Best known as a sailboat brand, Beneteau (or, more correctly, Groupe Beneteau) is actually the world’s largest boatbuilding conglomerate — a conglomerate that most U.S. observers know very little about. Parent to more than a dozen U.S. and European boat brands — with 200 models from 18 to 105 feet — the group has ambitious plans to become the boating industry’s most dominant global player by 2020. Its boat division last year had sales of $1.2 billion (€1.03 billion), for the first time edging out Brunswick Corp., which reported $1.03 billion in boat revenues.
Groupe Beneteau employs 7,000 people and has manufacturing facilities in France, Poland, Italy, the United States and, most recently, Slovenia. It is the world’s largest sailboat builder and, by 2020, plans to be its highest-volume powerboat manufacturer.
“We’re 130 years old and one of the most robust players in the industry,” says Hervé Gastinel, who joined Groupe Beneteau in 2015 as CEO. “We’ve successfully passed through two world wars and multiple financial crises, including the last one, where our sales dropped 40 percent in 2009 after a decade of growth.”
The company has returned to growth mode during the last four years, reporting 11 percent revenue gains in its boat division last year. It’s forecasting 5 to 6 percent sales growth for fiscal 2018. (Its 2018 financial recap was unavailable at press time.)
Powerboat sales accounted for 47.5 percent of its fiscal 2017 sales, while sailboats comprised 37.5 percent. The group’s manufactured housing division made up the remaining 15 percent.
Its two “superbrands” — Beneteau and Jeanneau — are known for their sailboats. However, both divisions, which compete fiercely with each other (and some observers say just as fiercely copy each other), oversee a list of sub-brands that include multiple types of sailboats, outboard powerboats, fishing boats, cruisers, trawlers and compact motoryachts.
The group’s other standalone brands include Monte Carlo, the Italy-based yacht and superyacht builder; CNB, which builds semicustom and custom sailing yachts in Bordeaux; the “Cadillac” brands of Four Winns, Glastron, Scarab and Wellcraft; Lagoon catamarans; and Prestige. Altogether, the group builds more than 20 brands.
Viewing Groupe Beneteau as a sleeping giant, Gastinel lit a fire beneath it in 2017 with a three-year “Transform to Perform” plan that has the company moving at high speed in multiple directions.
The group will introduce 88 new models during Transform, including 37 in 2018. Other ambitious targets include faster growth than the boating market, 8.5 percent net income from 2017 to 2020 and cash generation of $291 million (€250 million) during that period.
The Global Benchmark
“It’s unique in this industry to be able to launch so many new models in such a short period,” Gastinel says. “Beyond product, I also believe we need to focus on services as another pillar of this program. Our ambition is to become the global benchmark of the boating industry.”
Buoyed by healthy U.S. and European boating markets, the plan seems to be working. The group has fueled its growth both organically and with acquisitions. It acquired the Cadillac, Mich.-based brands in 2014 and recently bought a majority stake of Delphia in Poland, which builds sailboats and outboard powerboats. It also purchased an 80 percent share of sailboat builder Seascape in Slovenia. In August, the group launched an edgy catamaran brand called Excess to appeal to a younger generation who might want something different from its Lagoon catamarans.
This summer’s acquisitions not only expand the group’s market share and geographic reach with new brands, but Delphia gives it a second, 193,000-square foot production facility in Poland, where it can build its other brands. Gastinel sees the greatest growth potential in outboard powerboats.
The group’s facility in Ostróda is currently the largest boat plant in Poland. But the lion’s share of production is still in France, where it has 15 boatbuilding facilities.
Part of Gastinel’s master plan is to build his French brands in North America while increasing the presence of Four Winns, Glastron and Wellcraft in Europe. “We not only want to increase our production capacity in terms of volume, but we want to make sure we can produce different boats closer to the markets where they will be purchased,” Gastinel says.
