed its merger with golf entertainment business Topgolf, which combines virtual driving ranges with food and cocktails.

“This is a transformative merger. It creates an entity that doesn’t really replicate anything that currently exists, with the leader in golf equipment merging with the leader in golf entertainment,” said Callaway CEO Chip Brewer.

Last year, almost 37 million players teed off at a golf course or participated in an off-course activity like a driving range. Nearly a third of the U.S. population watched, read about or played golf in 2020.

But with movie theaters, travel and concerts expected to rebound, will golf club-makers like Callaway and its rival Acushnet be able to maintain their momentum?

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Who Makes Money From The U.S. Golf Frenzy

[GregDubela]

I like you guys, but the driver audio clip on a 9 iron at the start really made me uncomfortable.

[paultonner]

When they said that callaway makes golf bags the camera panned to a shopping bag 💀

[artistaprimus]

I liked the guy who answered the question about golf being an elitist game. He said" Yes, there are some elitist"then a after a long pause, " but they're a lot of common folks as well"

[LafkoOutLoud]

CNBC Digital Producers... You need (NEED) to actually pay attention to read-throughs and pre-screenings.

[florianjanen]

did not knew that 2020 had the second quarter three times (0:15)

[justincaffrey]

How could anyone not know what a golf bag is?

[shaneWARs]

This is missing something else thats impacting the growth of the game YouTube and social media is really pushing the youth and others to get in to the game ...

[Ariaga_II]

This video was absolute amateur hour in pulling it together. You mispronounced Temecula, the graphs show Q2 2020 being repeated for what should be Q3 and Q4 of 2020, and you say that Titleist sales decreased 4% in 2020 yet the graphic shows otherwise. I would expect these mistakes from a high schooler’s PowerPoint presentation but not from a professional “news” organization.

The spike in interest in golf will be temporary as more and more options open up to people. I am already seeing a difference in the number of people I see at the driving range.

[chrislabar]

Am I the only ome that noticed when he was talking about Titlest sales he said a 4% decrease, but the grapic said the opposite?

[jayholiday]

I think there’s downward pressure on club pricing. PXG is lowering prices, they have new drivers with choice of shaft for $225, and it’s as good as anything in the $500-600 range

[colegustafson]

Quarantine got me into golf. Never going back

[craigallen]

I work in a retail pro-shop in a region not strongly known for golf (seasonal) and for the past 5 months since restrictions came down its been an absolute zoo. Folks just starved for outdoor yet social activities that dont include sitting in packed bars/restaurants or concert venues. Lots of newbies dropping $2-4k to get geared up. Our fit center is booked 10 hours a day. My custom club orders directly from manufacturing which usually runs 4-6 weeks is back-ordered minimum 12 weeks, which actually means closer to 16 weeks. We cant find enough folks to hire just to be cashiers at $25 an hour. Golf (and what i've heard from a professional guide) and fishing have been re-embraced at a feverish pitch.

[markstephens]

Right on! I loved everything about what was said in the feature by CNBC. the only negative part I have for it is that Callaway decided not to interview. But, on the other hand the numbers says it for themselves as presented in this very nice feature!!

[TMM-N]

With people unable to go to other countries, best thing for rich people is to stay at home golf resort

[buffalobengolf]

I am a huge Callaway Golf fan. I play Apex irons, Diablo Tour balls, and use a Callaway bag. I never want Callaway to stop making products, because once my current irons get worn out, I WILL be back for more. I’ve never loved and adapted to a set of irons more than Callaway.

[stemogstel]

I'd love to know what the secondary market growth was in 2020, but obviously that would be very hard to track.

[commonman]

When I see old clips of Tiger, I think of that old SNL skit. "A&E Biography, The Story of....Tiger Woods" Classic!

[theoverunderthinker]

are they trying to make a commercial for Callaway to pump up their stock?

hard to find any balancing criticisms in this.

[FinancialShinanigan]

Gotta love the reoccurring revenue of golf balls

[Taser-]

Yeah I too picked up golf for real this year. I really don’t know why, I always liked it but never decided to play. But this year I bought callaway clubs and bag.