Valspar paints are in more stores than any other paint brand in North America, with products in more than 10,000 retail outlets. Despite this presence, the brand is still somewhat under the radar, according to Valspar CEO Gary Hendrickson.
That's why the $4.1 billion, Chicago-based company (symbol: VAL; recent price: $70.59) decided to sign a last-minute contract as the title sponsor of the PGA Tour event in Tampa for the next four years.
The tournament, now called the Valspar Championship, will be held March 13-16 at the Copperhead golf course at Innisbrook Golf Resort. Hendrickson says the brand exposure from the event will be invaluable for the global business, with the tournament broadcast in 225 countries and territories.
Although terms of the deal were not diclosed, Hollis Cavner CEO of Pro Links Sports, which helped set up the partnership between Valspar and the PGA, said a typical tour sponsorship runs between $6 million and $10 million a year.
Now that the company is selling paints using the Valspar name and no longer a private label, Hendrickson says it's essential to keep marketing consistent.
“We've worked really hard over 200 years to make sure that the customers that we do business with are the premium customers in their industries, and our brand at retail is positioned in the premium price point at every retailer, so we want to be consistent in everything we do to have a premium presentation of the company.”
Hendrickson spoke with the Business Observer during a media event at Innisbrook about why Valspar decided to partner with the PGA. The following is an edited transcript of the interview.
Why did you decide to partner with the PGA?
So basically Valspar is a 200-year-old company that not many people know about. The reason for that was because we have a big industrial business and in our consumer paint business, we were a private label supplier for many, many years, including to one of the biggest home improvement chains, Lowe's.
In 2007, we launched our brand. Then we converted all of the private label brands that we had to Valspar branding. We've been pretty systematically building our brand to the point that, shortly after our launch, we became the No. 2 DIY brand in North America. We've consistently grown our market share and other metrics throughout the years.
We're always looking for ideas for partnerships, marketing ideas, acquisitions or whatever to continue on that path for building our business. The PGA tour sponsorship is a very good one in terms of the exposure it's going to give Valspar, both on TV and many other mediums.
Having Valspar associated with the PGA tour is a good thing for our brand. If we look at the other PGA tour sponsors, there's 30 or so, they're all quality companies.
The PGA tour in and of itself is a quality property, and so between the exposure that we get from sponsoring the tournament and the association with the tour, it's going to do really good things for our brands. And the demographics of the tour are similar to the demographics we're targeting for our consumer paint business, so all of those things line up.
You're a golfer — how is business like the game of golf?
Business is about people doing business with people — that's the way we think about it. You meet a tremendous number of great people through playing golf. And you occasionally meet people who aren't great. That's a lot like business; you don't want to partner with everybody.
But the game of golf has been great for our company. We do a lot of entertaining, have a lot of customers on the golf course. It's one of the few games where you can get a customer to commit to spending five or six hours with you, where you can get to know each other, you can get to trust each other — all those things are added to a business relationship.
What's the best business decision you've ever made?
Launching the Valspar brand. That was a big decision for us. We didn't have experience managing a consumer brand. We had a great partner in Lowe's that we knew we could count on to help us with that. But we really didn't have the capabilities; we built the capabilities really quickly.
We made a very significant investment that damaged our stock price for a couple of years because it was earnings from the prior year that we invested. And so it was risky, but it just turned out beautifully. We are a much better company today because of what we did.
You've established a name in the U.S. How do you establish a name outside of the U.S?
Today about 45% of our business is outside of the U.S., and we really started that in 1995. We made our first significant acquisition in 1995 in Europe, and we've been systematically building up our overseas business mainly through acquisitions for the last almost 20 years.
Consumer paint, which is kind of the main target for the marketing association with the PGA tour, is a big business for us — it's almost 40% of the company today. We do business in consumer paints in North America, and in Europe, we're just starting a program with the leading home improvement retailer in the U.K. and Ireland. We've got a big business in China, and we've got the No. 2 consumer paint business in Australia.
Two of those three things happened by acquisitions: We acquired the business in Australia, a great local brand called Wattyl; we acquired a business in China, the No. 3 brand in that market, called Huarun; and in Europe, we found a great partner in B&Q, who wants to take our brand to consumers in the market.
What's one business decision on which you'd like to have a mulligan?
There wasn't a big one. There were some small ones. Here's what it's about — it's about people that get hired that you think are going to be more than they are. We've been lucky in our company that we've hired a lot more winners than people that didn't work out. But usually it's about having higher expectations for somebody that doesn't work out.
How do you find those winners?
Here's one right here (pointing to Howard Heckes, senior vice president of global architectural at Valspar).Howard came to Valspar five years ago, from Rubbermaid, to run this business. You have to look at what the needs of the business are and try to match up people with those needs.
You also have to try to match the people's basic beliefs about themselves and business and ethics with the company's culture. In the case of Howard, in 2008, after we had launched our brand, I knew I didn't have a marketing background. I needed a consumer products guy, I had been running industrial businesses.
So we went to the market looking for a consumer markets leader and that's when we found Howard, and he matched up on all of those attributes that I talked about. When he joined the business, we were a North American business doing business mainly with Lowe's and independent retailers. Today we're a global group - like I said, Australia, China, UK, and probably others to come.
How do you keep the company culture when making acquisitions?
You've got to work really hard at that. You have to communicate a lot about what it is that you expect and what's important. And you need to make sure that the people leading those businesses are aligned with those things.
Again, it comes back to the people. If you don't have the right people at the top of those organizations then you can't get the culture right. So we work really hard to make sure that we hire well and when we do acquisitions, we do a very rigorous analysis of the leadership of those businesses and decide frankly whether to keep it or to replace it. And then you work hard at communicating.
What's your advice to other people in business wanting to take their brand to the next step?
You've gotta take risks. You don't get any kind of reward by not taking risks. If you're evaluating the risk and you think you've got a reasonable shot at it, then you just gotta do it.
Have you played the Copperhead course?
Love it; it's hard! It's a great golf course, which is one of the reasons why it gets such a great tour every year. And we're going to work hard to make sure they have a good time here and they want to come back.