Drummond Golf tees off a sales process

According to the AFR, Drummond Golf is looking for potential buyers after 22 years of ownership.

If you’ve ever stepped foot onto a golf course then you likely know Drummond Golf, but you probably don’t know the extent to which they’ve covered the golf market.

They boast 30 per cent market share with more than 150,000 golfers visiting stores monthly and have revenue streams coming from everywhere.

So how did they get here, and where to next?

Here’s the story:

Chasing Growth

Mark and Ravi Abeyaratne bought the franchise back in 2002, 28 years after the first store opened back in 1974 in Bendigo Victoria. At this point there were 11 stores. Mark & Ravi have their minds fixated on growth, in the following 2 years they doubled the number of stores, and in 2004 they launched their membership loyalty program for the first time. Today they have 400,000+ members each paying $39.95, bringing in $16 million.

They continue this aggressive growth strategy in the early 2000s, opening up stores across every state. Then the GFC hits and the store openings slow considerably, from 2009 to 2013 there are only 6 stores opened, compared to 21 in the four years prior. Whilst I can’t find any documentation as to why this growth slowed, it is likely due to the impact the GFC had on disposable income, with golf being a luxury that can be taxing on the wallet.

Since then Drummond has held a more maintainable level of store openings and has instead focussed on diversifying their revenue streams.

Diversifying

In 2015 Drummond Golf launched Big Swing Golf, ‘Indoor golf. Real, fun, fast’. This allowed them to move from servicing the weekly golfer, who is serious about their golf equipment, to now also addressing the more casual golfer.

Big Swing Golf allows you to play a round of golf with some mates, all from the comfort of an air-conditioned room while having a few drinks. If you get tired of it before finishing the round, which many casual golfers do, you can just take a seat and focus on the social element.

Removing the need for serious time commitment and braving the elements ushered in a whole new customer base, who would get a taste for golf and then often start playing more regularly.

In 2016, Golf Works Australia was launched, operating a warehouse and distribution facility to provide wholesale golf equipment to retailers. The main customer of Golf Works Australia is reportedly Drummond Golf, so it is self-serving in a way, but it does allow Drummond to collect a greater piece of the pie and gives them the ability to spin off this business in a separate sale.

So now they have revenue coming in from the franchise and owned stores, the e-commerce store, loyalty memberships, Big Swing Golf simulators, and wholesale. The only area they don’t have covered is the actual golf courses.

The Future

Prior to Covid, golf was pretty well reliant on Baby Boomers but when Covid hit, people couldn’t go to pubs, they couldn’t go to gyms, and they weren’t able to play most sports at all. Everyone was looking for something you could do in that period. It was easy to uphold the social distancing rules of 1.5 metres out on the golf course, and it allowed people to get out of the house for half the day.

On top of this, LIV Golf launched in 2022, providing a completely new form of golf entertainment. Having attended LIV Golf in Adelaide earlier this year, I can attest to the show they put on. Each hole has something different to offer, from your standard quiet spectator holes through to the “watering hole” with music pumping and beers thrown onto the course after each shot. This attracts the complete spectrum of spectators, from bucks parties through to parents with their children.

18 to 35-year-olds are now taking up the game in droves.

These groups are coming in and buying a package: “I just want something; I’m having a hit with my mates.” Then, over the next year or two, you get that same person saying, “I love the game. I need to get some golf shoes. I need to get the clothing. I need to look the part.”

Where I see the game heading is towards a gym membership business model, where these younger players can head into a local golf simulator and practice their shot throughout the week before hitting the course on the weekend.

Drummond Golf has this all covered.

In addition to the several stores they plan to open in Australia over the next couple of years, they also plan to expand into the NZ market. Despite the already deep market penetration, there is still plenty of room for growth.

Here’s the Deal

Drummond Golf has hired Lion Advisory, who started pitching the 50-year-old company to interested parties last month, mailing out a seven-page teaser that spruiked a plan to grow the business and deliver $12.6 million in earnings by 2026.

The interested parties are likely PE funds or golf enthusiasts, however names haven’t been revealed at this time.

Thanks for reading,

Archie Sampson, Founder of Prepped