Industry news

Diving industry: A lesson in resilience

If there is one industry that has had all the odds stacked against it, it is the diving trade. The increase in fuel prices over the past year would have discouraged divers from driving to dive spots, and the economic downturn that saw the national growth rate drop from 4.5% to just marginally over 3%, affected the spending patterns in the leisure industry.

Add to that regulations by Marine and Coastal Management, the influence of American training agencies, as well as the influx of cheaper equipment from the East, and you have a formidable collaboration of factors conspiring to shrink local diving markets, especially in the Western Cape.

Diving now also faces strong competition from activities such as kitesurfing, mountain biking, wakeboarding, and especially the boom in 4x4 bush travel.

Which just shows how resilient the diving market is.

In Gauteng, especially, the market still seems to be buoyant — thanks to the bigger purchasing power of customers in what is considered to be the economic hub of Africa. The close proximity of the Mozambican travel market has also assisted the highveld diving industry. In short, Gauteng services an unrestricted diving area.

Still buoyant

Mike Lomas, owner of Scuba Fourways in Gauteng, says he experienced growth in the sales of diving equipment of 10-15% annually over the last five years, until the middle of 2008. Since then, the economic downturn has caused a drop of almost 50% in his sales and dive trip bookings.

“Usually the leisure sector is the first to suffer when there is an economic downturn,” he says. “People usually buy food and petrol as they are essential items, but they will cut down on the other non-essential elements, like leisure,” says Lomas.

“As a Gauteng retail store, I have not been affected by any legislation. If anything, up until recently, the diving industry has experienced growth.”

He says he is currently breaking even and expects to make a profit during the summer months.

His winter sales were helped by a steady growth in overseas divers coming to SA on holiday, particularly in our winter months.

For South Africans the Red Sea has been a particularly popular diving holiday destination and sometimes during the diving season from June-September, some people undertake two trips, in June and August, which is particularly beneficial to his business.

And yes, there is a growing interest in other adventure sports, but “we have always been in competition with other sports, so not much has changed there,” says Lomas.

During the late 1990’s, there was extremely rapid growth in the diving industry, to the extent that scuba was touted as one of the fastest growing sports in the world, says Rhys Couzyn, owner of Scuba Equipment Africa. That kind of growth is not sustainable and it was bound to slow down, but that doesn’t necessarily mean that there are fewer divers.

Globally, the number of new divers being trained has probably declined slightly, but the sport is stable and the number of active divers both locally and globally is fairly consistent year to year, even if it is marginally down on the peak years.

“I think all sport and outdoor retailers felt a slowdown this winter and this is not related to decreased interest levels in diving. Secondly, since there is no industry-wide reporting of scuba sales, you never know if the changes you experience are as a result of lost or gained market share, or as a result of industry trends.

Many retailers enter market

“For that reason (and discounting the last volatile period), some retailers may feel that there is a decline in retail over the last five or so years, but at the same time, there are many new retailers that entered the market,” says Couzyn. “I feel that the overall retail market is similar to previous years in real terms, but that it is possibly divided between more active retailers.”

He says where Cape Town’s diving industry used to essentially consist of three or four big retailers, that number has grown over the years and there are now at least a dozen shops competing for a slice of the same sized pie.

“The key is that we mustn’t confuse growth rate with industry size. A zero growth rate represents a static industry size, not a declining industry size, so, while the growth rate has certainly declined, I feel the industry has been quite static over the last five years and has not actually dropped off.”

Andrew Wentzel, owner of W.E.T. Sports Importers in Cape Town, importer of mainly snorkelling equipment, says that the diving market is much stronger in Johannesburg than in the Cape as there is more expendable income and they have access to unrestricted diving areas.

Legislation impact in Cape

He believes that legislation has had an impact in the Western Cape, as fewer people are interested in going diving for crayfish because of the shorter season, many laws and the fact that they are prohibited from diving in certain areas.

“I am sure the growing popularity of other adventure sports also have an impact, as many people would rather move to sports where they are not hampered by legislation,” says Wentzel.

He believes most suppliers in the diving industry would have decreased their imports as the retail markets would have shrunk due to these shifts in the markets.

There has been a shift towards better quality equipment as the people who have remained in the industry are serious about diving and expect a better quality product.

Through the introduction of the up-market, value-for-money Aqualine Pro range, they have managed to increase their sales over the past five years, says Kevin de Wet, owner of De Wet Sports, a major player in the snorkelling market.

