Industry news

adidas prepare for 2010

Strange as it may seem now, the months before the 2006 World Cup in Germany was a nerve-racking time for everyone concerned. The German press was scathing: the stadiums are not going to be ready in time, Germany is going to be knocked out in the first round, the World Cup is going to be a huge loss. The German economy was in a negative growth phase. There were concerns about security. The negativity and pessimism was infectious.

Which all transformed into mass optimism after Germany won the opening game, the weather cleared and it became obvious that the Fanfest were turning into a month-long party. The media developed mass amnesia and proclaimed it the most successful World Cup ever. And when all the visiting, eating, drinking and partying was over, the German GDP showed 2% growth, from negative growth before the World Cup.

"The benefits of the World Cup in Germany will have a lasting effect – investments grew and the whole society was unified behind the sporting event," says Auschel.

Adidas, FIFA’s technical sportswear and ball supplier for more than 30 years, could utter a huge sigh of relief: their €40-m investment had paid off handsomely.

Sold 4 times more than expected

When planning their stock for the World Cup, adidas estimated that they would sell about double the 300 000 of German team shirts sold in an average per year. "Just to be on the safe side, we made 800 000 German team shirts. But, even before the event kicked off, we had to replenish stock. Luckily we had a fast-replenishment option and could produce another 400 000 shirts in four to five weeks. In the end we sold 1.2-m German team shirts."

All in all they sold about six times as many football replica shirts during 2006 than in a normal year, he says.

Football played an important role in the 52% net sales growth 2006 that saw adidas AG sales pass €10-bn for the first time, with sales in Europe growing 31%, in Asia 33% and more than doubling in the US.

"Of all the market categories that showed growth, the one that stood out was football," says Auschel. "This growth in football sales already started the year before with the first wave of innovations when the new Predator was launched, and the introduction of the new match ball."

While all markets adidas operate in showed strong growth in sales, World Cup host Germany benefited the most.

And now its South Africa’s turn.

"Due to our prominent relationships with FIFA we are expecting 2010 to be a great year for us," says Auschel.

"We also have a strong relationship with SAFA, who are open to sharing the experience that adidas have," adds adidas SA MD Brian Kerby.

Strong relationships

adidas will not only (again) supply the match ball and clothing for all officials, but also the Bafana Bafana shirt, which Auschel believes will also become a unifying symbol for the country, as in Germany.

"We expect that the volume of replica sales will be through chains," says Kerby, "although sales through independents are important as they give the countrywide distribution."

The World Cup build-up will already gain momentum in 2009 when the Confederations Cup is played — the host country, past World Cup Winner plus the top teams in all the FIFA Confederations.

"The big build-up will start with the final draw in November-December, once it is known which teams will be in the World Cup," says Auschel.

As in Germany, FIFA expects to make the Fanfests the focus of the 2010 World Cup. With enormous screens erected in public places, those who could not get, or afford, stadium tickets congregated in these fanparks to watch the game, buy food, drink and souvenirs and party, party, party. When the final was played in Berlin, more than 8-m people came together to watch the game in the Fanpark next to the Reichstag.

Bringing football to the people

FIFA’s involvement with the Fanfests actually started with the 2004 UEFA Cup, when fanfests held in Lisbon by sponsors developed into parties that went on every night until 2-3 o’clock," says Auschel. "When FIFA saw the parties, they said Fantastic! Let’s do it in all cities and make football accessible to more people."

In Germany they had 250 people working in the World Cup office during peak times. The core of this World Cup team move from World Cup to major tournament, sharing their expertise with the local offices — they are currently putting the structures in place for the 2008 European Championship before moving to SA to focus on the World Cup.

"The World Cup is a brand driver and there will be very positive spin-offs across all product categories," says Kerby.

For, despite adidas’ strong showing in football, running remains the strongest sales category worldwide. The worldwide quest for a healthier lifestyle will keep the running category in the forefront for many years, believes Auschel.

They are also making inroads into the US market — apart from acquiring Reebok, they have signed a sponsorship agreement with one of the major American sports, basketball, which includes naming rights of players. Worldwide, basketball will be a major growth category, Auschel believes. "In China there are 300-m basketball players — it is the second highest number of participants after table tennis."

But, while running, basketball and football generate the most sales, the biggest growth categories will most likely be in lifestyle, predicts Auschel, who is looking forward to another booming business year.