Katker 2005 Kft, a company that deals with the distribution of sports equipment and outdoor fitness parks, has grown significantly in recent years due to the development of the Hungarian sports industry, and is now about to open a factory and expand in the United States with the help of the Foreign Market Growth Support provided by HEPA, Zoltán Katona, managing director of the company told növekedés.hu.
How did you get to the point where foreign expansion was a realistic goal?
We successfully developed a product family and opened up to a segment that has huge potential: outdoor fitness parks. We have been manufacturing these ourselves for five years, and we managed to enter this market at the right time with high quality products.
How big is the sports equipment market in Hungary and who are your competitors?
The sportswear and sports equipment market began to develop very dynamically after the introduction of the TAO (corporate tax) contribution system. The purchasing power of sports associations increased and they could afford to buy professional equipment and sportswear.
There has been a noticeable impact of the government’s efforts to support sport activities for more than a decade, which is particularly spectacular if we look at markets in neighbouring countries.
Our competitors are not the multinational companies dealing with sportswear, but companies that personally deal with sports teams and associations and deliver sporting goods to them directly. In this segment typically Hungarian companies compete with each other.
How much is the sales revenue of Katker now?
This year it will be about four billion forints, of which the distribution of sports equipment will amount to one and a half billion and the rest will already be from the fitness park business. We had fairly similar revenues last year,
before 2011, we only managed to achieve a small fraction of this amount; the TAO contributions boosted our sales revenue as well.
ow it is time to expand abroad. In which countries are you planning to expand?
We are looking at many places; we want to enter into Arab countries and we also see opportunities in Western European markets. In Russia, the competition would be very strong; Kenguru Professional – the main market player there - covers the whole market so we would rather not try our luck there.
It is in the United States that we are the closest to achieving our goals; we have taken the first steps there already. We are about to launch a plant overseas that will receive the finished products that we produce in Hungary. There will be an assembly hall, a painting workshop, and a rubber brick factory.
Is there still room in the congested American market for a Hungarian company that is very small by American standards?
In 2019, I visited the United States so that I could collect ideas that we could turn into innovation in Hungary, as the concept of bodyweight training after all set out to conquer the world from the US. But I didn’t find such a great variety of products there as I had expected, and our range of equipment and the quality of our products were actually better that what I saw in the fitness parks there. It was at this point that I realized that we could do some business there.
The USA is a big country with a huge market, where doing sport is very popular, and we not only produce workout equipment for general training, but also sport-specific parks.
The first one of these was a fitness park specifically designed for football, which we took to Miami for an exhibition, where it was extremely well received. The feedback was absolutely positive, we managed to make some business contacts, and we have even signed a contract with an American football team already.
How can the Foreign Market Growth Support help in this expansion?
Financial support is very useful, for example, for the purchase of real estate and machinery, but Anikó Kubatov, the foreign attaché there also gives us a lot of help by providing information, contacts or helping with the application. All this makes our entry into the American market significantly faster.
How much does it cost to appear in America?
The plant that we have chosen will cost three million dollars; it will need to be refurbished, fully equipped and furnished, so according to my calculations it will be a project worth two billion forints altogether.
When will your investment pay off?
I hope it will pay off within three to five years.
Are you present in any foreign market yet?
Not in this form yet, but through resellers our products have already appeared in Italy, Switzerland and France among other places; our fitness parks have already been installed in a total of fifteen countries.
How important are foreign sales in your revenue?
They are not yet significant as it is a relatively new story. We’ve been present at bigger exhibitions for a couple of years now, which has raised interest among resellers, but the coronavirus outbreak made everything stop before we could really get started. Fortunately, our partners have now become more active again, and it also seems promising that the demand for our products has increased significantly.
Our data show that after the closures gyms have lost some of their attendance compared to the pre-epidemic level, which I think is partly because there are a growing number of public fitness parks and many people have started using them in the last year and a half.
In addition, although all types of training have their own benefits, bodyweight training, in particular, has many positive physiological effects. All of this is likely to be reflected in our revenues in the long run.
What are your plans for the Arab countries?
We want to open representative offices, find resellers and go to exhibitions. It’s a different culture that we have to get to know and adapt to.
We hired an Arab colleague who started monitoring the market and building relationships. This line is still in its infancy, but at the same time we see great potential in it.
Where do you see yourselves in five years’ time if all your plans come true?
The name of our brand is BeStrong, and I hope it will be in the top 3 in Europe by then. If all goes well, we will have gained a foothold in the United States by 2026, and apart from gaining market share we will be making a lot of improvements as well. We still have plenty of new ideas and I’d be very pleased if all that could be turned into a profitable business.