May 29, 2008
Boat Sales Sinking
Recreational boat manufacturers have found it tough going as they seek to navigate through choppy economic waters. Some are simply doing the best they can to keep afloat even if it means having to jettison under-performing brands.
A case in point is Brunswick Corporation, which announced it would cease production of its Bluewater Marine saltwater fishing boat brands (Laguna, Palmetto, Sea Boss and Sea Pro) and close its production facility in Newberry, S.C., by the end of next month. A total of 175 people will lose their jobs with the plant’s closing.
“The U.S. marine industry has been in a prolonged slowdown since late 2005, driven by an uncertain economy, high fuel prices, the housing slump and other economic factors that have affected consumers’ confidence and eroded their discretionary spending,” said Dustan McCoy, chairman and chief executive officer of Brunswick, in a recent press release.
“With this action, we believe we will solidify our presence in the highly fragmented saltwater segment by concentrating our efforts and leveraging our resources on such brands as Boston Whaler, Triton, Trophy, and our sport fishing offerings from Hatteras, Cabo and Albemarle, while sharpening our market focus and providing necessary cost reductions,” he added.
Brunswick acquired the Sea Boss and Sea Pro brands in 2004 followed by Palmetto in 2005. The company established the Laguna brand of 18- to 24-foot saltwater fishing boats in 2006.
According to the National Sporting Goods Association, the number of people seven years of age and older who participated in all motor/power boating increased 8.9 percent in 2007. Interestingly, the number of people engaged in fishing dropped by 13 percent at the same time.
A study by the Recreational Boating and Fishing Foundation (RBFF) found that the primary reason that nearly 68 percent of “boating anglers” bought a boat was to fish.
Discussion Questions: Are there lessons for Brunswick and others in the recreational boating space to learn from brands in other discretionary spending categories? Can the recreational boating category find a way to thrive without a drastic reduction in fuel costs?
- Brunswick Bluewater Brands to Cease Production at Newberry, S.C., Facility – Brunswick Corporation/PRNewswire-FirstCall
- 2007 Participation by Sport – National Sporting Goods Association
- Market Research to Better Understand the Directional Relationship Between Recreational Boating and Fishing Participation – Recreational Boating and Fishing Foundation
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The 30-40 foot boats have a 100-200 gallon fuel tank. That is a $600-$1200 fill up.
Any decent weekend usage will go through that and more, which is why you are seeing the boats tied to the dock with the owner and friends filling up on gin and tonic instead of petroleum.
There is an old saying. When you own a boat, you have a boatload of problems. Boat ownership brings with it many problems: towing, launching, storage…and strict environmental regulations. When times get tough, that boat is suddenly a big headache.
Too many people get boats to try to impress their neighbors only to find out later that there are a lot of responsibilities.
Much like golf, boating is a way of life, not a need. The message here is the same for most retailers. Cut the lowest performing brands you carry, increase the ones that sell. If you want to be in this business, you better brainstorm ways to succeed instead of getting depressed about how tough it is. That’s the same for most businesses right now.
My advice? Deal with it and stop whining. Someone is still buying–why not from you?
In the mid and late ’70s, when gas prices climbed, many industries that relied on gasoline (cars, boats, etc.) experienced an unexpected downturn in their sales. Some stopped advertising and cut costs wherever possible. Others took the (forced) opportunity to retrench and get back to the basics of running their businesses. We are presently experiencing a similar downturn.
Smart companies will use the opportunity to look within their current product lines and business models and find ways to innovate. They will examine the core story of their business and find ways to adapt to changing market conditions. They will communicate their core story internally to their employees and externally to their customers. They will position themselves for growth from innovation or from a return to better economic conditions.
Let’s bring this discussion back to retail. Manufacturers of boats will adjust to ridiculous gas prices through new technology and restructured expenses. Retailers have the bigger challenge. I don’t think there’s a clear parallel for retailers, but let’s go back to basics here. Do retailers know how the boat market is segmented? Do they know how to make money from ancillary products? Can they serve up new services to customers if the market for new boats goes flat? Can they come up with creative financing deals to get more customers involved? I spoke to a boat retailer the other day who said he was investigating a “time share” strategy for boats. Maybe most people can’t afford to fish every weekend. But by the same token, they might afford six weeks a year. Interesting concept.
I’m not a boater, but live in Chicago where there is a large boating community on Lake Michigan. This summer is very interesting. There are a lot of boats in the harbor, moored at their reserved berths, but not too many boats out on the lake, even when the weather is perfect. This has to be an indication that the fuel costs are holding people back from enjoying this expensive hobby.
