News & Opinion

Titleist sees market soft spot for AVX ball

One in a weekly series of stories about golf gear to run each Wednesday.

By Adam Schupak

In the golf ball business, there is Titleist and everyone else.

The slogan "the No. 1 ball in golf" has multiple meanings, but the statement easily can be supported by Titleist through retail market-share numbers. More than half of the dollars spent on golf balls in the U.S. are for Titleist and sister brand Pinnacle products as measured by Golf Datatech, which has been tracking retail sales for hard goods since 1995. 

It's good to be the king, but it is an ongoing challenge to withstand the efforts of the likes of Callaway, TaylorMade, Bridgestone and formerly Nike (which abandoned the ball business in late 2016) to knock Titleist from its perch, or at least chip away at its market dominance. Titleist hasn't always been first to market with a new product, including its best-selling multilayer Pro V1, which debuted in 2000, but it has been nimble enough to pivot better than the rest.

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Titleist’s new AVX golf ball, which went on sale April 23, is the first non-Pro V1 premium ball introduced by the company in 15 years.

COURTESY OF TITLEIST
Titleist’s new AVX golf ball, which went on sale April 23, is the first non-Pro V1 premium ball introduced by the company in 15 years.

That’s why the launch of the Titleist AVX ball, which went on sale worldwide on April 23, is such a compelling business story. The AVX, which retails for $47.99 per dozen, is the first non-Pro V1 premium ball introduced by the company since the Pro V1x in 2003. The launch raises questions worth monitoring: Which customer is it right for? How does it fit into the overall Titleist portfolio? And will it cannibalize sales of the Pro V1 and Pro V1x franchise?

The Titleist AVX, a name which originally derived in prototyping as shorthand for “an alternative to Pro V1 and X,” is designed to fill a hole in the line as its lowest-flying, lowest-spinning and softest-feeling high-performance ball. Sure, Titleist offered softer-core balls such as Velocity and NXT (now the Tour Soft), but Callaway had found a niche among golfers who prioritize distance and extremely soft feel in a premium ball and grew its share with the Chrome Soft. As a market leader, Titleist strategically assessed whether this was a fad or a burgeoning category by test marketing in three states. The findings showed that while Pro V1’s market share has remained rock-solid, Titleist needed to counter.

At the PGA Merchandise Show in January, former Masters champion Adam Scott, a Titleist endorser, helped launch the ball to the company's sales force of PGA pros by telling a personal story. He recounted how he was playing a round with his father, who was using an AVX prototype. When they arrived at a par 3, Scott asked to test the ball. Scott launched a 6-iron into the wind and flew the green by 15-20 yards. “What is it with this golf ball?” Scott said.  

The Titleist AVX has a proprietary multi-component construction. The invention of a new high-flex casing layer enhances speed and controls spin to promote even greater distance. 

“It's lower-flying, lower-spin, great soft feel, good greenside control, but it is different from Pro V1," CEO David Maher said at parent-company Acushnet’s conference call with Wall Street analysts. “So, when we put out our test in that market, we were intrigued by this as a solution that some golfers would find really valuable and beneficial to their game.”

Test marketing was conducted in Arizona, California and Florida from October to January, and it included “shop-a-longs,” interviews with PGA professionals and an exhaustive study of sell-through data.

“During the test market, we heard from a lot of golfers playing competitive models who realized they had been giving up performance in order to play a softer-feeling golf ball,” said Michael Mahoney, vice president of Titleist golf ball marketing. 

That suggested a market for the new ball existed, but could Pro V1 and AVX coexist? Would adding to the line be a net gain for Titleist or confuse customers? 

As ball fitting has become more sophisticated, manufacturers have had to respond with a larger variety of offerings without overwhelming customers with too many versions.

“It's just like everything else, right? If you can get an extra yard or two with a ball based on your swing speed, your swing characteristics, why not? That's why golf ball fitting has become so important to a store like ours," said Randy Peitsch, PGA Tour Superstore’s senior vice president of operations. “You used to come in to our store, pick up your Pro V1s and take them to the cash register. Today, you can try 70 different styles of golf balls in our store and say, ‘Which one is right for me?’ ” 

Titleist's test marketing succeeded in calming fears of cannibalization. It proved that the aggregation of the three premium-priced balls has the potential to be greater than the two. 

“They didn't sell AVX in dozens; they sold it in three-packs. What they needed to measure was, does the customer come back and buy it again? That was an important indicator if the ball would have legs in the marketplace," said Casey Alexander, a senior vice president and research analyst for Compass Point Research and Trading.

Peitsch, for one, thinks AVX and Pro V1 can coexist and said the early returns in test markets were “phenomenal.”

“We've been very pleased with the early buzz that we've had,” he said. “We're excited to see what this ball is going to do for the rest of the year.”

So is Titleist. Production at Ball Plant 3 in New Bedford, Mass., has been accelerated in order to meet golfer demand and the worldwide launch of AVX. For investors and those who follow the stock price of the publicly traded company (NYSE: GOLF), the implications of the ball launch could be significant. (The ball is available in two colors: white and, in a first for a Titleist premium ball, optic yellow.)

“From a financial standpoint, this ball launch is a big deal in the second quarter,” Alexander said. “You are fully selling into an empty-shelf spot. You are doing it around the globe. No one is going to get all the supply they want. It is off cycle from their normal introductions for premium balls. It changes the dynamics of Acushnet’s second quarter.”

 

Adam Schupak has written about golf since 1997 for the likes of Golfweek, Golf World and The New York Times. He is the author of Deane Beman: Golf's Driving Force. Email:golfsdrivingforce@gmail.com; Twitter: @adamschupak