Adidas, the world's No. 1 football brand and official partner of the 2014 FIFA World Cup, wants to break $2.6B in football sales in '14, up from more than $2.2B in '12. Adidas Senior VP of Global Football MARKUS BAUMANN talked to SBD Global about how the company wants to achieve those numbers, new product innovations, growth potential and the impact of partnerships.
Q: At a press conference in June, adidas CEO Herbert Hainer set the goal of breaking €2B ($2.6B) in football sales in ’14. How do you want to achieve this goal?
Markus Baumann: We are very confident that we will break €2 billion in 2014 for the first time with sports performance football products. We will launch a firework of innovations in the next couple of months, starting from the end of 2013 onwards and then throughout the whole year of 2014. Innovations are key for us. They drive the industry; they drive the consumer. This is something where we clearly see ourselves as the No. 1 football brand, and we are very strong, and were very strong in the past, to always deliver innovations and bring innovations and newness to the game. In addition, we will also launch the biggest brand campaign in 2014. The World Cup and our strong federation and player portfolio will of course also help us to achieve maximum sales in 2014.
Q: You just mentioned innovations. Could give some examples?
Baumann: Unfortunately, I can’t give you too many details because we want to keep them secret until we are launching the innovation. Let me give one example on the match ball. We did something completely new, we already released the name. We worked all year on a complete new concept, we included the Brazilian population to vote for the name, so Brazuca is well-known, but so far nobody has seen how Brazuca is going to look. This is something where we will definitely generate a huge impact from a technical point of view, but also from a design point of view. All other innovations that we are rolling out will start in November with the federation jerseys. All those kinds of new products and innovations, technical stories, design stories, will create a lot of consumer excitement and, therefore, demand.
Q: What markets do you think have the biggest growth potential for adidas football?
Baumann: I believe that especially in Latin America we have huge growth potential. Over the last couple of years, we have always doubled our growth in Latin America as well as in Brazil. But we also look into markets in Asia, where we see huge growth potential. And also partly in markets in Europe, but that depends a little bit on the category because we see a lot of potential, for example, in team wear as not every market is as strong or as established as the central European markets like Germany and France. So there is also a lot of growth potential in European markets, but the biggest ones are definitely Latin America and Asia.
Q: Brazil recently hosted the Confederations Cup, and the event was surrounded by a number of protests. Do you think such protests would impact your business if they would happen during next year’s World Cup?
Baumann: I think it is a normal procedure that the people in Brazil used the platform of the World Cup to get awareness for their issues. I think this is normal in a democratic country and as long as those protests are peaceful it is absolutely OK. We don’t expect that this is somehow affecting our World Cup business because, as I said before, Brazil is an important market and we see the World Cup as a growth opportunity for us across the world, so in all other territories as well. Therefore, I don’t expect that this would have an impact on our business in Brazil or on our global business.
Q: Adidas is an official partner of FIFA and as such of the 2014 World Cup. How important is such a sponsorship deal in terms of sales, image and brand awareness?
Baumann: It is very important for brand awareness because we will have a massive presence throughout the World Cup with stadium boards, ball kids, volunteers in the stadium and referees. For brand awareness and brand visibility it’s a huge benefit for us. It also has a huge commercial impact for us through our licensing business with official lifestyle products such as bags, caps and shirts that we will launch in all markets. For brand awareness, image and also commercial impact, it is very important and very beneficial for us to be the partner of FIFA, UEFA or Champions League, which gives us unique commercial opportunities around the world.
Q: Adidas has an impressive portfolio of federations, clubs and players in its football family. How important are those deals and are you looking to add to it?
Baumann: As the No. 1 football brand, we are always looking at what kind of clubs, federations or players would be beneficial and would be a great addition to our portfolio. This is simply a normal process. The clubs and federations that we currently have in our portfolio are very important to us because they are not only representing the three stripes, but they are also important from a commercial point of view. For example, Bayern Munich’s on-field success by winning the historic treble this season clearly translates into sales numbers. In the whole year of 2013, we will sell more than 1 million Bayern Munich jerseys. Another example is Brazilian side Flamengo. The Rio de Janeiro-based club is the biggest club in Latin America with approximately 13 million supporters and the latest addition to our family. The deal with the club started in May and it shows that we also invest in markets where we see growth potential.
Q: Does it mean we can expect more deals to come in Latin America and Asia?
Baumann: If there’s a fit and the right symbol available, definitely, but I would not limit it only to Asia and Latin America because there are potentially also interesting opportunities in Europe. We are, of course, always looking to see what is possible here in the next couple of years.
Q: What about your competition such as Nike and Puma. How do you stay ahead of them?
Baumann: Most of the innovations in football came from adidas or were developed by adidas and this is somehow still the spirit that drives us. Our team is constantly looking and in close contact with players and coaches to see how the game is developing. I would say we are the brand that understands the game the best.
Q: What are the long-term goals of adidas football?
Baumann: I believe with new technology and new materials coming to the market in the next 10 years, there are still opportunities to further grow the business. We enjoyed double-digit growth in a lot of countries in Latin America, and we don’t see this coming to an end. The same is true for Asia. And there is growth potential in team wear, even in well-established markets in Europe. I believe football as a sport in the last couple of years got bigger and bigger and this gives me a lot of confidence that in the years after the 2014 World Cup we will be able to further grow the business and report new record sales.