As a young boy, J.J. Marie used to drool over the Zodiacs at the dealership near his home in Paris.
But as an adult living in North America, his boating dreams ballooned in size and complexity. He wanted to ignite in Americans the passion for inflatable boats and all the benefits they offer — their versatility, low-cost operation, safety and performance — that had already caught fire in Europe.
Thirty years later, while Zodiac of North America has a 50-percent share of the inflatable market, its president’s work is far from done. Marie’s zeal to grow the more than $60 million U.S inflatable business has only seemed to strengthen. He’s convinced there is room for substantial growth, if only consumers’ misperceptions of the products’ limitations can be overcome — something that may be easier now than ever, given the economic climate.
Marie is not alone — not anymore, anyway. The inflatable industry has recently come together to form the Inflatable Boat Manufacturers Association, an affiliate of the National Marine Manufacturers Association.
It’s no coincidence that the association was formed this spring as the Discover Boating advertising campaign kicked off. Inflatable boat builders don’t want to be left behind as the industry strives for growth. And inflatable builders historically have been under-represented at NMMA, according to the association’s chairman, George Dherlin of APEX Inflatables.
Marie is the exception. He has a long history of NMMA involvement, currently serving as chairman of its boat builders’ division and a member of its executive committee.
“When I started at Zodiac of North America, I found that the inflatable boat industry in general, and Zodiac in particular, had no respect within NMMA or the industry,” Marie explains. “We were little toy boats that no one was taking seriously, either as a business or a product. It was pretty clear that if I wanted the respect of my peers, I had to work on behalf of the industry, not just Zodiac or inflatables.”
Marie has been trying to change the industry from the inside out ever since, joining various association committees, task forces and boards. Over time, he has gained exposure and respect for himself and his company. But one man can’t change the perception of an entire industry sector alone.
That’s where the IBMA may play a vital role. Because Marie is so well known within the industry, some may have been surprised to learn he wouldn’t be heading up the newly formed group. But with industry visibility as a goal, it made sense to choose a different leader — one whom the industry didn’t know so well, who served to gain from further exposure.
One of the major goals of the association — one that the industry seems to agree on — is educating consumers about inflatables. How effective it will be remains to be seen, however. This isn’t the first time such an association has been established. The last time, in the late 70s, the association lasted only a few years before disbanding due to a lack of participation.
The difference this time seems to be the number of members involved in the association’s various missions. As NMMA’s Bernice McArdle explains, the association set up several task forces in its first meeting early this year, many of which have already met. IBMA will reconvene this month at the International BoatBuilders’ Exhibition & Conference in Miami for its second meeting.
Targeting traditional dealers
When most people think inflatable boat, they think pool toy — a completely separate market — or yacht tender — a market that has been relatively flat in recent years. However, the most recent trend has been toward use of inflatables as primary boats. Today, tenders make up about 80 percent of the market, while primary boats consist of about 20 percent. This is where Marie and many of his peers see the most potential for growth.
For this potential to be realized, the inflatable manufacturers need dealers’ help — and not necessarily the dealers they know best. Many believe those who want to sell their boats as primary vessels need to go beyond the inflatable specialist dealers currently in their networks to sign traditional boat dealers.
Of course, those selling inflatables have an uphill battle in the United States. Americans are about 10 years behind Europeans in their acceptance of these craft and probably will never catch up, according to most insider estimates.
Inflatables are very popular amongst urbanites in Europe because they’re so easily stored in small apartments. The fuel economy offered by inflatables is also a consideration. Typically, Europeans have paid much more for fuel than Americans, which has had a powerful influence on their boating decisions. Not only do they seek out fuel-efficient craft, they also tend to own fuel-efficient cars, which make towing heavier hard-sided boats difficult.
That’s where today’s U.S. market conditions may come into play. With gasoline prices at record highs this past boating season and boating access tightening in the nation’s largest boating communities, inflatable boats may begin to look more appealing to Americans.
Those factors alone — while they work in inflatables’ favor — won’t likely drive consumers to inflatable boats, according to Mike Shedivy, director of Mercury Inflatables. Ultimately, he believes the performance benefits are what will make the difference. And without experiencing those benefits, consumers won’t likely be persuaded.
“It comes down to the ride,” says Shedivy. “Until people get inside of one, they don’t understand what it feels like.”