“In real terms, however, I believe diving sales have remained constant over this time- period,” adds De Wet.

Interest steady

He says the interest in diving-related activities has remained steady over the past five years nationally, without any marked increase or decrease.

“In certain areas along our coastline we have noticed a drop in sales to recreational divers who buy snorkelling equipment for removing crayfish, shellfish and other fish.

“This decrease has, however, been offset by an increase in the number of holiday-makers that buy snorkelling equipment for pure leisure activities,” he says.

Their top sellers are affordable snorkelling gear (masks, snorkels and fins) aimed specifically at the leisure market, he adds.

A Western Cape-based owner of a diving shop says despite the negative perception of the public concerning the diving ban on abalone, the closing of diving areas and permit procedures, there has not been less buying and selling of diving equipment in Cape Town.

As the shop owner, who agreed to be quoted on condition of anonymity, says: “The wholesalers may have the perception that there is a decrease in orders, but it is merely due to a shift in purchasing because everyone now has access to the manufacturing markets of the East and import under their own labels, instead of purchasing from local agents.”

While local licensees import good quality diving gear, some cheap goods from the East are nasty, with fins breaking due to the blades being manufactured from recycled plastics, adds the shop owner.

Monty Guest, chairman of Underwater Africa, however, warns against the impression created indirectly that businesses are thriving, when, in fact, they are only absorbing the customers of the one’s that have crashed. He says many dive shops had closed down during the year.

Stores close

In Cape Town Dive Buddies, Scuba Afrique, Dive Exchange and Divers Choices closed down in the past eighteen months. This year Dive Dimension, The Whaler and Sea Forever closed down in KwaZulu Natal. Harmony Sub-Aqua Club in Virginia closed, and so did Algoa Bay Diving Club in Port Elizabeth, says Guest.

He attributes the decrease partly to the shortening of the crayfish seasons, the limit on diving activities to between 8am and 4pm, diving only on weekends and public holidays, and the ban on all recreational abalone diving.

He says that wetsuit manufacturers in the Western Cape were especially hard hit.

Other factors affecting the industry involve the legislation and a negative impression, like “bad press due to poaching and diving being linked in the media. It also makes retailers, training providers and operators think twice before expanding, employing, spending on marketing and advertising,” says Guest.

Lately the fewer South African visitors to diving spots like Sodwana and Mozambique may be attributed to increased fuel prices, he says, as there is a small increase in visitors to Aliwal Shoal, which is 200km closer to Johannesburg.

Also, Sodwana has become less popular since the access to the Greater St Lucia Wetland Park has been taken over by Katanga, resulting in delays at the gates that are sometimes as long as ninety minutes.

“They will say that the number of visitors increased, but it is because they are now giving a better account of the number of visitors, as there is less corruption at the gate.

“But if you ask the operators, they will say all diving trips have decreased. They were hit hard by new concessions that came into effect this year and have also resulted in job losses due to massive increases in overhead costs.

Best winter in 25 years

David Cohen, owner of Divetek, has returned to the industry after an absence of a few years (see box left). His observation is that the potential market for scuba diving has not declined, but the diving industry has shown a downturn in terms of sales and training trips.

Some American training agencies that came to SA with a strong marketing drive now dominate the market. “This is ultimately the source of the problems as they have a MacDonald’s approach to diving. Quick, easy courses with lots of home study and DVD’s have replaced the lengthy and proper training of the past,” he adds.

He says the diving industry had a drop out rate of 20% in the 1990’s, compared to 95% today. “In the 1990’s my dive schools would train between 40-60 new divers a month and employ about six staff members each. Today a local school is lucky to train ten divers a month,” he adds.

Because of the big drop out factor, most of the people who are trained by the American agencies in SA are lost to the diving industry. The income that could have been acquired through their purchasing of advanced equipment, is lost in the process.

The fact that some importers have put on such a high margin that the gear have become difficult to afford, compounds the problem. A simple check on the web shows how high are the prices of some diving gear sold in SA, says Cohen.

He says most of the diving equipment currently available is manufactured in the same few factories, where a bling and a brand name are added. Yet, some branded regulators sell at a four times higher price than an identical item, due to the higher profile of the branding. This is disputed by importers of branded gear.

“But, if you import and manufacture the right gear at the right price and not expect the margins of years gone by, you can do very well,” says Cohen. “Divetek is booming, and has had its most profitable winter in 25 years.”