If I were in the recreational boat business, I would focus on two things; Sailboats and Kayaks. Fuel prices are not going to come down in the near future, and recreational boating is becoming a hobby only enjoyed by the very rich!
While boating is great but bucks are few
Other things loom up as to what to do.
So you decide you must stop anchoring
And live happily without rancoring.
This industry is always hit hard when the economy takes a downturn. Why aren’t they looking at solar solutions? When times are good, people use their disposable income on things like boating, motorcycles, etc. The boating industry needs to focus on a way of stabilizing this recreational activity by cutting out the ongoing expense, like fuel. There will be a lot of boats that will remain in storage this summer.
The boating industry is under great pressure from three directions. First, boating costs money (BOAT stands for Break-Out-Another-Thousand) and follows the housing market. People first have to have a roof over their head before they can and will invest in a boat. The decline and unsure nature of the housing industry has reduced new boat sales for the last 3 years. Second, boating is a discretionary expense. The increase in fuel cost both for cars and boats is and will reduce their usage. Just like with cars, some boaters will not do the long trip this year to save the fuel money. The third factor is the poverty of time issue. People only have so much time to spend in leisure activities. Boating, like golf, takes too much time for some people.
Boating, like food, has far too many weak regional brands. There has been great consolidation by the manufacturers into 3 or 4 major builders with many lines. This spread the sales and marketing expense too thin for most brands. Boat manufacturers seem to be ahead of the car manufacturers in identifying a clear target market (fishing, sailing, cruising, etc.). Discontinuing, overlapping or duplicate lines with only regional customer interest is the way to go.
As a wakeboard/skier and boater, 2008 is a total game-changer! It costs me $5.65 a gallon for gas in San Francisco Bay. This means that it’s bit more than $200 to fill ‘er up (I use 1/2 tank on a typical full day out) and while I’m still out there, I no longer let my neighbor’s kid use the boat.
Boat use has got to be down 25% locally as a result of the gas prices….
The industry needs to invest in fuel efficiency fast as this problem isn’t going away.
Here’s an idea for power boat dealers: buy 4 projection TVs and put them into a single room, each focused on a different wall. Put a fake “deck” in the middle of the room with a real beer cooler, stocked with popular brews. Run an endless boating DVD on the 4 televisions (like the Yule Log). Charge $100/day per “passenger” and hold a lottery so that 1 out of every 4 passengers wins a fish. This is the fast-track technology solution.
The super yacht industry is alive and well. Vessels over 80 feet can’t be built fast enough. My good friend Sara Montefiore, General Manager USA for Camper & Nicholsons International, shared this week that if new orders ceased tomorrow for luxury yacht builders it would be a minimum of three years before they’d consider lay-offs.
Also consider that 20% of all super yachts have been built since the 2005 slowdown referenced in the article.
The rich get richer in this economy.
Boat builders–and anyone else making or selling anything–would be wise to move upscale and go after the money. The super yachts are just one example of an industry thriving in this economy.
The motor yacht owner I know is simply leaving it in port or anchorage longer and using the smaller vessels to get around.
Small (14-65 foot) gas and diesel powered pleasure boats are an endangered species. These are normally owned by middle-class individuals and families who cannot sustain $5-$6+ a gallon for fuel simply for boat rides or fishing. Mass small boating was built on cheap fuel. Boats only get 3-7 miles per gallon, and in some cases a lot less. Those days are gone, and soon the middle class power boater will join the exodus.
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The 30-40 foot boats have a 100-200 gallon fuel tank. That is a $600-$1200 fill up.
Any decent weekend usage will go through that and more, which is why you are seeing the boats tied to the dock with the owner and friends filling up on gin and tonic instead of petroleum.
There is an old saying. When you own a boat, you have a boatload of problems. Boat ownership brings with it many problems: towing, launching, storage…and strict environmental regulations. When times get tough, that boat is suddenly a big headache.
Too many people get boats to try to impress their neighbors only to find out later that there are a lot of responsibilities.
Much like golf, boating is a way of life, not a need. The message here is the same for most retailers. Cut the lowest performing brands you carry, increase the ones that sell. If you want to be in this business, you better brainstorm ways to succeed instead of getting depressed about how tough it is. That’s the same for most businesses right now.
My advice? Deal with it and stop whining. Someone is still buying–why not from you?
In the mid and late ’70s, when gas prices climbed, many industries that relied on gasoline (cars, boats, etc.) experienced an unexpected downturn in their sales. Some stopped advertising and cut costs wherever possible. Others took the (forced) opportunity to retrench and get back to the basics of running their businesses. We are presently experiencing a similar downturn.
