Press Conference Speech
15 July 2010, OutDoor, Friedrichshafen, Germany
David Udberg, President, European Outdoor Group
Managing Director, Lowe Alpine UK

Welcome
As the new President of the European Outdoor Group (EOG), it is my pleasure to welcome you to the 17th OutDoor Trade Fair. Our industry looks forward to OutDoor as the perfect venue to present our companies, our products and our people.

OutDoor provides the perfect venue to renew and develop relationships, both business and social, and I believe we come away from OutDoor as a stronger and more cohesive industry as a result.

My role this morning is to give you a very short overview of what has been happening in the outdoor sector and what is on the horizon.

The situation last year
Exactly one year ago we were right in the middle of the biggest economic crisis the world has seen for some considerable time. From an outdoor perspective, we stated then that the outdoor industry was like a ‘Lighthouse in a stormy economic sea’ as our sector was still reporting positive growth. Yet at the same time we were cautious in our view of the coming months, stating that much would depend on levels of employment if our sector was to continue to see consumer confidence. So where are we now?

One Year On
Most countries have seen some level of stability return to their economies but we are still suffering from continued troubling economic news. The latest phase of the crisis is focusing on the levels of governmental debt. Across most of Europe we are seeing governments seeking to reduce their spending and lower their levels of national debt. With this comes the fear of cuts in state services and corresponding reductions in employment etc. In spite of this, we have stated before that we believe that outdoor activities are, for many consumers, a deep-seated passion that works as a necessary counter balance to the stresses of modern life, and nothing has changed since last year to make us doubt this. Our consumer study of last year, the growth figures from our companies and last but not least, the latest forecasts of turnover for our sector, all point towards the outdoor industry being in a healthy condition.

As an obvious source of information on the outdoor industry, the EOG is frequently asked to assist main stream newspapers and I would like to share with you a recent request from one of Germany’s largest daily newspapers, who’s Finance Editor is writing an article on the outdoor industry;

“I would like to ask you about the main reasons for the outdoor boom in the last years. I remember when I was a kid in the 70s and 80s, hiking was the last and most boring thing to do for kids. Today my kids want a Wolfskin jacket, Lowa shoes and a coloured backpack and love to walk in the mountains…do you have an explanation for this phenomenon?”

You know, this is a re-assuring question to receive, as it is further anecdotal evidence that outdoor products are capturing the imagination of the public across all age ranges. More importantly, it is evidence that young people are interested in the outdoors and it is young people who represent the future of our industry. We are increasingly seeing societies reacting against the type of passive lifestyles that are leading to young people being overweight and unhealthy. Increasingly we see movement to promote a more active lifestyle for young people and outdoors is probably the finest way to achieve this. I believe this trend augers well for our industry for the future. Let’s be clear, outdoor products are great products and to be associated with outdoor activities is something to encourage – we see increasing evidence that our kids are starting to adopt this.

So, is the industry universally buoyant? Well if you take the figures recently released by NPD, then perhaps not. NPD’s survey of the market states that turnover in 2009 reduced by 1%, but from a specialist outdoor perspective (i.e. the brands that make up the membership of the EOG) we simply do not recognise this number. Many of our members have posted strong growth figures. For example: Jack Wolfksin, Fenix / Fjällräven, The North Face and Mammut Sports Group have all posted double digit growth figures in the last year.

Of course not every company is enjoying such growth, but even allowing for adjustment the EOG estimates that the specialist market grew on average by 2-3% during 2009, which in terms of our definition of ‘specialist’ gives a European outdoor industry turnover of approximately €6 billion. This is of course a lot less than the headline figure of €14.1 billion that NPD state, but please remember that their figure includes lots of areas we don’t include (e.g. ski, hunting, fishing etc and also includes the lower priced areas of the market that our members typically do not supply).

The differences between these figures highlights the difficulties of comparing market research data and more specifically how to define ‘outdoor’ within our industry. To ensure we continue to find solutions to this, the EOG is currently evaluating a new market survey system that we feel will empirically grow our knowledge significantly. We will update you on this at a later stage.