Translation: Beneteau plans to build more of its boats in-country, rather than shipping them overseas. Its facility in Marion, S.C., has been producing Beneteau sailboats since 1986 and began building Swift Trawlers and Jeanneau sailboats there for the U.S. market.
It is now building Jeanneau’s NC 795 and NC 895 pocket cruisers in its Michigan facilities after reopening the Cadillac sport plant, which was mothballed for 10 years until last summer. “The sport plant will be used to produce the smaller Four Winns, Glastron, Wellcraft and Scarab lines, while the cruiser plant will be for larger boats,” Gastinel says.
Beneteau officials say the American brands have gained market share over the last two years. “We’ve invested heavily in new-product development and dealership channels,” Gastinel says. “They’ve turned into great assets for our group.”
Several Wellcraft and Four Winns models will also soon be built at the Ostróda plant in Poland. “With our digitized designs, it’s not difficult to move production to another country,” Gastinel says. “What’s most difficult is making sure the quality of the components is the same on both sides of the Atlantic. That’s critical for this to be successful.”
Moving production from one country to another is not as seamless as it sounds, especially with boats that have dozens or even hundreds of parts that need to be sourced locally to make manufacturing cost effective. Add to that the increasingly fast pace of product development, in which five new models have to be built in a given facility every year, and transferring production from another country becomes even more of a challenge for the local teams.
Still, Gastinel is convinced this brand transfer strategy is key to the group’s long-term financial health. “You cannot claim to be a global player without a global footprint,” he says. “We need to make sure we can produce closer to our target markets, with a more specialized approach that emphasizes profitability.”
The group’s ultimate goal, Gastinel says, is to have global brands, rather than regional names with limited geographic distribution. That has worked for the flagship marques Beneteau and Jeanneau — and to an extent Monte Carlo Yachts, which surprised the yachting sector after its 2011 launch with robust sales while other Italian yacht builders struggled. The group’s U.S. brands are growing in North America, with brand recognition in Europe and Latin America.
Gastinel’s master plan is to grow its primary European market, develop its secondary North American territory and expand its presence in Asia.
Whether European brands such as Barracuda and Antares, both recently introduced at U.S. boat shows, can capture enough market share to justify a long-term U.S. presence remains to be seen. There is also the question of whether these smaller-boat brands can provide the margins dealers need to represent them over better-known U.S. brands.
Beneteau, which signed an outboard supply agreement with Mercury for Barracuda and Antares, says it sold the first models at the Newport (R.I.) International Boat Show. The group will also have a display dedicated to its outboard models at the Fort Lauderdale boat show.
“The U.S. is a prominent market with appealing growth potential,” Gastinel says. “You need a critical size and long-term vision to be successful there. Our Cadillac brands are strong. Our Prestige, Jeanneau inboard and Monte Carlo brands are already present in this very competitive, sophisticated market. We plan to be a long-term player, consolidating as much market share as we can.”
The U.S. strategy over the last three years has been to offer a range of brands to persuade dealers to become Beneteau-heavy sellers. The United States is now the top sales territory for its Prestige motoryacht brand, which provides high enough margins to incentivize dealers to carry the group’s smaller, lower-margin brands.
Headwinds and Fire Sales
But there have been headwinds. The announcement last June that Sea Ray was closing its yacht and sport yacht divisions threw the U.S. yacht segment into turmoil. With no warning, 120 Sea Ray yachts came on the market at fire-sale prices, leaving a glut of product.
The Monte Carlo and Prestige brands could be most impacted. “We were taken by surprise by the announcement, and the decision to discount has put pressure on everyone else in the short term,” Gastinel says.
The group says a slowdown in orders for yachts larger than 70 feet could impact sales by $23 million (€20 million) this year. Retaliatory tariffs by Canada and the European Union are also expected to reduce Cadillac-built exports between $5.9 million and $6.9 million (€5 million to €6 million), according to the group’s third quarter financial report. Despite that, the company expects 7 to 8 percent sales growth for fiscal 2017-2018, which ends Oct. 30.
