In the past few years, there’s been a changing of the guard of sorts in the paddlesports sector, with new CEOs and companies behind such venerable brands as Hobie, Jackson Kayak, Confluence Watersports, Kokatat, MTI/Ocean Kayak, and more. But what do these new owners think of the industry and its future, and are they participants in the sport themselves? To find out, PL canvased the companies, retailers and more to shed some light on the new wave coming to watersports.
“A lot of people are looking and Pelican and Confluence,” said Sutton Bacon, co-organizer of this year’s inaugural Big Gear Show, held in Deer Valley, Utah, in early August. “In paddlesports, maybe 50 percent or so of their retailers are specialty, with a fair number of ‘lifers’ who are pretty opinionated. We’ll have to see how it goes.”
Kicks Off with Pelican/Confluence
Indeed, the buying spree kicked off when Pelican International Inc., a Canadian manufacturer rec kayaks, canoes, SUPs and other watercraft, acquired Greenville, SC-based boat maker Confluence Outdoor in late 2019, whose brands included kayak makers Perception, Dagger and Wilderness Systems, Mad River Canoe, Harmony accessories and more.
With the acquisition, Quebec-based Pelican instantly became the industry’s biggest and most comprehensive paddlesports company, offering everything from premium to entry-level products, across all categories. And the company gained a foothold in the inflatable sector by adding this year’s purchase of inflatable kayak and standup paddleboard company Advanced Elements. It now has more than 800 employees in three manufacturing sites across North America, with a large distribution network and R&D team in all categories.
“The combination will produce by far the largest and most comprehensive group in the paddlesports space,” said Pelican co-founder Antoine Élie. “We offer, under the best brands, a complete line-up of products spanning all paddlesports categories, catering to the needs of all types of consumers.” Added CEO Danick Lavoie: “The acquisition capitalizes on the strengths and capabilities of two synergistic businesses and brands, in a consolidating and globalizing industry.”
“There are good and bad things about consolidation, and it can be fine when the leadership involved understands their role,” said Darren Bush of Madison, WI, retailer Rutabaga, one of the largest paddlesports specialty retailers in the country. “The good is that it provides a cash influx when a company is strapped, whether due to market forces or bad management, and can be useful when a company grows out of its entrepreneurial phase and needs to change. It can bring in new leadership, if needed, and sometimes offers an owner a way to sell their company and provide succession.
“The bad is that, as the suits take over, innovation slows to a crawl because R&D is expensive and doesn’t pay out this quarter,” he added. “The company becomes part of a machine with centralized customer service. Then the brand dies and is quietly mothballed. There are too many examples of that to mention.”
With its acquisition of Confluence, Pelican’s role as the market leader surfaced only after previous paddlesports powerhouse Hemisphere Design Works — makers of Evoke, Future Beach and Sun Dolphin recreational kayaks, sold mainly in big box retailers — shut down its Muskegon, MI, headquarters in October 2019 after failing to secure necessary working capital. The announcement came two years after industry giants KL Outdoor and GSC Technologies merged to form Hemisphere Design Works, at the time predicted to become the world’s largest kayak maker.
Around the same time, Jackson Kayaks founder Eric Jackson left the company he founded in 2004, which started with whitewater kayaks but expanded into rec and fishing kayaks as well as coolers and even dog kennels. Now under new ownership, a new corporate structure and a new brand name of Jackson Adventures, the company brought on Peter Hausin as its new CEO and Brad Taylor as its new vice president of sales.
More recently, in January of this year kayak, surf and SUP company Hobie Cat Co. was sold to a private equity group consisting of executives from Detroit industrial auction company Maynards Industries, adding 65 new positions at its Oceanside, CA, headquarters to help with production. While the new team doesn’t have experience in the paddlesports or surf/SUP markets, led by new chairman Taso Sofikitis it does have it in machinery, automotive, education, and high-performance sports and plans to adhere to founder Hobie Alter’s original successful product and business formula. The company added new CFO and COO positions to complement its existing core leadership team.
“The outdoor recreation industry represents an opportunity that excites us and promises near and long-term growth potential,” said Sofikitis at the time. “Sales of kayaks and other watercraft are booming and we see an opportunity to continue Hobie’s legacy of innovation while improving distribution. We feel a deep sense of responsibility to maintain and grow the brand’s legacy.”
Ownership changes in paddlesports have continued through this summer as well, with Mustang Survival, a 55-year-old, Canada-based maker of lifesaving solutions, purchasing both paddlesports apparel maker Ocean Kayak and PFD manufacturer MTI Adventurewear. Purchased itself by the Wing Group in 2019, Mustang’s most recent acquisitions now give it more than 250 employees across the U.S. and Canada.
“When the Wing Group acquired us, we were fortunate to join an ownership group that was keen to invest in our growth,” said Mustang recreation division vice-president Josh Horoshok. “Our strategy on the recreation side is to grow our presence in the sailing, paddling and fishing markets through product development and acquiring brands, like MTI and Ocean Rodeo, that will help us accelerate our growth plan.”
Most recently, in July 50-year-old paddlesports apparel maker Kokatat was sold by founder Steve O’Meara to the company’s director of operations Mark Loughmiller, who joined the company in 2013. Loughmiller said he recognizes that Kokatat “is a cornerstone brand in paddlesports” and that he’s looking to building on its success as the company’s new CEO.
And he, for one, thinks his acquisition and the others bode well for the paddlesports sector as a whole.
“All the recent acquisitions and investments in the paddlesports market are a reflection of the confidence in the current health and future growth of the category,” he said. “The industry has experienced a solid surge in new participation over the past year and we’re working hard to capture and retain these new customers while maintaining the quality and reputation of our brand.”
It all ushers in an era of change in the paddlesports world, as convoluted as the currents its products are meant to navigate. And each acquisition has its own reasons for happening.
“Mustang Survival has had difficulty entering the paddlesports world, so it bought a really nice company, MTI, from great people, and then kept both founders on in their roles,” said Rutabaga’s Bush. “It was a brilliant move and it’s already showing in their product line.”
The Confluence purchase, he added, also had its merits. “Confluence probably would have been cut up and the parts sold if Pelican hadn’t bought them,” he said. “Some might look at that as consolidation, but it’s more like a merger, and the new owners are good folks.”
Insiders at the company agree.
“The paddlesports industry could definitely use structure and experience from outside industry as all of us aren’t the best at growth and change management,” said Don Meredith, brand and product dir3ctor at Confluence. “On the other hand, many of the businesses were driven by a core team of passionate paddlesports businessmen, which leads to creativity and innovation. Hopefully, we’ll all find a way to combine more efficient business practices without losing sight of the most important element – great product.”
Then there are the owners who want to move on, he added.
“Steve O’Meara at Kokatat is one of the lucky ones who found someone in-house,” Bush said. “The new folks will make improvements, of course, but they won’t do the vulture capitalist stuff.
“Is this good long term? I think it’s neutral. Some mergers and acquisitions will be badly done. The good news is that it allows for sunlight to penetrate to the forest floor, where the seeds of new companies start to grow. As specialty retailers, we respect the larger manufacturers we work with and enjoy our business relationships, but it sure is fun to find a start-up and help them grow into their own.”