A Blog by Jonathan Low

 

Nov 11, 2021

Will the Boom In Guitar Sales Outlast Covid?

The first - and most recent - boom in guitar sales occurred in the 1960s after the Beatles exploded onto the music and socio-economic scene. The pandemic boom in guitar sales is showing similar numbers but instead of being driven exclusively by teenage boys, it now covers all demographics and genders. 

The industry is hopeful that this unexpected boost will be sustained by this broader appeal - and by the remote work movement combined with the advent of TikTok, Instagram and other social media which allow budding musicians to share their chops with a wider (if not always appreciative) audience. JL

Brian Majeski reports in Music Trades:

Over the past 18 months, COVID created 16 million new guitarists. Acoustic guitar imports for the first half of 2021 are 35% higher than any six month period over the past ten years. Electric guitar imports saw a 35% gain over historic averages. U.S. guitar factories are running at peak capacity. Retail gross profits are running 3 points higher than pre-COVID. Post Beatles, the guitar was the province of teen boys. Today, it appeals to Gen Z through the aging baby-boomers, (including) females. With work at home now a component of the post-COVID normal, more time will be available to making music.

The COVID pandemic delivered a wholly unanticipated boost to the guitar industry, propelling it into record territory. “Lockdown” protocols that severely crimped out of home activities apparently prompted millions to take up the guitar. A recent study conducted by Fender Musical Instruments confirms this: it found that over the past 18 months, COVID created a staggering 16 million new guitarists. Data from other sources support these findings. Acoustic guitar imports for the first half of 2021 came in a hair under 1.0 million units, 35% higher than any six month period over the past ten years. During the same time frame, electric guitar imports of 965,000 units also saw a 35% gain over historic averages. U.S. guitar factories are also running at peak capacity with production booked well into 2022. Yet production still lags demand: retailers complain about lengthy backorders and insufficient inventory and most manufacturers say their sales have been constrained by product shortages. One happy consequence of the shortages has been a significant improvement in retail margins. In the absence of discounts, survey results indicate that retail gross profits are running 3 points higher than pre-COVID levels.

While scrambling to meet the surging demand, the industry is haunted by the question: “Will the demand for guitars collapse when the pandemic subsides and life returns to a more normal rhythm?” It’s a valid issue given the unprecedented circumstances of the recent past. Having seen comparable sales run-ups during the pandemic, manufacturers and retailers of housewares, furniture, exercise equipment, bicycles, and consumer electronics have the same concerns. We can’t speak to other industries, but the trajectory of prior guitar booms offer some insights into how the current surge might playout over the next few years. 20-30% sales gains in the guitar sales are unlikely to persist, but there is reason to believe increases in guitar usage will persist post-pandemic.

The folk boom that began in the 1950s elevated the guitar from niche status—often derided as a hillbilly instrument—into the mainstream. Shipments in 1950 totaled a little under 200,000 units but by 1963 had risen to 650,000 units. That steady growth was turbocharged in 1964 by the advent of the Beatles. Within a year, volume had more than doubled to 1.5 million units, peaking at 2.5 million units in 1971. From there, shipments declined every year until a rebound began in the mid-1980s. However, total unit declines in the 70s masked positive underlying trends.

A majority of those first time buyers who had propelled demand in the wake of the Beatles had relegated their guitars to the closet within a year and moved on to other pursuits. But, a sizable minority persisted, trading up to better instruments and spending heavily on a fret related accessories. This resulted in a bifurcated market. The decline in first time buyers took a heavy toll on low-priced guitar makers. In 1973, Music Trades reported that 69 guitar factories in Nagoya, Japan, then the center of high-volume guitar production, had closed their doors due to slumping demand. Low-cost producers in the U.S., Harmony and Kay, also folded. Yet at the same time, makers of premium guitars continued to post record results right up until a sharp economic downturn in the late 70s. Makers of effects pedals, replacement pick-ups, strings, and amplifiers also benefitted from this trend.

It’s possible that a similar dynamic could play out over the next few years, with a slowdown for entry level instruments and continued demand at the high-end. However, we think current prospects are brighter than during the post Beatles-era. Here’s why. The “addressable market” has grown substantially, given the larger U.S. population and the fact that guitars are now embraced by a much broader demographic. Post Beatles, the guitar was almost exclusively the province of teen boys. Today, it appeals to Gen Z through the aging baby-boomers, as well as a large contingent of females. Second, with work at home now a permanent component of the post-COVID normal, time previously spent commuting will now be available to devote to activities like making music. Finally, the tools for learning to play have never been better or more available. Beatles era guitar beginners had only Mel Bay’s Modern Guitar Method to guide them. Compare that today with the multitude of online videos that teach popular songs and basic technique.

Fender’s experience with Fender Play, its online learning program, offers insights into the power of this technology. At the height of the pandemic in March 2020, the company offered a three month free trial of the service, expecting ten or twenty thousand to sign up. Within days, servers were swamped with over a million sign ups. Since then, Fender Play as retained over 250,000 paying subscribers. Fender’s CEO Andy Mooney logically concludes that this online engagement will create more committed players. But, Fender Play is hardly the only available service. Type in “How to Learn” on a search engine, followed by the title of any even remotely popular song and dozens of instructional videos will turn up. It’s not uncommon for these videos have millions of views. By contrast, print publishers are happy to sell between 50,000 and 75,000 copies of a method book in a year.

Put it all together, broader demographic appeal, more free time, and better teaching tools and it’s possible that COVID may have launched the most durable guitar boom yet. Having failed to anticipate both COVID and the post COVID surge in guitar demand, we acknowledge our limited forecasting skills. However, optimism does not seem to be misplaced.

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