The current economic climate has not been kind to homeowners and drivers, and now there’s another group of Americans due to take a hit—tennis players. Over the past two years, the cost of carbon fiber, the primary building block of most racquets, has more than doubled, thanks in part to increased demand from the aircraft industry in order to build more planes. Meanwhile, labor costs in China, where nearly all racquets are made, are also up. Add to this the slide of the American dollar and mushrooming transportation and manufacturing expenses because of rising gas prices, and it’s trouble for tennis players. “It’s a perfect storm,” says Kevin Kempin, vice president of sales and marketing for Head/Penn Racquet Sports.
Companies are scrambling to find cheaper labor sources in China and throughout Asia, but it takes time and money to set up new manufacturing facilities. “China also has reduced export credits to manufacturers,” says Doug Fonte, the recently retired president of Prince Americas, who continues to consult at the company. “We’ve seen this before, to some extent, when you have periods of economic recession. But what we haven’t seen is the huge increase in oil prices at the same time.”
Tennis BallNow the big question is to what degree the additional expenses will be passed on to consumers. “We’ve seen our costs go up about 30 percent already over the past year,” says Sean Frost, managing director of Völkl/Boris Becker Tennis. So far, he says, his company has passed on only 10 to 15 percent of that to consumers. At the moment, racquet makers are trying to absorb most of the cost with corporate belt-tightening, but they’re hoping that most consumers won’t balk at slightly higher prices. “The seven top-selling racquets on the market all retail for between $170 and $200, and I believe most companies shoot for that range,” Kempin says. For example, the price of Head’s popular Prestige racquethas retailed for $199 for the past decade.
While sales aren’t expected to drop significantly, it’s also difficult to envision rapid growth in the near future. “If prices continue to rise, then I think you may see the occasional player putting off replacing his racquet with a newer model,” Kempin says. “And competitive players, who often buy two or three racquets at a time, might not buy as many and use older racquets as backups.”
Tennis balls may feel the squeeze as well. While prices abroad have been higher for a can of balls (in Europe a can of four can cost as much as $10), U.S. consumers have paid around $2 a can for the past 25 years. Why? A can of balls “is one of those focus products, like golf balls, that shoppers look at,” Kempin says. “If the price seems high, the consumer is going to think that the rest of the merchandise in the store is overpriced, too.”
But now, with the prices of key components of a tennis ball like petroleum, rubber, and resin all increasing, hitting the court with a new can is likely to become more expensive. “So much of what goes into the manufacturing process, the adhesives and heating, is petroleum based,” Fonte says.
Another reason the cost of balls may increase is a practical one—the public probably will accept it. “At Prince, we did a study that found if the price of a can of balls was raised from $1.99 to $2.99—50 percent—only 13 percent of consumers say they’d buy fewer balls,” Fonte says.
Meanwhile, racquet companies are watching their competition closely. “What could happen in this market is one company may decide to absorb the rise in costs and not raise its sales prices to retailers and consumers in a bid to increase its market share,” Kempin says. “Right now, we’re a lot like gas stations or airlines. We’re waiting to see who makes the first move.
...
Continue Reading
Length: 27.5
in.
MEN
WOMEN