What are the key issues for the industry right now?
There are a number of new topics that the EOG is working on for the future and we believe it is important to have an industry wide approach to these topics.

Sustainability
Growth in any sector brings new challenges and one of the most important is ensuring that what we do has the minimal impact possible on our environment. To achieve this, the EOG set up the Sustainability Working Group in July 2008 and since then the group has been working tirelessly with our US colleagues at the Outdoor Industries Association, to develop an index for outdoor companies to use to evaluate their company’s environmental impact and to develop strategies to reduce this. We are pleased to announce that the Beta testing phase of this index will be launched at the Sustainability Breakfast at 08:30 on Friday the 16th in Room Berlin. In addition to this, the group will be hosting a second breakfast meeting on Saturday the 17th to look at the launch of a new tool for companies to use to keep up to date on environmental regulations.

Social Responsibility
Another aspect of company stewardship that is of key importance to us as an industry is that of Social Responsibility. Our sector is largely made up of small to medium sized enterprises that have typically developed their own social compliance codes over the years. Whilst this has served the industry well and has provided us with a generally good standard of social compliance, we are finding that there are more and more pressure groups intent on gaining publicity by criticising anyone who does not have an internationally recognised social compliance partner. This challenge does not hold any fear for our industry and the EOG is currently discussing sector partnerships with a number of providers such as the Fair Wear Foundation, the BSCI and MADE-BY. We expect to be providing all our members with an EOG endorsed CSR compliance policy in the near future. We believe this will be helpful to our members but will also offer our customers and consumers an assurance of a strong CSR policy across our industry. One thing we can say with certainty is that the outdoor industry is not comparable to fast fashion organisations and that we generally make durable, quality products to a high standard of social compliance.

Economic Pressures
Whilst our sector is buoyant in growth terms, we should also mention some of the other pressures that we see as an industry. During the last 20 plus years we have seen the majority of manufacturing move to Asia. This has generally been a positive trend in that it has brought relatively lower prices to consumers and also enlarged the worldwide economy. However, over the last year or so we have seen a significant movement in costs. This is attributable to a whole host of reasons such as rising raw materials prices, currency exchange fluctuations, labour cost increases and probably quite surprising for some people to hear, shortages in the availability of skilled labour. These are, naturally occurring factors as the world economy moves forward and reacts to changing circumstances and a developing economic environment. Such is the nature of competition within our industry that we believe outdoor brands will do everything they can to ensure that their products remain competitively priced and attractively priced to consumers. However, it may be that the days of relative cost reductions from Asia are over and that we all have to prepare for rising costs as we enter the next decade.

Conservation
Once again we are delighted to say that the industry’s conservation group, the EOG Association for Conservation, has gone from strength to strength. Boasting over 60 members the Association is tireless in raising money in order to support conservation projects. So if you would like to get yourself some outdoor gear at special prices and by doing so contribute to the work of the Association, then visit their booth in the East Foyer.

Summary

• The outdoor industry is in good health and has so far, weathered the economic storm.
• We still predict some turbulent times with economic pressures and austerity measures still capable of impacting what we do.
• Outdoor products are universally appealing and probably more widely accepted now than at any time previously.
• We need to build on this and reach out to ensure that access to the great outdoors is there for everyone, from young to old.
• We are building on a strong foundation to ensure that our sector has the right policies on the environment, sustainability and social compliance.
• Finally, we are all fortunate to be working in a wonderful industry. It is full of people with a real and driving passion for what they do and who are determined to deliver ever better products to our customers and consumers.

Above all, this is our life and I believe we all continue to have great fun doing what we do!

Notes to Editors:
The European Outdoor Group is an association set up to represent the common interests of the European outdoor industry.
Founded in 2003 the European Outdoor Group has 55 members, which include some of the largest brands in the world. The combined strength of the member brands, and a close cooperation with national outdoor associations, provides an extremely powerful force to represent the whole European outdoor industry in a constructive and positive manner.

Further information about the European Outdoor Group can be found on the website:
www.europeanoutdoorgroup.com
Or contact Vanessa Knowles, Tel: +44 1942 886402
vanessa.knowles@europeanoutdoorgroup.com