Adidas Group CEO Herbert Hainer

Adidas Group CEO Herbert Hainer

Adidas Group CEO Herbert Hainer is confident that major investments in the World Cup this summer are paying off. In an interview with just-style news editor Joe Ayling, he also discusses sourcing, currencies and his vision for the Reebok brand.

Wearing a polo shirt, sweater, casual trousers and sneakers, Adidas Group boss Herbert Hainer is refreshingly relaxed about company dress code; just don't ask him for a biscuit.

We meet at the company's global headquarters in Germany, and Hainer arrives bang on time to speak to just-style about himself, the business he leads, and the sport it profits most from.

Until he shuts the door, the drone of vuvuzelas can be heard from the meeting room next door, where plasma screens show Portugal's footballers beating North Korea 6-0. As official sponsors of the FIFA World Cup in South Africa, football has become the soundtrack to Adidas' summer.

"We are the dominant brand at the World Cup so far," Hainer says. "It's not just that we have more teams than any of our competitors, it's also the official match ball, the referees, the ball boys, the billboards - you can't miss the three stripes."

The company spends around 13% of net revenues, or around EUR1.3bn, on annual marketing and football takes a massive chunk of the budget this year. However, its launches and sponsorship are also expected to result in record sales for football products this year, of around EUR1.5bn.

Hainer is sitting in front of a display featuring the controversial Jabulani football - invented for the event but subject to mixed reviews. Hainer tells just-style it travels faster due to the high altitude in South Africa, and giant-sized replicas built around the company HQ show just how important the ball is to Adidas.

The cookie cutter
Adidas' tree-lined HQ feels more like a university campus than the home of an internationally recognised brand worth tens of billions of Euros.

After being escorted into the Herzo-base through a turnstile, it becomes clear that working for Adidas is no ordinary job. Herzo was formerly an army base before Adidas moved there in 1997 after outgrowing its birthplace in downtown Herzogenaurach.

A bronze statue of founder Adi Dassler now sits proudly in the company's very own football and athletics stadium. The Herzo-base also has an outdoor staff restaurant, tennis and basketball courts, and state-of-the-art office buildings for when it's time for the 1,700 employees there to get down to work. 

Hainer admits he has the perfect job, and it's difficult to disagree. However, leading Adidas through the toughest recession in living memory is no stroll through the campus for the man in charge.

Indeed, one of his first symbolic actions after taking charge nearly ten years ago was to ban the supply of corporate cookies for staff.

"Our profits were decreasing, and part of that was because during the 90s we had big success and became too lazy as an organisation, and too complacent. Therefore we took a lot of measures to increase our efficiency and bring our cost base into the right range.

"One of the many measures taken was to say 'there are no cookies sponsored by the company anymore'."

Hainer describes his management style as "straight-forward, honest, direct, challenging but also a team worker", and he certainly doesn't look like a cookie man, with a slim physique from hobbies like football and golf.

Further challenges have followed in the past few years, as the global economic downturn hit sales. Hainer describes 2009 as his most difficult as CEO, as demand dropped and the strength of the Euro undermined Adidas' international revenue stream.

He tells just-style: "2009 was a difficult year because of the financial and economic crisis. But it was not just the consumption within individual countries that raised challenges, it was for us the currencies that played mainly against us.

"All the currencies during the crisis weakened against the Euro, be it the Russian ruble, the Japanese yen, the US dollar or the English pound."

Adidas' group revenues fell 4% in 2009, but grew by the same margin in the first quarter of this year as demand in Western Europe and America picked up.

Acquisitions on ice
Prior to the downturn Hainer was instrumental in Adidas' decision to acquire rival sportswear brand Reebok for EUR3.1bn five years ago. Despite slumping sales initially, there are signs recently that Adidas is winning the battle to reposition Reebok, buoyed by the popularity of its Easytone toning shoes.

Hainer says: "I'm absolutely convinced it was the right move for us [to buy Reebok] because it makes us stronger as a company and gives us the possibility to mean more to more consumers.

"We have given Reebok a clear new direction of where we want to have it. It should be the fitness and training empire - this is where Reebok is coming from where the brand still has the strongest link to the consumer."

That said, Hainer is not looking to add further brands to the Adidas Group portfolio, which also includes TaylorMade-Adidas Golf, any time soon.

"First and foremost I think we have a lot of growth potential with the portfolio that we have now," Hainer adds. "There is still a lot of potential, and we still have some homework to do to make the process even more harmonised and get synergies out of it."

Sourcing strategy
Earlier in the morning of our interview, the Chinese government pledged to allow its currency to move more freely against the dollar. This, together with rising wage demands and a recent weakness in the Euro, is expected to hike sourcing costs for European firms, but Hainer isn't too phased.

He tells just-style: "Because we have a relatively diverse supply chain less than 40% of our total supply is from China. We have brought some apparel production back into Europe and our suppliers are merging into other countries like Vietnam and Cambodia. Therefore, we try to balance the risk of rising prices and salaries within the different countries."

Therefore, Hainer is spreading his bets when it comes to both product mix and sourcing strategy as consumption and currencies remain uncertain.

Likewise, only time will tell whether the World Cup will bring a return to form for Adidas. At the time of writing the brand has four sponsored teams left in the tournament - double that of rivals Nike and Puma.

But who does Hainer think will lift the trophy?

"I believe Spain will play a dominant role, but also expect that Argentina have an extremely good team and it looks like Maradona has brought them together as a team," he says.

Perhaps unsurprisingly, both these teams are sponsored by none other than Adidas.