Outboard boats recorded the highest third-quarter sales gains, and inboard boats from 30 to 60 feet showed “good performance” for the quarter. Its sailing division has been strong, generating 44 percent of sales for the fiscal year.
Transform to Perform is also looking beyond boatbuilding. It launched an industry first “Leasyboating” in France modeled on car-leasing programs. It has also moved into boat clubs, with a Beneteau-brand program that will work through French dealerships. Jeanneau recently partnered with Florida-based Freedom Boat Club for five clubs in the south of France.
The group also launched a social media site called BandOfBoats.com, which it hopes will be a gathering space for boaters. The site offers new-boat and brokerage sales, charters, educational blogs, information and story-sharing. “It’s more than a marketplace, but a real platform where boaters can gather and get solutions for everyday boating questions,” Gastinel says. “They’re united by their passion for boats.”
Gastinel believes the boating industry is oblivious to societal changes that are transforming other industries. “Everything is transitioning, from the way we eat to the way we travel to how we boat,” he says, referring to the sharing economy. “Our goal, whether it’s selling, buying, leasing, chartering or being in a boat club, is to make boating simpler.”
Moving beyond traditional boat sales reflects the group’s desire to stay ahead of competitors across the boating spectrum. That is the “global benchmark” that Gastinel often refers to.“Looking ahead, I believe the market will be very different,” he says. “Boats are going to improve in terms of simplicity by being more connected. Boat clubs and leasing programs are going to increase. We’re pushing more dealers to offer those platforms across all our brands.”
There are some observers, all asking not to be named, who wonder if the group’s ambitious plans will evaporate in the next downturn. Brunswick was on a similar growth track in 2005, but by 2010, it had killed or sold 10 brands and shut down more than a dozen production facilities across the United States. Beneteau mothballed its facility in Brazil in 2016, so it is aware of regional downturns.
One observer says the number of brands a company builds is not important. It’s whether those brands have a large enough following to sustain them during recessionary years. It’s not clear whether the group’s relatively unknown European brands, even with its financial support, can attract enough buyers outside their home markets.
Another says the relatively small volumes of production across the boating industry will make the Beneteau plan untenable in a severe downturn. A third wonders if building up production capacities and boat brands are precursors to selling the company.
Despite the chatter, Gastinel remains confident with the group’s three-year outlook. He says the fourth generation of the Beneteau family is now working with the company. “We don’t have one euro of debt, and we’re seeing growth of 4 percent ahead,” he says. “At the moment, we are very bullish and investing a lot in new boats and production capacities.”
The group recently hired 500 permanent workers at its French facilities to accommodate higher demand, in addition to 150 in the United States and Poland. The Delphia acquisition will give it much-needed production space for its fastest-growing segment, outboard boats.
“Delphia gave us another 2,000-boat capacity, as well as a new R&D center,” Gastinel says. “It not only makes us very competitive in the heart of Europe, but the Polish workers are skilled, and their salaries are competitive — a third of what they are in France.”
Groupe Beneteau’s global approach will help it transition through the next bear market. “We have a sound financial approach to cope with more difficult times,” Gastinel says. “For the moment, we are happy enough with the growing market. It’s robust and in line with our global expansion.”
Groupe Beneteau at a Glance
- Founded: 1884
- Number of employees: 7,000
- Manufacturing facilities: France, Poland, United States, Italy, Slovenia and Brazil
- Publicly traded company with majority family ownership (54.4 percent)
- Fiscal 2017 sales: $1.391 billion (€1.21 billion), EBITDA: (€152.9 million)
- Revenues: sailboats (37.5 percent), powerboats (47.5 percent), housing (15 percent)
- Sales by region: Europe (48.5 percent), North America (30 percent), South America (7.5 percent), Asia (5 percent), rest of the world (7 percent)
This article originally appeared in the November 2018 issue.