Five years ago, the two heavyweight contenders among golf-club makers were Callaway, ELY +0.29% still selling its famed Big Bertha drivers, and its Carlsbad, Calif., neighbor TaylorMade, pioneering moveable-weight technology. Yes, other companies were in the fight, each with its own strengths. Ping made great woods and irons; Cleveland was known for its wedges. Titleist and Mizuno 8022.TO -0.72% catered to elite amateurs, while Cobra specialized in clubs for the common man. Nike NKE -0.16% had Tiger Woods. But overall, and especially in the all-important category of drivers, which players replace more often than other clubs and which have the highest price tags, the rivals from Carlsbad were way out in front.
Fast forward to today: TaylorMade hasn't just blown away Callaway, it now positively dominates the business. Last year in the U.S., TaylorMade captured 47% of every dollar spent on woods (drivers, fairway woods and hybrids), according to Golf Datatech, the industry's leading market-research firm. That's up from 26% in 2007 and a mere 11% of the driver-only market in 2002. In irons last year, it hauled in 25% of all sales, up from 16% in 2007. No other company comes close. Callaway, though still No. 2 in clubs overall, has slouched back closer to the pack. Its sales have declined 26% since 2007, while TaylorMade's in that period are up 21%.
TaylorMade's rise is even more remarkable considering that the $2.6 billion golf-equipment market, as tracked by Golf Datatech (excluding goods sold at sporting-goods stores and mass merchants), has shrunk by $300 million since 2007. Every bit of TaylorMade's growth has come from the hide of its competitors.
How did the company pull it off? Primarily by a relentlessly aggressive management style—"pushing the envelope on every front," in the words of Chief Executive Mark King—aided by some gambles that paid off, a series of missteps by Callaway and a recession poorly timed for everyone but TaylorMade.