Adidas told journalists converging on its head office Tuesday that it expects to achieve record sales of €2 billion in football in 2014. This compares with sales of more than €1.5 billion during the World Cup year of 2010 and a little over €1.7 billion in 2012, when Adidas benefited from the European championships in Poland and Ukraine. Like in 2011, when the category generated sales of €1.5 billion for the company, no major tournaments are planned for this year, but the management hopes to hold sales at €1.7 billion.
The Big a continues to claim the leadership in technical football. Nike has claimed before that it is bigger than Adidas in this category and it would not be surprising to hear that claim again, but it would be good to know whether it uses the same definition of the market as Adidas, which includes replica kits but does not include other football-inspired lifestyle products. Adidas estimates that it has a 37 percent share in a technical football market worth about €5.4 billion a year at wholesale on a global basis.
Nike's share looks similar at first sight. For its last financial year, ended in May 2012, Nike had reported revenues of $2,006 million worth of football products, or less than €1.6 billion. That doesn't include sales of football products by Umbro, which had sales of more than $260 million but is no longer part of the Nike group.
To reach its new goals, Adidas will invest more money than before in football, said Herbert Hainer, chief executive of the Adidas Group, declining to provide any specific figures. Markus Baumann, senior vice president in charge of global football, said that Adidas wants to reach this goal also through a steady flow of “cutting-edge” products until the 2014 Fifa World Cup in Brazil and afterwards, starting with the first jerseys in October of this year. It will offer quarterly updates for the jerseys and other products, changing the colors and other details.
Last month, Adidas introduced a new football boot, the Nitrocharge, which can be connected to its MyCoach system, and staged a special ‘Adidas lab' in London. Focusing on football, it was the first of a series of events showcasing Adidas products of the past, the present and the future. It featured its new 99-gram Adizero boot, its 630gram Kit, its Smart Ball and its MyCoach Elite System. The Smart Ball has built-in sensors that track its movement and feed information to the player's smartphone to improve his power, spin and accuracy. MyCoach sends data to the coach's tablet on the power, speed, distance, heart rate, acceleration and field position for each player on the pitch. Due to come out in 2015, the 630-gram Kit includes a base layer that is connected with the MyCoach Elite system.
As usual, Adidas will launch the official match-ball for the World Cup next December. Called Brazuca, it follows almost two years of testing, but Adidas officials declined on Tuesday to reveal any of its features. The company is confident that the 2014 sell-in will exceed the 13 million balls it marketed during the last World Cup year.
Adidas plans to launch its biggest campaign ever next year in connection with the World Cup, which it sees at the same time as an opportunity to consolidate its global leadership in football and to overtake Nike's leadership in the Brazilian sporting goods market. According to our market research, Nike had sales estimated at 1.2 billion reais (€404.2m-$532.7m) in Brazil in 2011, against R$900 million (€303.2m-$399.6m) for Adidas.
Adidas is investing strongly in Latin America, which turned out to be the fastest-growing region for the group last year with sales of €1.4 billion, a big jump from less than €200 million ten years earlier. Adidas claims that it is gradually closing the gap with Nike in Brazil, but Hainer admitted that it will be a big battle next year between the Three Stripes and the Swoosh.
Nike will have the Brazilian national football team, but Adidas will remain the official sponsor, supplier and licensee of the World Cup. Nike will have a presence in most or all of the cities hosting the tournament, but both brands will outfit many of the national teams qualifying for the championship. Adidas will probably have eight to ten national teams and capitalize on its sponsorship of big players like Lionel Messi, who was awarded Fifa's ‘Ballon d'Or' a few weeks ago for the fourth time in a row. Besides its numerous sponsorship deals, the Three Stripes will make strong use of social networks to support its presence in the Brazilian market during the World Cup.
For the moment, the Fifa/Coca-Cola power rankings for the national teams give Adidas a clear advantage over Nike, placing the Spanish, German and Argentinian teams in the lead, followed by Croatia and the Netherlands. The French team, which Nike has snatched from Adidas at a very high price, ranks in 18th place. Brazil is only #22 on the list, but it is given a good chance to score well next year because it is going to play at home. The leading bookmakers are currently placing Brazil in first place in the betting for the World Cup, followed by Argentina and Spain.
Adidas made a big investment in the Brazilian football market a few weeks ago by signing up the famous Flamengo football team of Rio de Janeiro, previously sponsored by Olympikus. At the Confederations Cup in Brazil, which has just started, four out of the eight participating teams are going to be equipped by Adidas: Spain, Mexico, Japan and Nigeria. Adidas officials hope that the Flamengo deal and its presence at the Confederations Cup will help it to maintain its turnover in football at last year's high level.
Meanwhile, the start of the Confederations Cup is being marred by the largest protests since 1992 throughout Brazil. More than 200,000 people demonstrated in the last days in a dozen cities to complain about higher bus fares, poor public services, the high cost of living and political corruption. Scenes of violence erupted in São Paulo. Authorities in São Paulo and Rio de Janeiro have decided to bring bus fares down to the previous levels.