That’s where demos — believed to be an essential part of growing inflatables’ popularity — come into the picture. The challenge is that the inflatable specialist dealers currently making up a large percentage of inflatable builders’ business aren’t typically located on the water. They also don’t usually have the floor space, floor plan financing and equipment that it takes to be a primary boat business. And while it is slowly changing, the majority of traditional boat dealers, which some inflatable builders are trying to target, still are reluctant to demo boats until a consumer has signed on the dotted line.
There also is a certain amount of education that goes along with learning to sell and service inflatable boats. Traditional boat dealers have to learn about caring for fabric, replacing tubes and rigging boats with a different center of gravity.
The result: most inflatable boat builders are expanding their dealer networks very carefully, working with inflatable specialists willing to expand into primary boat dealers and with traditional dealers willing to learn a new market.
The bonus for both manufacturer and dealer could be significant. Marie believes profit margins on inflatable boats — which average about 25 percent — are often much higher than traditional solid-sided boats. And in an industry in which many competing dealers carry similar products, inflatable boats can separate a dealer from the crowd, allowing it to have a niche business — one that is expected to grow.
Not all inflatable manufacturers are using a dealer network to sell to the consumer, however.
Take Ribcraft USA, for example. The five-year-old Marblehead, Mass.-based custom rigid inflatable boat manufacturer employs both independent and full-time sales reps instead of a dealer network. This decision was made despite — or perhaps because of — founder Brian Gray’s roots working on the retail side of the industry.
“The traditional relationship between manufacturers and dealers is terrible,” he comments. “They continue to squabble, and who loses? Our customers. It’s terrible for the customer to get stuck between a dealer and a manufacturer. Our theory is work directly, build what they want, get it right the first time.”
Gray’s business, admittedly, is focused on the professional side of the industry, though Ribcraft sees a lot of room for recreational market growth as well. Today, he says Ribcraft — with “production numbers in the hundreds and revenue in the millions” — is the No. 2 or 3 player within the U.S. RIB business. Gray expects Ribcraft’s unit sales to more than double this year and for at least another two years after that. He points out that most solid-sided boat segments are flat.
“RIBs fit into a different category,” Gray comments. “We’ve got market share yet to be attacked.”
Like others in the industry, he believes providing demo rides is an important tool for boosting the popularity of RIBs. But for the moment, one of the biggest drivers of recreational growth is exposure to professional RIBs, from safety and rescue vessels to those used by yacht clubs and harbor masters, he suggests
Sea Eagle is at the opposite end of the market from Ribcraft. While the RIB manufacturer sells boats for as much as $300,000 — mostly to experienced boaters, Sea Eagle’s typical boat retails for between $1,000 and $1,500 and its typical customer is a first-time boater and an RV owner.
But, like Ribcraft, it sells most of its product direct — mostly through the Internet. Its Web site attracts 4,000 to 5,000 visitors per day and over a million users each year, the company says.
“We’re geared toward inflatable boats that are UPS shippable,” says Cecil Hogue, co-owner. “We can’t figure out how to ship a RIB, otherwise we’d be in that market.”
Sea Eagle has about 100 dealers throughout the U.S., including Cabela’s and Camping World. But that accounts for only about $1 million in annual sales, while mail order and the Internet account for almost $5 million.
Another thing that sets Sea Eagle apart is an advertising strategy that — with its similarity to that of companies like Tempur-Pedic — is unique within the boating industry. The company spent close to three quarters of a million dollars this year on advertising, much of which consisted of print ads in magazines such as Smithsonian, The New York Times Sunday Magazine, Newsweek and National Geographic.
Sea Eagle has seen a 50-percent increase in its direct sale business year-over-year, according to Hogue, largely due to its introduction of a folding fishing boat. He expects his company to continue to grow in today’s economy.
“I definitely think there will be a continuing trend toward more and more inflatables with the cost of gasoline,” he says. “I would not be excited to be selling rigid fiberglass boats right now. For the common person, inflatables really are one of the few things that are affordable.”
More than just RIBs
The inflatable boats most likely to serve as primary vessels are RIBs, a market that has received a lot of attention because of its growth in recent years, and has resulted in the entrance of many boat builders that focus exclusively on this market. Ribcraft is just one such example.
AB Inflatables USA is also focused exclusively on the RIB market. The distributor, which imports its boats from Venezuela, says it represents one of the top five RIB brands in the U.S. market. A recent customer survey revealed that over the last two years, 85 percent of the company’s center console RIBs over 13 feet in length were sold as primary boats. The company targets experienced boaters who understand the performance benefits a RIB offers over a traditional boat.
“No first-time boat buyer comes out and buys an inflatable [as a primary boat],” says Julie Rettstatt, the company’s vice president. “They don’t realize that the fabrics are [better] than fiberglass.”
