New Era seeks to assert position as lifestyle brand
New Era is building on the post-Covid success of its cap business and intends to accelerate. The American brand, founded in 1920 and which made a name for itself by creating caps for baseball, basketball and American football sports teams in the United States, is enjoying positive momentum.
"We've almost doubled our sales from before the crisis," said Laurence Joslin, marketing, brand and product director for Europe who is based in London.
"Since 2015, we've been growing every year, and over the last two years we've seen growth of 45%. The impetus is on caps, but also on accessories, which represent a small percentage of our business, and on apparel, which is close to reaching 20% of our sales."
Without providing details of the company's sales, which, according to the American trade press, reached 750 million dollars prior to the Covid-19 crisis, the brand's directors expect to realise their best year to date in 2022. And 2023 could, after a good spring/summer campaign, be even better.
It must be said that the company, which was one of the few unlisted companies of such size in the industry still run by its founding family, is moving in a different direction.
For years, New Era was the go-to brand for a fine New York Yankees cap, either in the American baseball franchise's classic colors or in its signature red version created thirty years ago at the request of director Spike Lee. Every sports team fan could find products that were well made, constructed and embroidered with care, according to the twenty-two steps of production that have made the brand so successful. This continues to be a significant part of its business in the United States, where fans wear the brand's caps both inside and outside of sports arenas.
The company's lifestyle culture has spread internationally, particularly in Europe. The company's primary market in Europe is Germany, due to its sizeable U.S. sports fan base, followed by France and Great Britain, while its Spanish and Italian subsidiaries are showing strong growth, according to New Era's management.
American sports leagues and Acon Investments fund acquire an equity stake
The company's history, which is deeply linked to American sports, will continue to be a core pillar of the brand. Especially since last summer, the MLB (baseball league), the NBA (basketball league) and the NFL (American football) have taken a stake in the company founded by the Koch family. With the Covid-19 period, the company's current CEO Christopher Koch opened the New York-based company's capital for the first time in history, with Acon Investments fund acquiring a 15% to 20% stake.
Last summer, the company carried out a new round of financing, reportedly for $700 million, again with Acon, as well as other players including American sports leagues. Koch will remain president and will retain control of the family company. He handed over management roles in the meantime, making Jim Grundtisch worldwide president of the brand and Jim Patterson president of operations.
With this injection, the brand will be able to build on its global momentum by strengthening its network of stores in North and South America, where it recently opened new stores in Mexico and its first store in Argentina, as well as in Asia. In Europe, the company has tested flagships in the past, notably in Paris, but now prefers to focus on working with leading sports, streetwear and lifestyle retailers.
A specific strategy for Europe
In addition to American sports, New Era is betting on European sports.
"We are taking a reversed approach," said Yves Pham, who manages the brand's operations in France. "Clubs and federations used to have their own fan merchandise and were rather reluctant to diversify their equipment suppliers by product category, as is the case in the United States. In rugby, we are currently developing with the Stade Toulousain and the French Rugby Federation, with initiatives for the World Cup and efforts to promote distribution in stadiums and sports retailers. For the French national team, we have proposed more sophisticated caps, with a more subtle logo, and we have seen a rapid response in sales for these products. In motorsports, we have been working for a long time with Renault and now Alpine, and we do a lot of work on sports and lifestyle."
New Era currently works with the Manchester United, Tottenham and Chelsea soccer clubs in England, with whom the brand develops specific products. In addition, the brand supplies most of the clubs in the German first division and has recently signed with a major Italian league club. But New Era has also scored recently in motorsports. It has already styled the Alpine and McLaren drivers and has just announced an agreement with the reigning world champion team Red Bull and its Dutch star Max Verstappen for next spring.
But New Era is more than just a cap supplier, offering a range of styles starting at 25 euros (Trucker, 9Fifty, 9Forty 39Thirty and the iconic 59Fifty) that appeal to a wide variety of customers, and wants to establish itself as a brand in its own right.
"We're transitioning from a New Era branded U.S. sports franchise cap to a New Era cap for a club. We know that consumers identify a product as authentic when it has our New Era logo on it," said Joslin. "Interest in the brand is strong, so we need to cultivate that. We need to build on that to grow the brand."
That was the idea behind the brand's latest poster campaign, 'Always On Side', which was launched in the fall of 2022 and will continue into the spring. Displayed in Paris at metro exits as well as in other major cities, the campaign opted for lifestyle visuals with complete New Era silhouettes. The brand makes a strong statement with hoodies, tracksuits and varsity jackets, all synonymous with U.S. sports culture.
This is enough to satisfy consumers who are fond of streetwear and to start offering complete looks to fashion retailers, such as Citadium and the many independent streetwear stores in Paris and surrounding areas, as well as to sports retailers such as Blackstore (Intersport) or WAS (Sport 2000). In Europe, the brand is clearly aiming to take advantage of its momentum to gain market share.
"We have benefited from a favorable headwear market since 2020, as retailers have decided to focus their purchases on one or two brands in each product category, from the introduction of our apparel offer to several major accounts and from the impact of our collaborations," analyzed Joslin. "This year, our collaboration with Bisous Skateboards gave us great local visibility in the French market. And, undeniably, our collaboration with Saint Laurent gave us international visibility and allowed us to reach new consumers."
In 2023, New Era will therefore continue this strategy of deploying collaborations. About ten launches are planned for the year, with very local activations and projects with global resonance. Pham, who initiated the partnership with Saint Laurent, is convinced of the company's potential. Eager to present the second collaboration with the French luxury house, he is already planning other projects to bring New Era to the fashion week catwalks in 2023.
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