Adidas (Germany) continued

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History of Adidas

Free for all users | see full profile for current activities: Whereas Nike's history is tied up with track athletics, Adidas was carried to world prominence as a result of the enormous success of the West German football team from the 1950s onward. Based in Nuremburg, Germany, the Dassler brothers Adolf ("Adi") and Rudi began making sporting shoes during the 1920s, initially for track and field events. Their footwear debuted on the world stage for the first time when it was worn by member of the German team at the 1928 Olympics. By the 1930s the Dasslers were making 30 different types of shoes for 11 different sports. American track star Jesse Owens wore Dassler shoes at the 1936 Olympics, earning four gold medals. But three years later, at the start of World War II, the brothers' factory was commandeered by the German government to make army boots. Adi stayed at home to run the business, while brother Rudi joined the army, and was later captured by Allied forces during the D-Day invasions.

After the war, with Rudi still in a POW camp, Adi made a fresh start, making shoes for US soldiers in the occupation army, using leftover rubber from tires and fuel tanks. When Rudi was finally repatriated in 1947, the brothers went back into business, but quickly fell out, reportedly over their respective wartime activities. They split in 1948, vowing never to speak to each other again, and formed rival companies. The only other thing on which they could agree was that neither would use the family name for his new business. Adi Dassler selected the name Adidas, adopting what was to become the world-famous logo of three stripes in the form of a boot. Rudi Dassler set up as Puma, and so began a fierce rivalry.

Although Adi Dassler's personal preference was for athletics, the sport which quickly earned him the biggest attention was football. In the 1950s he developed the first football boots with screw-in studs, allowing different sizes or shapes to be used. (That claim is denied by Puma, which argues that it was in fact Rudi Dassler who invented the screw-in stud). Worn by the West German side during the 1954 World Cup, they created a sensation. During the first half of the final between West Germany and the dynamic Hungarian team, a torrential downpour turned the pitch into a mud-bath. The German team was able to screw in longer studs during half time, giving the players superior control, and taking them to a 3-2 triumph. Sales of the boots rocketed as a result. Later, the company introduced a new lightweight boot with rubber studs. By the 1960 Olympics in Rome, three-quarters of all athletes competing wore Adidas shoes, including legendary US high jumper Dick Fosbury. Eight years later, Adidas-wearing athletes captured virtually all the medals at the Montreal Olympics.

Later the company began diversifying into sports clothing, kit bags and equipment. In 1970 the company's branded football became the official ball of all international tournaments (a position it has now held for almost 40 years). A year later boxers Muhammad Ali and Joe Frazier both wore Adidas shoes for the so-called "Fight of the Century", and the group also began making tennis rackets and skiwear. But the most important endorsement during that decade came from the still all-conquering West German soccer team. By the time of Germany's 1974 World Cup triumph, Adidas was firmly established as the world's biggest sports brand, and found in German team captain Franz Beckenbauer an articulate spokesman and an invaluable ally. For most of the 1970s the company had only one international competitor, Rudi Dassler's Puma.

Adi Dassler died in 1978, just as his company reached its peak. A year later Adidas unveiled the Copa Mundial shoe, which went on to become the world's best-selling soccer shoe ever. But now the company suddenly had two new rivals in the international marketplace as well as Puma: UK-based Reebok, but more importantly US manufacturer Nike. Both took advantage of cheaper labour costs in Asia to undercut Adidas's pricing, while also giving added value. Meanwhile Adidas was still running production from expensive factories in Germany. During the 1980s, under Adi Dassler's son Horst, the company began to feel increasing pressure from the American company. In 1984 Adidas made what was to prove perhaps its biggest marketing error, turning down an opportunity to sponsor upcoming basketball star Michael Jordan. Instead, Jordan signed with Nike in what became a hugely lucrative partnership for both parties.

This was not a good period for Adidas. The company drifted for several years, not just losing control of the international sportswear sector to Nike, but slipping into third place behind Reebok. Horst Dassler died in 1989, and two years later his sisters sold control of the business, now heading towards bankruptcy, to French entrepreneur-turned-politician Bernard Tapie for $290m. When Tapie was jailed in 1993 for bribing three French footballers to "fix" a match, Adidas, now losing $100m a year, was taken over by its creditors. They eventually appointed financier Robert Louis-Dreyfus to run the company. Having just spent three years restoring Saatchi & Saatchi to profitability, Louis-Dreyfus set about refocusing Adidas, cutting out huge swathes of management and restoring the famous boot logo (which had been abandoned several years earlier). In 1994, Adidas regained second place in the industry from Reebok. A year later, he took the business public, tripling sales and doubling profits by the end of the decade. (In the process Louis-Dreyfus turned his initial investment of just $10,000 into a personal stake worth around $390m.)

As growth in sportswear sector began to slow in the late 1990s, Louis-Dreyfus diversified with a $1.4bn takeover of French ski goods specialist Salomon Sports. However the enlarged portfolio of newly renamed Adidas-Salomon initially proved more of a distraction than a benefit. Salomon's golfing goods division Taylor Made failed to carve a niche in the US, and profits dipped alarmingly. Louis-Dreyfus retired from the business in 2001, handing over to new CEO Herbert Hainer, recruited from P&G. In 2000, as profits began tumbling from the high of €500m achieved in 1999, the group came under renewed pressure from investors. The announcement that Adidas would purchase of a minority stake in Germany's biggest soccer team, Bayern Munich, caused its share price to plunge by 10% mid-year. However performance steadily began to improve, with sales up strongly in 2001, and in the first half of 2002. Since then the company has continued to improve, streamlining its product range to concentrate on the more fashion-oriented side of sportswear. But the US, a market in which Adidas's reputation as a soccer pioneer counts for little, remains its Achilles heel.

In 2004, the company's regained impetus took a dent when it was forced to recall around 200,000 Superstar Ultra and Pro Team basketball shoes because of a manufacturing defect. Although the financial impact was described as "pretty insignificant" at less than €10m, it undermined the group's reputation for quality. Regardless of this the group launched its first ever global branding campaign under the banner 'Impossible is Nothing', featuring appearances from a host of sportsmen and women led by boxer Muhammad Ali. See full profile for current activities

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