While this may sound like a pretty terrible situation all round, it has actually worked out pretty well for some bike brands. So much so that we’ve seen a year of record sales, profits and stock prices for the brands that allow us access to them. A boom like this hasn’t gone unnoticed by the wider world either. We’ve reported in the past month alone on Kona being bought by Kent and the Accell Group securing a $1.56 billion price from a consortium led by the KKR Group. Further back than that, Pon made a big play when it bought Dorel Sports, and both Canyon and YT secured big private investments. It’s clear that money is flooding into the cycling industry, but what decisions are driving the sales of these bikes brands? Let’s take a quick run down some possibilities:
There’s money to be made As we outlined above, this boom is making money for brands. Investors want a slice of that pie for as long as it lasts. Hopefully this is a boom that they see lasting and investors hopping on board while the getting’s good rather than hoping to flip a quick buck.
eBikes Sorry to break it to you if you’re an eMTB detractor, but battery-powered bikes are driving the industry forward at the moment. While giant multi-nationals probably aren’t paying attention to who is winning the EWS-E, they definitely are looking at the changing ways people are getting around cities. E-bikes, electric scooters and electric cars are the transport of the future and rather than start from ground zero, investors want to own companies that already have a foot in the door. Porsche buying a majority stake in Greyp and investing in Fazua is a perfect example of this.
Brands need the cash Brands currently have a lot of cash tied up in pre-orders and stock cash tied up in inventory – cash that could be used to get more sales, price its products more competitively or continue funding R&D, marketing and more. For small to medium sized brands, investment could be the only way they can actually capitalise on the promises of the bike boom.
Bigger brands can help with operations Those same brands may also not be equipped to deal with the current demand they’re experiencing. When DT Swiss bought Trickstuff, it mentioned how it would use “its information in enterprise mannequin growth, IT infrastructure, provide chain administration and manufacturing optimisation” to profit the brake producer. In Trickstuff, you had a model with an important product that was falling behind in logistics and operations however that may now be buttressed by DT Swiss. With different manufacturers, buyers may grant them entry to new markets, assist them arrange e-commerce or share technical info to assist them develop.
Regardless of the motive for investments, is any of this good for cyclists? Well, sorry to dodge my very own query, however actually that continues to be to be seen. I personally consider if the bike increase is managed sustainably, it should result in a greater future for cyclists of all stripes. However, if we let the bubble burst, mountain biking might be wanting at a stoop much like the one skateboarding had in the 2010s. Whatever occurs, we’ll be following the scenario with curiosity and holding you up to date.