So far consolidation among manufacturers has proven to be a smart business model, so don’t expect it to cease anytime soon.
On Feb. 3, French ski manufacturer Rossignol announced that it bought Irvine, Calif.-based Felt Bicycles. It’s the latest of many major triathlon and cycling brand consolidations to occur in the past few years, and the implications for the sport are huge.
The biggest consolidation of major triathlon and cycling brands came in May of 2011, when Dutch company Pon Holdings purchased Cervélo to add to its cycling division that also includes Santa Cruz Cycles, Gazelle and Derby Cycles, which produces Focus and Raleigh. With the acquisition of Cervélo, Pon now had the entire cycling market covered: from commuter (Gazelle) to mountain (Santa Cruz) to affordable (Raleigh) to high-end (Focus) to ultra high-end (Cervélo). Such vertical segmentation has been a staple of Pon’s success in the transportation industry, and the recent success of all five of its cycling brands shows that it can work with bikes too: Santa Cruz has gone from a relatively niche off-road brand to one of the biggest players in the high-end mountain bike market; Cervélo has more than doubled its next closest competitor at the annual Kona bike count for the past five years, and Gazelle—one of the oldest bike companies in the world—now produces more than 275,000 bikes each year. What’s more, with PON’s massive distribution network throughout Europe, brands like Cervélo and Santa Cruz are now available to more consumers than ever before.
Rossignol dipped its toe in the cycling market with a purchase of Time Cycles last year. But with the purchase of Felt, Rossignol now has a summer sports brand with the potential to really scale. And that’s the point of a merger like this one: Rossignol can now go from a seasonal to a year-round business and Felt can use Rossignol’s marketing, financing and distribution expertise to grow. And while acquisitions between mega corporations often lead to large-scale layoffs and multiple brands merging into one, so far that hasn’t been the case in the triathlon and cycling industries. Consolidation offers smaller brands a way to infuse more capital and capabilities than they ever could on their own. The end result: triathletes win.
Take a look at AmerSports, for example. Last April the Finnish owner of Mavic completed its purchase of ENVE Composites, making it one of the biggest players in the wheel market. Similar to Felt, ENVE already had some distributors in Europe, but it was rather limited, particularly compared to its biggest competitor in the high-end wheel market, Zipp. AmerSports, which is based in Finland, also owns major sporting brands including Louisville Slugger, Salomon, Wilson and Precor, and has broad distribution and sales channels throughout Europe.
“Bigger distribution is something we were working our way toward when we were privately held, but the acquisition accelerated that distribution opportunity,” says Jake Pantone, ENVE’s director of marketing. “What would’ve taken us another five or 10 years, we were able to do basically immediately.”
AmerSport’s addition of ENVE also opened up some interesting collaboration potential. “From a design standpoint, there are areas we can collaborate,” says Pantone. “For example, Mavic has been working on a new thru-axle system. That’s something where Mavic makes a thru-axle, but they don’t make a fork, so that’s an opportunity where we can make a fork for them. [ENVE] doesn’t have great quick release technology, so that’s an example of where we can work with something Mavic does really well.”
Ultimately, it should make for better designs and more affordable options for the consumer, with one company making an entire system—from rim to hub to thru-axle to fork—instead of outsourcing every little component.
Of course not all mergers are a match made in heaven, particularly when it comes to the event and media side of the triathlon business. Challenge Family’s short partnership with Rev3 led to Challenge’s brief arrival in the U.S. market, followed by the disappearance of both Challenge and Rev3, and ultimately the return of the Rev3 series last year. As for Competitor Group: while Triathlete, Velonews and Elite Racing have continued to thrive, Inside Triathlon printed its final issue in 2013.
But so far consolidation among manufacturers has proven to be a smart business model, so don’t expect it to cease anytime soon.
“Anytime there’s an opportunity to inject resources into brands that might have trouble scaling, it’s a good thing—whether it’s innovation on the product side, or manufacturing capabilities, to better distribution,” Pantone says. “I imagine it’s something we’ll continue to see.” As more mergers happen, the triathlon industry will be affected with greater consequence. The question still remains, and will for some time, how it will ultimately drive the industry and trickle back to the consumer. For now, we’ll all just have to wait and see.