The United States is continuing to see an increase in boatbuilders from abroad who want to bring their brands here, and although it’s not a new phenomenon it is one that continues to gain traction in light of the strong dollar and relatively robust North American boating market.
“Clearly there are more boat companies outside the U.S. putting their foot in the water in the U.S.” because of a favorable exchange rate and a healthy market, says Thom Dammrich, president of the National Marine Manufacturers Association.
Two or three Brazilian boatbuilders were slated to exhibit at the Miami International Boat Show for the first time, he says, and several sailboat manufacturers from overseas are returning to the market, as well. At Yachts Miami Beach, Polish boatbuilder Galeon was to display for the first time. “So it is definitely happening,” Dammrich says.
Part of what American boatbuilders and dealers are feeling is the Beneteau Group effect. The French company, which has long built and imported sailboats to the United States, has introduced three brands to the U.S. powerboat market that have rapidly gained market share. As Beneteau America president Laurent Fabre told Trade Only last year, quoting Beneteau Group leader Madame Annette Beneteau-Roux, “Never waste a crisis.”
The Beneteau Group saw the Great Recession as the perfect opportunity to penetrate a once-saturated U.S. marketplace because companies were hard-pressed to invest in research and development.
“In our case, our company as a group invested an enormous amount of money during the recession to not slow down the rate at which we were coming out with new and innovative product,” says Nicolas Harvey, president of Jeanneau America, part of the Beneteau Group. “Madame Roux, along with her siblings, made the decision that this is the perfect opportunity to put the hammer down on innovation. Some of the American builders didn’t push as hard, and we had the right product at the right time.”
When MarineMax, the world’s largest boat dealership chain, said it will begin to offer Polish-built Galeon yachts, sales and marketing vice president Chuck Cashman emphasized the price point. “We were determined to find a brand that could successfully compete with the more affordable pleasure yachts that recently began being imported in the market,” Cashman said at the time.
Executives at Brunswick-owned Sea Ray addressed the move during quarterly earnings discussions, saying the strong dollar and pricing advantage from overseas products wouldn’t affect Sea Ray sales. Asked specifically about Galeon, COO Mark Schwabero said Sea Ray shoppers wouldn’t be deterred by the prospect of saving $10,000.
“Galeon is, I’d say, just a relatively small manufacturer over in Europe,” Schwabero added. “[MarineMax CEO] Bill McGill and the MarineMax organization feel this can be a complementary product. They are bringing it in a very finite range. Net, net, I don’t think you are going to see any huge impact on us in the marketplace.”
Indeed, McGill stressed during earnings conferences that the line was meant to bring additional, entry-level buyers to the dealership, not deter them from buying Sea Rays or Azimuts, a luxury Italian brand of yachts the company carries.
“The exchange will rise and fall, but we think Galeon will stand on its own in the scheme of being competitively priced,” Cashman says. “We don’t let the exchange rate drive us because in the long run we know it’s going to be all over the place. It’s going to work to your advantage and disadvantage.”
That said, “you can’t ignore the timing of it,” Cashman adds. “It wasn’t a driver, but it’s great to think that [one euro] is [worth] $1.10, which is more favorable than two, three or four years ago. If you’re a dealer looking for manufacturers, there is a certain advantage when the cost goes down. I’m not saying the timing wasn’t great, but it just wasn’t the driver.”
The exchange rate does mean that European boats, if the exchange is translated into the cost of boats, theoretically could make them cheaper a year later, and even less expensive two years later, Cashman says. “That’s real. It certainly is enticing to a customer if that reduction in euros is translated in pricing at the show.”
“We’re the healthiest economy for boaters, and we’re a growing economy in a world that’s not growing so quickly anymore,” he adds. “If you were going to sell boats, regardless of currency, I think you’d come to the U.S. right now. And the euro is down, so you have these things working concurrently, especially in the larger-boats market.”
The Beneteau effect
Indeed, the larger-boat market is where the squeeze is being felt. Anything less than 40 feet, the cost to ship the boat across the pond wouldn’t make sense, says Jack Ellis, founder of Miami-based Info-Link Technologies, a company that tracks boat registrations. Ellis is quick to point out that his company in no way tracks where boats come from. But he can say that in the 40- to 60-foot market, there has been a shift in the last five years. Number one in market share is Sea Ray — “the 800-pound gorilla,” Ellis says.
But the Beneteau brands have come on strong. “With Prestige, we went from 12th to third in market share in the 50- to 60-foot yacht segment between 2011 and 2015,” says Beneteau Group CEO Herve Gastinel. “We have obtained 25 percent share of the trawler market for Beneteau since 2011. We want to push farther now.”
“They came barreling in, and they came out of nowhere,” Ellis says. “That had to have hurt a lot of people. Now every time a dealer sees a new entry from Europe or wherever, they’re probably kind of like, ‘ugh, another one,’ where in reality they’re probably not too much of a threat because they’re not selling a lot if they just entered. But then again, neither were Beneteau and Jeanneau a few years ago. Companies like Bavaria, who sell a lot of boats in Europe, there’s nothing stopping them from coming and selling boats like crazy in the U.S. market.”
