Callaway Golf Company CEO Ron Drapeau told CBSMarketWatch, "We have become known as the company that brings innovation to the game for the average golfer. We're not focused on the elite professional players. It's been a very successful approach for us."
But that is not to say that Callaway clubs are spurned by professionals. By the end of the 2000 professional tour, Callaway Golf ranked as the most-played manufacturer of drivers, fairway woods and irons on the world's five major professional tours combined.
Best known for its Big Bertha, ERC II, C4, Hawk Eye VFT, and Steelhead drivers and fairway woods, Callaway Golf also makes irons, wedges, Odyssey White Hot and Dual Force putters, and several long-distance golf balls including the HX, CTU 30, and CB1. The company also licenses its name for apparel, golf bags, and other golf accessories.
Callaway Golf had its beginnings in 1982, when a 60-year-old recreational golfer by the name of Ely Callaway, who in earlier incarnations had served as president of Burlington Industries and founder of a world-class winery in Southern California, purchased a financially troubled company that manufactured one of his favorite golf clubs.
Given that the conventional golf club had been around for approximately 250 years, Ely Callaway figured that there was plenty of room to re-invent it. Although his new company started off manufacturing rather traditional hickory-shafted putters and wedges, by 1988 the Callaway Golf Company had introduced a remarkably innovative set of irons under the label S2H2. These irons featured hollow shafts with weight redistributed to the hitting area.
One year later, Callaway Golf introduced its S2H2 metal woods. Again, the weight of the club was distributed to optimize efficiency. The hickory shafts were by now gone, having been replaced by steel or graphite. In 1990, the S2H2 Driver was the number one driver on the Senior PGA Tour.
In the 1990’s, Callaway introduced yet another new line of woods that featured the S2H2 design with an oversize head. Compared to "an oversize tennis-racket for golfers," the Big Bertha driver, which was named for a World War I cannon, permitted straighter shots on off-center hits. Pro golfers were impressed with the feel and distance they got from the club, and by the end of the 1992 golf season, the Big Bertha driver was ranked Number 1 on the Senior PGA, the LPGA and the Hogan tours. Callaway Golf was now well on its way to achieving a reputation for producing forgiving clubs that helped lower scores.
In 1995, a second generation Big Bertha, the Great Big Bertha, was introduced. The new club featured larger (titanium) heads and longer shafts, but lighter overall weight than its steel predecessor. Later, in 1997, Callaway Golf would introduce an even bigger Big Bertha – its Biggest Big Bertha Titanium Driver.
Callaway clubs are not cheap – they typically cost several hundred dollars – so anyone who buys one might reasonably hope that it would lower his golf score a few notches. And although Ely Callaway never made that claim explicitly, he once noted that if his clubs didn't help golfers make more pleasing shots, his company would probably not be selling as many of them as it did.
In 1996, Callaway Golf set out in an entirely new direction and began building a facility to design, manufacture and sell superior golf balls. Coincidentally, 1996 was also the year that Ely Callaway decided to relinquish his title of CEO of Callaway Golf.
But Callaway was not to get back to the links so easily. Despite Callaway Golf's introduction of its best-performing X-12 stainless steel irons in 1998, the company soon found itself in the rough. A saturated US market coupled with a soggy El Niño winter in California and a downturn in the Asian economy left the company's sales hurting. Callaway Golf responded by lowering its club prices, by cutting 700 jobs, and by eliminating some of its side-stream operations. But more importantly, Ely Callaway agreed to take back the reigns as Callaway Golf's CEO.
With Ely Callaway back at the helm, Callaway Golf proceeded to introduce a new set of titanium metal woods, and its low-center-of-gravity tungsten-injected titanium irons. The metal woods reportedly gave the ball a more penetrating flight, while the irons facilitated long trajectory shots.
In February 2000, Callaway Golf introduced its much-anticipated Rule 35 golf balls. Named after the unofficial 35th Rule of Golf, which admonishes the player to "enjoy the game," the balls' superior performance made them the Number 2 ball in usage, top 10 finishes and wins in the five major professional tours in their first year in play.
In 2000, Callaway Golf announced that it would produce a new forged titanium driver. But with the introduction of its so-called ERC II Forged Titanium Driver later that year, Callaway Golf suddenly found itself double-bogeyed. Although the new driver was ruled eligible for play overseas (it was actually rated the top driver in Japan and the number-one driver on the Japan PGA tour), it was ruled to be non-conforming to the United States Golf Association's (USGA) limits on the coefficient of restitution – that is to say, its action was too spring-like – and the club was therefore deemed unacceptable for play in tournament events where USGA Rules apply.
By mid-2002, the USGA had decided that the banned drivers would be legal for use by recreational golfers – but not for professionals – until 2008, after which time they would again be considered non-conforming. The five-year window for non-professional golfers was still good news for Callaway Golf because it was primarily the recreational golfer, not the professional, that the company sold to. Meanwhile, one observer noted that to achieve the most benefit from Callaway's ERC II Driver, the player would almost have to have the swing of a professional. Since amateurs apparently did not stand to gain very much from the club and USGA professionals could not use them, the major effect of the USGA ruling seemed to be to create a barrier for professionals and amateurs playing together.
In 2001, Callaway Golf introduced its CB1 Red and Blue golf balls. The CB1 Red was designed for greater distance, and the CB1 Blue for long distance on short-iron and wedge shots. Introduced the same year, Callaway's Hawk Eye VFT Pro Series Titanium Drivers and Woods were aimed at low-handicappers wanting greater ability to work the ball off the tee or off the fairway.
But 2001 was even more noteworthy because it was the year that Ely Callaway died. Shortly after learning that he had pancreatic cancer, Callaway had retired as president and CEO. He was succeeded by Ron Drapeau, who had been with the company since 1996.
With Ely Callaway no longer on the green, Callaway Golf's future seemed uncertain, and there was speculation that the company might be sold. In fact, the company's stock began to move higher in the final days of Ely Callaway's illness, apparently in response to just such speculation. And it climbed again on the day that he died. Because Ely Callaway did not own a great deal of Callaway Golf stock when he died, he left few obstacles in the way of his heirs selling the company.
But it remained unclear who would buy the company. Callaway Golf's three major competitors were Fortune Brands, which owns Titleist and Cobra Golf; adidas, which owns Taylor Made; and Nike. Some observers felt that of these three, none would be an ideal buyer. No one, for example, could really imagine the Callaway brand with the Nike swoosh on it.
The good news was that a senior management team had been in place at Callaway Golf for the two years preceding Ely Callaway's death. In 2002, CEO Ron Drapeau predicted that the company would pioneer further innovations in club design, "because we're nowhere near done bringing products that we think will bring more enjoyment to the average player." That year, Callaway Golf introduced its C4 composite driver, designed to make it even easier for the average player get the ball on the fairway. CEO Ron Drapeau was hoping that the C4 composite would replace titanium as titanium had steel. And so, as of June 2002, it seems to be innovation as usual at Callaway Golf.