The approach allows Bauer to retain some control over the way its products are sold. So far, the company has grown from 20 retail partners three years ago to about 150 sporting goods and department stores now. Countries like Latvia, Belarus and Kazakhstan are also on Bauer’s radar.
The question, though, is how much room is there to grow Bauer in Russia and Eastern Europe. Even in Canada, data on the hockey equipment market is difficult to come by for financial analysts. Eastern Europe is tougher yet. “It’s a very specific question in an area where data is limited,” says National Bank’s Johnson. “Trying to find stats on Eastern European and Russian hockey participation [and] the amount they actually spend on gear is very challenging. We’ve had a lot of problems trying to aggregate that.”
The other burning question is whether the gains to be made in new markets can offset the maturation of the hockey equipment market in North America. That’s unlikely, given the sheer size of the Canadian and U.S. businesses. Though Bauer doesn’t break down its financials by sport, Davis estimates that roughly 90% of the company’s $400-million revenue in fiscal 2013 came from hockey. Of that figure, $296 million was earned in North America, while the rest of the world, including large retail distribution channels in Scandinavia, accounted for $104 million. Though Russia and Eastern Europe aren’t broken out, they would represent a small slice of that pie. So swift growth in those areas wouldn’t translate into a major impact on the balance sheet. Not for now, at least.
Bauer opened its first Siberian office in June, which will act as a distribution and marketing hub for the region.
The outpost is located in Novosibirsk, Russia’s third-largest city after Moscow and St. Petersburg. It is still more than 1,400 kilometres from Sam Babintsev’s hometown. But it’s a start.
“Obviously [Siberia] is not easy to get in and out of, or not easy to get to,” Davis says. “So, having a localized office there with our distribution partner, we’re able to service the teams out of that region and really continue to pick up market share.”
Throughout the country and digitally, advertisements showing Ovechkin in his Washington uniform have been rolled out in advance of the Olympics. The ads speak directly to young Russian hockey hopefuls, with slogans in Cyrillic that seem almost reminiscent of old Soviet posters encouraging the workers to press on: “We see your hard work. We see your return. Long hours. Defeats and victories. We see you,” the text proclaims, atop a heroic picture of the NHL star.
Bauer expects its sticks and skates will be used by many of the hockey players competing in Sochi, including much of Canada’s squad.
When Ovechkin steps onto home ice, Bauer will be hoping he scores—on the ice, but more importantly, for the brand. Russian eyes will be on his stick, his skates, his helmet and gloves. If all goes right, it will be the start of a beautiful relationship.Report Typo/Error
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