Those data have to be looked at somewhat cautiously, says Harvey, because Jeanneau is lumped in with the group’s Prestige brand of motoryachts. “Everything is lumped under Jeanneau, but it’s still an amazing success story,” Harvey says.
Decades of learning
A combination of factors has led to the Beneteau and Jeanneau success, Harvey says. “It was a really strong management decision to say this is how we are going to deal with this crisis — by being stronger in investment. But I trust that most of the boats in that segment are going to be good boats; it’s just a matter of choices made in usage of space,” Harvey says. “We’ve benefited from very unique distribution of rooms on board the 50- and 55-foot range. We still have a unique offering. I guess that’s one thing that’s made us successful.”
Harvey also credits the dealer network. “We as manufacturers have a responsibility to envisage and imagine what the boating market is going to enjoy boating on in the next 20 years, but we can’t do that if we don’t have a dealer network that gets on board with the product.”
And it might seem to dealers and builders of powerboats that Beneteau brands swooped in out of nowhere. Prestige is entering its fifth year in the U.S. market. Jeanneau powerboats have been sold here for two or three. But Harvey says the 35 years of experience selling sailboats here also was pivotal.
Beneteau has been operating in the United States for years, selling sailboats and opening a factory in South Carolina in 1986, Harvey points out. Bringing powerboats to the United States was not a haphazard decision. “We have come a long way. It wasn’t our first rodeo.”
The company knew it had to invest heavily to figure out certain things in the American market, but it could also build on the knowledge it had acquired from having sold Beneteau and Jeanneau sailboats in the country for so long. “From even the sizes of sofas in the salon, to more minute details like cup holders, we had experience adjusting equipment to what the market wanted — the headroom inside the boat. We had gone through the same process that had brought Beneteau and Jeanneau to become the No. 1 and 2 sailing boat companies in North America. That’s mind-boggling to us still.”
Importing boats comes with a set of built-in costs, and Harvey says favorable currency can help offset that. “The reality is, when you go to look at where we’re starting from, compared to U.S. builders, we’re obviously penalized because we’ve got to pay for shipping of the boat to the United States and duties,” Harvey says. “Having a favorable exchange rate isn’t so much an advantage as it is something to offset the disadvantage.”
Additionally, companies can’t really benefit from short-term variations, he says, because prices need to remain somewhat static. “If the dollar was to weaken suddenly, we’re in this market for the long term, so we could let our dealers enjoy a good price positioning. We have that long-term strategy.”
It’s complicated, but Harvey explains it like this: There are a number of boats stocked in the dealer network. If the dollar were to suddenly fluctuate, what about the boats in the dealer network? Changing pricing would wind up unfair, in that instance, so the group works to keep currency changes out of pricing altogether, regardless of whether it benefits or hurts.
But he says that might be different with other companies. “I don’t think a lot of companies out there from Europe have shown the desire to really have a go at what Beneteau and Jeanneau have been able to establish,” Harvey says. “They’re often choosing a different model. For anybody to reproduce [our model], it will take tens of years, in my opinion.”
More American players
But it’s not only an increasing number of manufacturers from Europe and Australia that might be squeezing this 40- to 60-foot category, Ellis says. Looking at the past 10 years, he can see the emergence of several American boat brands that have long been builders of center console sportfishing boats, and now they are going bigger.
“The number of builders in this category has actually decreased” during the past decade, Ellis says. “These center console boatbuilders are now building boats 40 to 50 feet long with quad outboards. Those satisfy the needs of people who previously felt the only option was a cruiser or big sportfishing boat. Now they can actually run out to the middle of the Gulf Stream safely in this center console.”
For example, Yellowfin, Pursuit, Everglades and Boston Whaler had no offerings in this range, but now do. And more are coming — Scout and Regulator introduced boats larger than 40 feet in the past year or so. “Center consoles have [taken off], and it’s largely due to the fact that power is available now. You can strap four engines to a boat, and that outboard technology is more desirable now. That’s why we bought one.”
One effect of drawing more builders from overseas has been evident in styling. Sea Ray “seems to be introducing boats that have a little bit more of a European flair to them than they used to,” Ellis says, to appeal to that growing consumer desire.
The U.S. boat market was “very homogenous” 20 years ago, Cashman agrees. “It was all the same DNA because American boatbuilders were very prevalent. Now it is a global market, with heavy influence from Italy, and in the last five years, from France. We just took on a Polish brand, and Australian boats are coming in,” Cashman says. “An Italian boat is very easy to recognize. … It just has a certain style to it that is identifiable. It’s a big world.” That was why the company took on Galeon, “the distinctive style, tremendous innovation and Polish craftsmanship,” Cashman says. “Each group has its own identity.”
For years and years, U.S. manufacturers made very boxy boats because the American consumer wanted that, Harvey says. “There came a point that the American consumer no longer wanted that, and they turned to a more European styling. Yeah, we’ve come full circle. It’s certainly been interesting to watch.”
This article originally appeared in the March 2016 issue.