Right now, AB Inflatables USA sells primarily through a network of inflatable specialists, but it’s exploring the use of traditional boat dealers.
“Should they be sold through more traditional dealers? I honestly don’t know,” she says. “I have one dealer in Maine putting big inflatables next to Sea Rays and seeing who wins. It’s been difficult to get dealers to stock larger boats, but the ones who do sell them very quickly.”
One way the company is promoting the sale of its large RIBs is through its Flagship Dealer Program, launched this year. The program provides its dealer members special designation on the company Web site, in-store point of purchase signage and “Flagship Status” recognition with retail literature mailings. As the new program grows and develops, AB Inflatables says it will find additional ways to reward dealers.
“Selling 9- and 10-foot inflatables is great, but if we want to grow, it’s got to be through primary boat sales,” she concludes. “That’s where I’m going with the company. That’s where our future is.”
But RIBs only make up about a quarter of the inflatable market. Inflatable boat builders range the gamut from those that focus exclusively on high-end RIBs to those that make only the smallest soft-bottom inflatables. Then there are companies like ZNA and Mercury Inflatables that cover the majority of the market.
ZNA, widely recognized as the No. 1 player in this U.S market segment, imports, manufactures and distributes a wide range of inflatables from one end of the market to the other under the Zodiac and Avon brand names, and through manufacturing contracts with retailers like West Marine. But it sees the most room for growth within its RIB business.
In fact, Zodiac has been making some major changes to its products to target the mainstream American boating market. Earlier this year, it opened its own U.S. factory to manufacture and distribute its growing RIB line-up through a partnership with Scout Boats.
“Zodiac is very good at processes,” explains Marie. “Steve [Potts, Scout Boats president] is more the hands-on craftsman. We feed on each other’s strengths.”
Zodiac is working to Americanize several of the boat models built at the Summersville, S.C., plant, adjusting the fuel capacity, accessories and hardware to appeal to U.S. boaters.
Like Zodiac, Mercury Inflatables targets a wide range of consumers with its products — and sees a strong future for its RIB line-up. There are actually three pieces to its business. The first is its soft bottom boat line, once marketed under the Quicksilver brand but moved under Mercury’s brand name in the late 90s. This line is manufactured through an exclusive long-term supply agreement with a couple of plants in Asia.
The second is its relationship with Valiant brand boat manufacturer Supra-Industrial Textil — through which Mercury is supplied with many of its RIB models — which became closer when Brunswick Corp. purchased the Portugal-based company last year. Finally, Mercury owns a minority interest in New Zealand-based Rayglass Boats, which manufactures Protector RIBs, a line of 22- to 40-foot cabin cruiser style boats.
“We’re able, when we need a new line of inflatable boats or RIBs, to find the best team to build it,” explains Shedivy. “The misconception I think people have of our product is that we don’t design it, we don’t build it, we just slap our name on it.”
Mercury doesn’t participate in the custom market, and unlike the majority of its competitors, it doesn’t have a long history of involvement in the professional market. The company has only been involved in this sector for a year, though it currently makes up about 20 percent of Mercury Inflatable’s business. RIB sales consist of about 20 to 35 percent, according to Shedivy.
He says he’s seeing growth in use of inflatable boats as primary boats — both in the roll-up segment for freshwater use and in the RIB segment for saltwater use. The company has had a strong product line-up of soft-bottomed boats for quite some time, something it will continue to offer, he explains. But he admits the company is focused on expanding its RIB business.
“It’s almost a cult-type following right now,” says Shedivy. “Is it ever going to be the mainstream boat out there in the U.S.? I see it more as this niche market. But I see the growth in the primary boat happening. Look at a BMW in the auto industry. A lot of the aspects of a BMW are very technologically, functionally superior. But is that what everybody wants? No. When you start explaining the benefits, certain people say, ‘Yeah, that makes a lot of sense.’”
While he admits that Mercury’s dealer network’s willingness to give demo rides play a big role in the future growth of its RIB business, Mercury isn’t depending on that alone. The company has recently begun making its RIBs available for demo rides at in-water boat shows across the country.
APEX is another builder covering a large portion of the inflatables market that has seen particular growth from its large RIB business of late. In fact, the company says that 70 percent of its unit business consists of tenders, while 30 percent are primary boats. On a dollar basis, it’s closer to 50/50.
Dherlin says that through education, he hopes to see the growth in the use of inflatables as primary boats spread from the coasts to the inland market.