Smart companies will use the opportunity to look within their current product lines and business models and find ways to innovate. They will examine the core story of their business and find ways to adapt to changing market conditions. They will communicate their core story internally to their employees and externally to their customers. They will position themselves for growth from innovation or from a return to better economic conditions.
Let’s bring this discussion back to retail. Manufacturers of boats will adjust to ridiculous gas prices through new technology and restructured expenses. Retailers have the bigger challenge. I don’t think there’s a clear parallel for retailers, but let’s go back to basics here. Do retailers know how the boat market is segmented? Do they know how to make money from ancillary products? Can they serve up new services to customers if the market for new boats goes flat? Can they come up with creative financing deals to get more customers involved? I spoke to a boat retailer the other day who said he was investigating a “time share” strategy for boats. Maybe most people can’t afford to fish every weekend. But by the same token, they might afford six weeks a year. Interesting concept.
I’m not a boater, but live in Chicago where there is a large boating community on Lake Michigan. This summer is very interesting. There are a lot of boats in the harbor, moored at their reserved berths, but not too many boats out on the lake, even when the weather is perfect. This has to be an indication that the fuel costs are holding people back from enjoying this expensive hobby.
If I were in the recreational boat business, I would focus on two things; Sailboats and Kayaks. Fuel prices are not going to come down in the near future, and recreational boating is becoming a hobby only enjoyed by the very rich!
While boating is great but bucks are few
Other things loom up as to what to do.
So you decide you must stop anchoring
And live happily without rancoring.
This industry is always hit hard when the economy takes a downturn. Why aren’t they looking at solar solutions? When times are good, people use their disposable income on things like boating, motorcycles, etc. The boating industry needs to focus on a way of stabilizing this recreational activity by cutting out the ongoing expense, like fuel. There will be a lot of boats that will remain in storage this summer.
The boating industry is under great pressure from three directions. First, boating costs money (BOAT stands for Break-Out-Another-Thousand) and follows the housing market. People first have to have a roof over their head before they can and will invest in a boat. The decline and unsure nature of the housing industry has reduced new boat sales for the last 3 years. Second, boating is a discretionary expense. The increase in fuel cost both for cars and boats is and will reduce their usage. Just like with cars, some boaters will not do the long trip this year to save the fuel money. The third factor is the poverty of time issue. People only have so much time to spend in leisure activities. Boating, like golf, takes too much time for some people.
Boating, like food, has far too many weak regional brands. There has been great consolidation by the manufacturers into 3 or 4 major builders with many lines. This spread the sales and marketing expense too thin for most brands. Boat manufacturers seem to be ahead of the car manufacturers in identifying a clear target market (fishing, sailing, cruising, etc.). Discontinuing, overlapping or duplicate lines with only regional customer interest is the way to go.
As a wakeboard/skier and boater, 2008 is a total game-changer! It costs me $5.65 a gallon for gas in San Francisco Bay. This means that it’s bit more than $200 to fill ‘er up (I use 1/2 tank on a typical full day out) and while I’m still out there, I no longer let my neighbor’s kid use the boat.
Boat use has got to be down 25% locally as a result of the gas prices….
The industry needs to invest in fuel efficiency fast as this problem isn’t going away.
Here’s an idea for power boat dealers: buy 4 projection TVs and put them into a single room, each focused on a different wall. Put a fake “deck” in the middle of the room with a real beer cooler, stocked with popular brews. Run an endless boating DVD on the 4 televisions (like the Yule Log). Charge $100/day per “passenger” and hold a lottery so that 1 out of every 4 passengers wins a fish. This is the fast-track technology solution.
The super yacht industry is alive and well. Vessels over 80 feet can’t be built fast enough. My good friend Sara Montefiore, General Manager USA for Camper & Nicholsons International, shared this week that if new orders ceased tomorrow for luxury yacht builders it would be a minimum of three years before they’d consider lay-offs.
Also consider that 20% of all super yachts have been built since the 2005 slowdown referenced in the article.
The rich get richer in this economy.
Boat builders–and anyone else making or selling anything–would be wise to move upscale and go after the money. The super yachts are just one example of an industry thriving in this economy.
The motor yacht owner I know is simply leaving it in port or anchorage longer and using the smaller vessels to get around.
Small (14-65 foot) gas and diesel powered pleasure boats are an endangered species. These are normally owned by middle-class individuals and families who cannot sustain $5-$6+ a gallon for fuel simply for boat rides or fishing. Mass small boating was built on cheap fuel. Boats only get 3-7 miles per gallon, and in some cases a lot less. Those days are gone, and soon the middle class power boater will join the exodus.