Germany 2006: A productive sibling rivalry: Adidas and Puma remain competitors

European
Germany 2006: A productive sibling rivalry: Adidas and Puma remain competitors
By Finfacts Team
May 4, 2006, 14:29

Germany is Europe's largest economy and the world's No. 1 exporter. According to the Ifo Economic Institute, business confidence was at a 15-year high in April and in the lead up to the FIFA World Cup that will begin in Munich on June 9th, we will publish a number of articles on the powerhouse of the eurozone.

The article below is the fourth of a series.

Once upon a time there once were two brothers making sports shoes together in a small town near Nuremberg. But they fell out and that led to adidas and Puma.

More than a million customers journey annually to this town sited along the road between Würzburg and Nuremberg. On holidays and over long weekends, the streets are usually packed.

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Adi Dasseler is the inventor of interchangeable screw-in spikes for shoes Source: adidas-Salomon AG

That’s because the sportswear giants adidas and Puma promise some great deals for people who know their sports shoes. That’s not the only positive economic aspect for Herzogenaurach though. Adidas employs 2,200 workers, while Puma has 700. The employees come from 40 countries. «Things are going relatively well for us,» says Herzogenaurach official manager Gerald Höfler.

Adolf (Adi) and Rudolf Dassler were the two brothers who left their mark on this small town’s shoemaking tradition. The pair started in 1924 at their father’s Herzogenaurach shoe making company and quickly branched out from there. At the 1928 Olympics in Amsterdam many of the athletes were wearing shoes labelled ‘made in Herzogenaurach.»

Then came the split. After World War II the brothers grew apart. «Their interests and expectations were too different. The divide between them became progressively greater,» wrote one chronicler in the local newspaper, the «Herzogenauraacher Heimatblatt.» Few other details are available. All that is clear is that Rudolf formed his own company in 1947, giving it the brand name Puma. His brother Adi registered his company as ‘adidas’ and began to oversee production of his shoes with their trademark three stripes.

Adi Dassler became legendary as the inventor of interchangeable screw-in spikes for shoes, the kind which the German National Soccer Team used to win at the 1954 World Cup in Switzerland. To this day, the rivalry between the two companies overshadows many elements of everyday life in this small Franconian town, which also happens to be home to Lothar Matthäus, the German national record holder and 1990 worldwide soccer player of the year.

The chief executive officers of adidas (Herbert Hainer) and Puma (JochenZeitz) rarely mention one another in public, although they keenly monitor each others’ activities. Both Hainer and Zeitz have successful years behind them. With revenue of 6.5 billion Euros, adidas is today the second biggest sporting goods label worldwide, behind Nike. With its recent takeover of U.S. competitor Reebok, adidas has narrowed the gap to Nike, increasing its revenue to about 9,5 billion Euros.

An event like Germany hosting the World Cup is an opportunity that comes along only once in a century says CEO Hainer. For adidas it means putting together its largest-ever marketing campaign. The company expects to break records for the sale of soccer shoes, jerseys, souvenirs and balls. Revenue from soccer merchandise is projected to exceed the one-billion-Euro mark. Soccer stars like David Beckham and Michael Ballack are under contract with adidas.

In some ways Puma’s recent success story is even more breathtaking than that of adidas. For years, the company with the feline predator trademark enjoyed double digit growth rates. With revenue of 1.5 billion Euros in 2004, Puma is the global No. 3 and, according to studies, is the «most coveted sports lifestyle brand in the world.» Anyone who bought Puma stock five years ago ought to be rich by now. Shares in the company have increased in value more than 10 times and a Puma stock is now worth more than 200 Euros.

Click here for more information on the car industry in Saxony, Germany.

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