“One of my theories is that the PWC enthusiast with age is looking for a family [friendly] — but still fashionable — dry alternative option,” he adds.
APEX also expects to grow through its new tube supply agreement with Walker Bay Boats.
A different stance
Despite this trend, not all inflatable manufacturers believe the primary boat market is their ticket to growth.
“Achilles is unique in that, unlike the other inflatable companies, we don’t necessarily agree with the evolution of the inflatable as a primary boat,” says Jeff Frank, Achilles marine division manager. “Our market strategy is to be the company that offers the best selection in the foldable inflatable and roll-up inflatable market.”
The company does offer some small RIBs from 9 feet to 12 feet, six inches in length, however, and Frank admits that it might be behind the curve on the RIB trend.
But Achilles remains focused on selling inflatables as accessories. The company manufactures the majority of its fabric and boats in Japan and imports them into the United States in boxes — something it has been doing since 1977. It’s expensive to box a RIB, something that affects the company’s strategy in the U.S. market.
Frank says Achilles’ sales have been relatively flat in recent years, largely due to the number of Korean and Chinese competitors that have come and gone, selling PVC boats for less than half of the price of Achilles’ Hypalon boats.
This, in fact, has an impact on most of the soft-bottomed inflatables manufacturers. For a long time, Zodiac kept a list of those inflatable brands that had come and gone, which it would post in its booth at boat shows. For the period of time from 1985 to 2002, its list included the name of 72 brands.
Walker Bay Boats seems to be the most recent entrant into the inflatable market, manufacturing soft and hard bottomed inflatables from 8 to 12 feet in length. It, however, doesn’t expect to make such a list.
“While we are new to the inflatable boat world, we are not new to small boats,” the company states. “We have been in business now over 9 years and in that time have shipped over 60,000 boats with a very successful record of customer satisfaction and product quality. Walker Bay has a well established infrastructure with key business veterans that are dedicated to finding the right solutions to ensure our products are here for the long term.”
Since the company launched its inflatable boat line last December, it has built up an order backlog for some models. One of its goals for 2007 is to improve its product supply to consumers, according to the company.
Walker Bay, like most inflatable manufacturers, has been developing its dealer network, looking for a good match among both traditional boat dealers and inflatable specialists.
“Dealers owe it to themselves to look at this profit opportunity,” says Zodaic’s Marie, referring to the inflatables business. “I think they’re missing the boat.”
He should know. In the mid 70s, before entering the boat building business, Marie founded a Connecticut chandlery that became the largest one-location Zodiac dealer in the world. At the time, inflatables were virtually unknown in the U.S. market.
“Many dealers say there is no demand for this product,” Marie concludes. “But some dealers have made a lot of money in this market.”
He’s one of them.
Sidebar: Taking aim
The new Inflatable Boat Manufacturers Association has established several goals for its future, some of which will be led by task forces it will set up.
1. Work with the NMMA CSI program to more accurately reflect the needs of the inflatable market.
2. Create more awareness of the inflatable
category among the boating public and prospects, perhaps through the creation of a buyers guide or educational brochure.
3. Obtain representation on legislative and regulatory issues affecting inflatable manufacturers and users.
4. Promote boating safety and the safe usage
5. Develop a set of standard warning labels
6. Ongoing review of ABYC and ISO standards
To advance these goals, IBMA has been working to establish several task forces, some of which have had their first meeting, including:
1. Safety, Labeling and Standards
5. Member Recruitment
Progress on these goals will be discussed during the association’s second meeting, scheduled to take place in conjunction with the International BoatBuilders Exhibition & Conference, Nov. 1-3 in Miami.
Sidebar: The Wrong Number
NMMA has tracked inflatable boat sales for the past three years, but many brands are missing from the totals, resulting in what some suggest is an inaccurate picture of the inflatable market.
That’s good news. NMMA’s numbers paint a pretty dismal view of the inflatable market, one in which units, retail value and average unit cost are all on the decline.
Most manufacturers agree that, on the whole, inflatable unit sales have been flat in recent years, while dollar sales have been rising. This is due largely to growth in the popularity of rigid inflatable boats, which tend to fetch a higher price than their soft-bottomed peers — anywhere from a few thousand dollars to several hundred thousand.
With the formation of the Inflatable Boat Manufacturers Association earlier this year comes a big push for a sharing of numbers among its members. While only five brands were included in the 2005 control group — Achilles Inflatable Craft, Avon, Mercury Marine, Walker Bay and Zodiac — the association is “trying to expand the list” for 2006.