Like some other outdoor sports, tennis has enjoyed a recovery from the effects of the Covid-19 pandemic of this past spring, as players can easily respect social distancing rules in the tennis courts. In the first half of this year, Babolat, the world leader for tennis racquets, came 20 percent below its previously set budget of a 10 percent sales increase, but the company is now projecting a decline of only 15 to 16 percent in its turnover for the full year.
The French company is also hoping to realize in 2021 the 10 percent increase that it had expected to book in 2020, thanks to a revamped website, its successful launch last month of a new generation of its Pure Drive tennis racquet, the introduction of a selective distribution policy in Europe and its involvement in the growing game of paddle tennis. The victory this past Sunday of Rafael Nadal in the Roland-Garros tournament for the 13th time with a Babolat racquet, in a long duel with Novak Djokovic, will no doubt give a further boost to the brand. In the Paris tournament, the 34-year-old Spanish champion also matched Roger Federer’s score of 20 Grand Slam wins during his career.
Babolat was already pursuing a selective distribution program in the U.S., where it has qualified as the leader in the upper segment of the tennis racquet market. In Europe, it has decided to institute three levels of service and engagement with the 5,000-odd points of sale where the brand is sold.
Only 500 of them, including online/offline retailers like Tennis Point, Tennis Warehouse and Tennis Pro, with which it has struck a strategic alliance, are benefiting from the highest level of support as members of its top-level “match cluster,” which includes access to its new Pure Drive and other premium products. Their physical stores are being invited to feature a special new, dedicated “Babolat Branded Space.” The members of the lowest tier, called “game,” will only be able to sell the brand’s cheaper products for beginners and intermediate players.
Babolat is also hoping sooner or later to reap the fruits of its strong investments in the Chinese and Japanese markets. As already reported, it set up a new Chinese sales subsidiary in Shanghai in the summer of 2019, which currently employs 15 sales and marketing officials. Three months ago, it did the same in Japan, the second-largest tennis market in the world after the U.S., taking over the distribution from Sumitomo Rubber, the new owner of Dunlop.
Babolat claims to be the leader in the Japanese tennis market already where its first deliveries of the new Pure Drive were quickly sold out, but it is trailing Wilson at a distance in the much smaller Chinese tennis market. With the help of a local agency, the French brand is trying to make a name for itself in the social media, gaining a reputation in racquet sports that could place it as an alternative to Yonex, Victor or Li Ning in the country’s much bigger badminton market. Li Na, the Chinese female tennis champion, is still acting as an ambassador for Babolat.
In the shorter term, Babolat is banking on the growing popularity of paddle tennis in China and in some other countries outside Spain, where the vast majority of the market is still concentrated. While the paddle tennis market is evaluated at around €180 million a year at the retail level, it is growing at an annual rate of around 20 percent as it continues to expand outside Spain, particularly in markets such as Italy, France, the U.K. and Sweden. In contrast, the tennis and badminton markets have been relatively flat worldwide in terms of growth in the past few years, stagnating at much higher levels of around €1 billion and €1.2 billion at wholesale, respectively, including equipment and softgoods.
Babolat’s sales in this segment are rising at a faster rate than the market, partly because of strong international presence of the French brand. Eric Babolat, the president of the eponymous family-owned company, reported about a real “explosion” of paddle tennis in Sweden, thanks largely to the support of local celebrities like Måns Zelmerlöw, winner of the Eurovision song contest in 2015, or Jonas Andersson, a former Swedish hockey champion. The popularity of paddle tennis in Sweden is contaminating the neighboring Scandinavian markets of Norway and Denmark, and Babolat is benefiting from it because of its strong position in the Scandinanvian countries.
Together, badminton and paddle tennis represented about 10 percent of Babolat’s sales in 2019. Its investments in these two sports helped the company to post a slight increase in its total revenues to €136 million last year from €135 million in 2018, offsetting a drop in its sales of tennis racquets.
Due primarily to strong competition from Wilson, which launched a new family of tennis racquets, Babolat’s share of the global market fell by an estimated 2.5 percentage points to 30.9 percent in tennis racquets and by 1.5 percentage points to 30.2 percent in tennis strings. The global market was flat in terms of value, but down slightly in terms of volume.
The ongoing development of the company’s footwear range, in cooperation with Michelin, is also expected to sustain Babolat’s growth. The brand has developed the first specific shoe model for paddle tennis. As previously reported, it has also invested along with other French firms in a new project for the automated manufacture of sports shoes in France, opening up the possibility to produce customized products.
The project is run by Chamatex, which has been supplying the fabrics for its uppers of its Chinese-made shoes. Babolat plans to come out with its first shoe made at the new French factory in 2022. If the project works out well, its investors may consider replicating it in the U.S. and Asia to get closer to the local markets.