Heitner pointed out that adidas AG (ADR) (OTCMKTS:ADDYY) made debut in FIFA World cup back in 1970 and for 2014 world cup turned out to be official sponsors of ball named ‘Brazuca’. Brazuca became a big hit in Twitter with over 3 million followers. He also said that Nike Inc. (NYSE:NKE) is close behind Adidas in the race. He feels that both these giants in the industry has considerable share in the soccer market.
“You have a very competitive market in soccer, where Nike and Adidas make up about 70% of the market place in soccer, With Nike reportedly taking in $1.9 billion in 2013, Adidas reportedly taking in about $500 million more than that”, he said.
Heitner feels that adidas AG (ADR) (OTCMKTS:ADDYY) has taken decades and put in lot of resources over years to come up to this position, whereas Nike Inc. (NYSE:NKE) made their debut during 1994 world cup when soccer came to US and in a short span of time closed the gap with Adidas.
Among the four teams that qualified for Semifinals of the world cup, Nike Inc (NYSE:NKE) sponsored Brazil and Netherlands, whereas Adidas sponsored Argentina and Germany. Heitner said that even though Nike sponsored teams did not qualify for world cup finals they have done very well during the campaign.
There was serious issue with the way these companies manufacture their gears. Many concerns were raised about the sweat shops, the conditions in which people work to manufacture and the child labor. Heitner considers that none of these concerns has affected the sales that these companies are making in the retail shops. He thinks that consumers even though hear about these concerns they keep buying the equipment’s manufactured by these companies.
adidas AG (ADR) (OTCMKTS:ADDYY) being a German company, everyone might think that it will be a bonanza for for the company if Germany lifts the world cup. But Heitner had other views.
“It’s huge, but you know what, at the same time Adidas would probably be just as happy if not happier, should Argentina win. There has been a very large focus for Adidas in Latin America in expanding its presence and it has done a fantastic job doing so. Not only does it sponsor Argentina, but it also has allowed Messi to create his own line of Cleats and it is doing fantastic across the board” Heitner said.
He feels even though the adidas AG (ADR) (OTCMKTS:ADDYY) home team Germany does not win the world cup, a win to Argentina is equally beneficial for them.