WSJ On Costco Ball: Probably Doomed By Low Price

Thanks to reader JacksonWharf for the Wall Street Journal's Brian Costa effort backing up reports by MyGolfSpy and this site suggesting the Costco Kirkland ball is likely done for now due to a one-time, ultra low dump of cores.

I kept the analogy at Trader Joes $6.99 and $12.99 bottles, but Costa went for the Two-Buck-Chuck metaphor. He says the suppliers of the cores allowing Costco to sell the ball for so little are now unhappy because of golfers' changing expectations.

According to a Nassau executive based in Europe, the company believes the expected retail price for the ball would be closer to $45 per dozen, all costs considered.

This executive said that both Nassau and TaylorMade, its biggest client, are unhappy with the rise of the $1.25 golf ball and that the company won’t sell excess supply in such large quantities again. A TaylorMade spokesman didn’t respond to a request for comment.

Comments

[jomthan knoxville]

The nut will eventually be cracked and price will drop below what major manufacturers what to hold up

But, maybe the advertising hype will hold up the price, who knows.

[Southside]

"Like"

[Silly Bodkins]

Fortunately for me, the Gamer Tour Soft works pretty well most months. Maybe in July and August I need urethane.

[TLB]

Damn! I was counting on COSTCO to re-stock.

[Melvyn's Inner Demons]

I tested them out last week with my ProV1x. Felt a little harsher but performed just as well on irons. Driver was on average ~5 yards shorter and had more roll out with chips/pitches. Overall: a solid solid ball that performs.

It's a shame they will no longer sell them. Titleist/TM conning JoeBlo 20 HCP into $45-$50/dozen is the biggest scam in the industry.

[Luffer]

Sounds like price fixing. DOJ should probably look into it.

[BrianS]

I would say it was doomed because of an artificially low cost of manufacturing, making the price not sustainable for any actual manufacturer.

[Pasaplayer]

Gimme my Epipen for a buck and a half! And my Pro Vs for $2!

[TTB]

@BrianS there was nothing artificially low regarding the manufacturing of those balls, nobody lost any money in the process. The independent audiologists (hearing aid resellers) whined similarly when Costco entered that market. Dean Snell is making a ProV1 quality golf ball that can be bought for $2.17 each at the retail level. If Dean can find suppliers and get a ball to market for $2.17, it is guaranteed Costco can get it done for less (should they choose to). A Kirkland Signature ball at $1.75 will be just about as popular as it was at $1.25.

[BrianS]

The story said that the factory unloaded excess material that was left over from regular production - at a discount. That is an artificially low price, and as it says, only designed for limited quantities.

[Simon Templar]

This "core dump" story is a ruse.

Ponder this, what is Costco going to do with a rail car or two or three of "core" overruns?

Costco do not have any expertise or patents or anything else as it relates to golf ball construction and manufacturing. What are they going to do, wander around Asia hoping to stumble on overruns of layers 2, 3 and 4? And once they have collected an inventory of the four layers needed to make this particular golf ball, then what? Wander around Asia some more hoping to find someone to combine all those layers and make them into a 4-piece golf ball stamped Kirkland Signature?

This story is a big load of bullshit someone concocted to cover their ass, and the press has bought it hook, line & sinker.

The USGA conforming balls list initially showed Nassau Golf as the manufacturer of record and KOR (Korea) as the country of origin. The most recent USGA conforming balls list (Jan. 4th) shows SM Global LLC as the manufacturer of record and the country of origin is left blank (this change took place in November). SM Global LLC is a packaging and logistics firm based in Seoul, and they have a facility in Los Angeles. To me it looks like Nassau Golf started to feel some heat and tried to obscure their participation by putting SM Global LLC in the middle, and on the record with the USGA.

So, how did the ball come to pass in the first place? It doesn't appear that Costco put any effort into setting up a deal for a long term supply of this product, what it looks like is the opportunity fell into their lap by chance, someone approached Costco with the idea.

Why? Because all of a sudden there was serious amounts of excess supply in the system of the raw materials that go into all four parts of a golf ball of this nature.

Why was there so much excess of supply? In August somebody suddenly announced they were immediately getting out of the golf hard goods business.

Sure looks like Nassau Golf had excess capacity in its manufacturing operations and that combined with access to excess raw materials presented an opportunity they could not resist. There was nothing happenstance about this product showing up at Costco, and it certainly wasn't because some "excess cores" were floating around.

[brianmdv]

I don't know about you guys, but I got 4 dozen. And I love them.

[Exilgolfer]

If one of you is seriously interested in overcoming prejudices, go and get yourself some Vice golf balls. They sell a fantastic ball for a very reasonable price. And the business model is sustainable.

[Long Knocker]

Simon Templar- I believe you have this right. The core dumping story is BS. Nassau made the Kirkland ball because, at the time, they had some limited excess manufacturing capacity. Costco underestimated the demand and undersold on price not knowing the golf market. In the meanwhile an existing customer of Nassau's bought up the capacity effectively shutting out Costco from meeting demand. This is a big deal in the golf market but diddly in Costco world. They may or may not look for another supplier but don't be surprised if they don't.

[mydgolf]

If marketing and advertisng were cut by the major ball companies, they would sell for the same...

[The Ghost of Perry Maxwell]

**Change**

get used to it.

[TTB]

@Long Knocker, as previously mentioned if Dean Snell can find a way to get balls manufactured in Korea, Costco certainly can. I don't think anyone "bought out" any excess manufacturing capacity and unless they are running 24/7 there is capacity remaining. As @Simon Templar said it sure looks like Nassau Golf got caught selling someone else's technology to Costco and whoever that was put a stop to it. Now the question is has Costco's appetite been whetted enough to further pursue this segment of the golf ball market? Dean Snell could probably make a lot more money licensing his technology to Costco versus the profits Snell Golf may or may not be currently generating. If Costco wants to find a way to market a Kirkland Signature ball of the quality of the recent one, they will do so.

[Long Knocker]

TTB- I happen to know for a fact what I said is absolutely true. I can't tell you my source but trust me- it is from the inside. Any manufacturing plant has a maximum capacity and when they contract all of their capacity then there is no more capacity for anyone else. This is not speculative or opinion. You

[Chico]

I believe the core dumping story to be bs too. More likely balls a major manufacturer committed to and didn't take.

[Geoff]

Chico,
The balls were dissected by My Golf Spy and manufacturers and they've traced them to a certain ball. Even MyGolfSpy is coming around to the likelihood of it being a Taylor Made core.

[TTB]

@Long Knocker don't care who your source is or what they say, not buying it. As @Simon Templar says these guys at Nassau are in complete CYA mode and their story changes daily. Only going to get more interesting from here!

[Long Knocker]

TTB- you're right. No sense being confused by the facts.

[T. Simpson]

Long Knocker either name your source or stop complaining.

[spoiling a good walk]

Sounds like price fixing. DOJ should probably look into it. --Luffer

The government will soon no longer enforce regulatory schemes, excessive regulations, job killing regulations, and business crushing regulations. So you're regulation on price fixing is soon out the window. It's all now laissez faire and laissez le bons temps rouler..

[tiger's fault]

Make America Great Again! Only use balls made in 'Medical; it's not just for cars!

[Long Knocker]

TSimpson- what was I complaining about? I don't have a dog in this race. Just stating what I know. Maybe it means nothing to you but when I tell someone that I will not divulge their name I actually mean it and would never violate a trust.