Golf industry analyst Casey Alexander looks at the year ahead in the golf business, sourcing extensive consumer sentiment data drawn from SLRG’s latest market trends report.
December US Golf Rounds Played Up 1.9%. December 2021 US golf rounds played were up 1.9% versus December 2020 according to the monthly report from Golf Datatech. This follows the November 2021 reading that was down (17.6%) and the October 2021 reading which was down (1.8%). The December 2021 rounds played increase was a surprise because it was up against the December 2020 rounds played increase of 37.3% The YTD rounds played figure ends the year at a more-than-healthy increase of 5.5%, adding on to the 13.9% increase in FY2020.
Regional results were heavily skewed to the upside with warm weather and lower precipitation contributing to the report. Five regions were up YoY while three regions were down YoY. The strongest regional contribution came from the Mid Atlantic region (NY, PA, and NJ) up 30.9%. The weakest reading came from the Pacific region (CA, WA, OR and HI) down (21.1%). The Mid Atlantic region experienced a reported 5.3-degree increase in average temperatures and a (47%) reduction in precipitation in December 2021.
Exhibit 1. US Monthly Golf Rounds Played Comps — 2020 – 2021
Source: Golf Datatech, National Golf Foundation, Compass Point Research.
This completes two straight years of extremely strong YoY rounds played gains. The 2021 gain of 5.5% would normally be considered a banner year during the 2000-2019 period where growth in the game was non-existent. The COVID era has pushed in a new period of growth for golf, and the question on everyone’s mind is how sustainable is it? We will offer some golf consumer sentiment data later in this report that might be helpful to investors.
The Comp Versus 2019 is Still Really Strong We can look back to 2020 and see how 2020 compared to 2019 on a YoY basis. We know now how YTD comps look through 2021 compared to 2020. And now that we have two full-year comps, we no longer have to concern ourselves with lumpy monthly comps versus 2020. This should give us a much better feel for the underlying growth rate of rounds played through the COVID cycle.
Exhibit 2. YTD Rounds Played Comps, FY2019-FY2021
Source: Golf Datatech, National Golf Foundation, Compass Point estimates.
Looking at Exhibit 2, we can see that while FY2020 vs FY2019 comp was up 13.9% and FY2021 vs FY2020 comp was up 5.5%, the more relevant comparison is FY2021 vs FY2019. When we make that comparison, rounds played YTD in 2021 are up 20.2% compared to 2019. That is an extremely positive sign for golf equipment manufacturers.
The golf equipment manufacturers have benefited from this growth rate and the increase in rounds played has definitely coincided with an increase in equipment sales, and now this 2-year comp looks like it may have some staying power.
Golf Consumer Sentiment Surveys from Sports & Leisure Group. On 1/26/22 Jon Last of Sports & Leisure Group presented his annual consumer survey study Golf Market Trends 2022. The presentation was full of insights regarding the current environment, how people feel about COVID, how it affects their lives, and how they expect it to affect their lives going forward. These consumer attitudes are relevant in terms of the sustainability of the recent growth wave of golf.
But for now, we will concern ourselves with the consumer surveys regarding golf equipment spending attitudes for 2022. Many investors have questioned the sustainability of the ‘work from home’ trend. But consumer surveys suggest that attitudes towards working from home and allocating time to leisure activities may have changed permanently. As Exhibit 3 shows, close to 60% of respondents clearly value the change in work habits and how it impacts their lives:
Exhibit 3. COVID Re-Prioritizes Individual Time Allocation
Source: Golf Market Trends 2022, Sports & Leisure Group, Compass Point Research.
Moving to Exhibit 4, we see that almost 60% of all golfers expect to play either much more or slightly more than in 2021. Only 14% expect to play less golf than they did in 2021. We concede that there is a bias in golfers to always hoping to play more, and can be distracted by weather, age, injury, and alternative entertainment options, but the attitude to play more is there, and that generally is what leads to investments in equipment and whether to join a club or not.
Exhibit 4. Consumer Expectations for the Amount of Play in 2022 vs 2021
Source: Golf Market Trends 2022, Sports & Leisure Group, Compass Point Research.
As it relates to specific spending plans on golf equipment, the results are notable. For the second year in a row, consumers expect to invest the same (Baals, fairway woods, hybrids, irons, wedges, shoes, and bags) or spend more (Drivers, putters, and apparel) than they did in 2021.
Exhibit 5. Golf Equipment per Purchaser Expectations Across Categories
Source: Golf Market Trends 2022, Sports & Leisure Group, Compass Point Research.
This specific data point coincides with our observations that new golfers, which joined the game primarily in 2020, start to make larger and more frequent investments in equipment as they start to see themselves as golfers and not just someone playing a little golf recreationally. As we break this down by the type of golfer, we can see more clearly the type of spending plans expected for 2022.
Exhibit 6. Golf Equipment Spending Plans for 2022 vs 2021 by Type of Golfer
Source: Golf Market Trends 2022, Sports & Leisure Group, Compass Point Research.
Exhibit 6 tells us that over 90% of Avid golfers expect to spend the same of more on equipment in 2022 as compared to 2021, and this group tends to spend the most each year in equipment. But greater than 50% of both casual and core golfers intend to spend the same or more on equipment in 2022 versus 2021. Taken together, these are important indicators for 2022 equipment sales.
Lastly, we think it is also important to define the marketplace, which is quite different today than it was several years ago. The emergence of off-course golf as a category, led in large part by the popularity of Topgolf, has created a more active feeder system for on-course golf new participants.
Exhibit 7. Total US Golf Participation
Source: National Golf Foundation, Compass Point Research. Income refers to household income.
We note that the average age of off-course-only participants is significantly lower at 30 years old than the average age of on-course-only participants at 45 years old. There is also greater gender and ethnic diversity among the off-course-only group. As they age and their income rises, there is a certainty that some percentage of those off-course only participants will join the on-course only or both on/off groups and start making investments in golf equipment.
SUMMARY US golf rounds played data exhibiting 20% growth over the 2019-2021 period bodes well for sustainable growth in golf longer term. Consumer surveys suggest that behavior patterns related to workplace location and leisure activities are changing in favor of golf long term. These surveys also suggest that spending plans on equipment for 2022 are robust across multiple categories. And the demographics of golf participation, including strong growth in off-course-only participants, have created a meaningful feeder system for the growth of on-course golf in the future.