Is that just Fox or are they lumping Marzocchi, Race Face and Easton into that number too? Is there another brand under the bike umbrella that...
Is that just Fox or are they lumping Marzocchi, Race Face and Easton into that number too? Is there another brand under the bike umbrella that I'm forgetting?
Is that just Fox or are they lumping Marzocchi, Race Face and Easton into that number too? Is there another brand under the bike umbrella that...
Is that just Fox or are they lumping Marzocchi, Race Face and Easton into that number too? Is there another brand under the bike umbrella that I'm forgetting?
Interesting read by Deviate and I understand they wish for discounts to stop as soon as 2025, but is that even possible ?
I get it that other premium brands like Santa Cruz and Forbidden are doing massive sales since 2 years are hurting them, but is this going to stop into 2025 really ?
The used market is flooded and there's so many almost new bikes that it must interfere with the new market more than ever. The inventory of previous model year bikes must be so high that it'll carry on well into 2025.
Then you have your average smart buyer that is now used to see X premium brand discounted 20-30% since 2 years, how will that buyer justify forking out full MSRP for the same bike in 2025 ? Buying at full MSRP right now is crazy, you're hit with a 50% penatly just by walking it out the door...MSRP and market value is truly messed up right now.
Is that just Fox or are they lumping Marzocchi, Race Face and Easton into that number too? Is there another brand under the bike umbrella that...
Is that just Fox or are they lumping Marzocchi, Race Face and Easton into that number too? Is there another brand under the bike umbrella that I'm forgetting?
I used to dive into participation numbers back when I was running Evergreen MTB Alliance (long time ago, so take this for what it's worth). The...
I used to dive into participation numbers back when I was running Evergreen MTB Alliance (long time ago, so take this for what it's worth). The problem with MTB numbers was that they often classified a whole whack of not-actually-MTBing as our sport. Think hybrid bikes with sorta fat tires, Walmart/Costco "mountain bikes", people who rode a rail trail once, etc. You really need to look at the source data closely to have any idea WTF they're actually reporting.
In today's market I'd bet my rear rotor that shitty, not suitable for trail, e-"MTBs" are skewing the numbers heavily. You know the ones; the RAD bike with 4" floaty tires that people use to cruise bike paths or commute (always seeming to get flats).
Golf is easier to define, much less of a spectrum.
Golf is in decline, at least in the USA, and MTB is on the rise, but I'd still be shocked if participation #s and total $$ for actual MTBing are even close to that of golf.
„In today's market I'd bet my rear rotor that shitty, not suitable for trail, e-"MTBs" are skewing the numbers heavily.“I can confirm this, at least in...
„In today's market I'd bet my rear rotor that shitty, not suitable for trail, e-"MTBs" are skewing the numbers heavily.“
I can confirm this, at least in Europe. Anytime I drive on one of the roads towards tourist destinations between Germany and Italy the vast majority of bikes on the cars are Cubes and KTMs with the occasional Trek Rail or Husqvarna. Usually 150-160mm of travel, fully kitted out with racks, fenders and enough lamps to light up a small town. That’s what the sales person told them they need, and then it only gets ridden on bike paths and the occasional fire road.
Sometimes you see dad bikers riding the flow trails at bike parks with them, but very few people in my local bike community below 40-50 actually ride an ebike.
What I see a lot of in the US, and what I think @JVP is referring to, are bikes like this absolute monstrosity. The bikes you're describing could reasonably be considered "real" mountain bikes, while the below is, well, I'm not really sure what it is.
Is that just Fox or are they lumping Marzocchi, Race Face and Easton into that number too? Is there another brand under the bike umbrella that...
Is that just Fox or are they lumping Marzocchi, Race Face and Easton into that number too? Is there another brand under the bike umbrella that I'm forgetting?
Interesting read by Deviate and I understand they wish for discounts to stop as soon as 2025, but is that even possible ?I get it that...
Interesting read by Deviate and I understand they wish for discounts to stop as soon as 2025, but is that even possible ?
I get it that other premium brands like Santa Cruz and Forbidden are doing massive sales since 2 years are hurting them, but is this going to stop into 2025 really ?
The used market is flooded and there's so many almost new bikes that it must interfere with the new market more than ever. The inventory of previous model year bikes must be so high that it'll carry on well into 2025.
Then you have your average smart buyer that is now used to see X premium brand discounted 20-30% since 2 years, how will that buyer justify forking out full MSRP for the same bike in 2025 ? Buying at full MSRP right now is crazy, you're hit with a 50% penatly just by walking it out the door...MSRP and market value is truly messed up right now.
I think it's very unlikely that the discounting will stop any time soon. There's going to be a hangover to this as well with people delaying purchasing a new bike at full pop because of years of deep discounts. Unless you're buying an e-bike with a significantly better motor or battery, the differences between each successive generation of a mountain bike is narrower and narrower. Take the newest Hightower or Sentinel as examples: they're both great bikes, but if you own the previous generation and it's not entirely clapped out, what's the incentive to upgrade at MSRP?
It's going to be a great time to be a buyer in the used market for a while yet.
It also includes Marucci (baseball/softball) along with Lizard Skins and Oury.
Correct. I should have been more clear.
SSG: Fox, Marzocchi, Easton, RaceFace, Ride Concepts, Marucci and Lizard Skins. They lump Lizard Skins in with the Marucci side. Here is a quick graph showing the breakdown year over year. This was from a presentation back in April (I think).
I do wish we had a further breakdown of sales - Fox vs Easton vs RF etc. but oh well. Not really that important.
Unrelated, look who is cited in their presentation. Kinda cool!
This keeps coming up, and for good reason, so I wanted to give a little more context and color around the industry data I cited in my presentation. In short, this data is incredibly messy and not to be relied upon in any sort of social studies project, business school presentation or internal pitch at whatever company you work at. I think I put the above disclosure on the slide, but you guys are doing a good job articulating the various ways it may be misleading. There are a few things I want to note here...
Primarily Private: The industry is comprised mostly of private companies upstream all the way down to the retailer. This makes it incredibly difficult to aggregate sales data of any kind.
Niche: Mountain bikes are a niche within a niche that has little interest from "big money". There simply isn't a lot of incentive to do these highly challenging deep dives into the state of the industry when the sport is pretty far from what most investors, founders and capital allocators are interested in. To add, a lot of this becomes academic and not all that important when deciding what kind of company you are going to build. IE - I don't really care if the mountain bike industry is a $4B or $14B market, I'm still going to start the company I am aiming to start.
Participation: Unlike almost every other sport, mountain biking has no hard lined way to track participation. Golf has greens fees and memberships, (alpine) skiing has lift tickets and passes, ball sports have team sign ups. Mountain biking requires you to tell nobody when you go ride a trail, making it really hard to track how many people ride and how often they ride. To add, even if we did have a way to track participation, what do we do with it? Do we count someone as a mountain biker if they ride off road once a year? Does a gravel bike path count? How about a trail I could comfortably ride my gravel bike? It gets super messy, super fast.
Equipment: As many have demonstrated, there are a number of flavors of "mountain bikes" we wouldn't really consider to be a mountain bike the way we see mountain biking, but get lumped into the equation.
In short I'm sure the numbers floating around out there includes a lot of riffraff and stuff we wouldn't consider to be "core" to the sport. However, I do know with confidence the sport is actually larger than I used to think it is. Fox alone doing over $500M per year tells me "yup, sales are well into the billions for the entirety of mountain biking". The sport is healthy, and more on par with other larger sports like skiing, and yes - even golf.
On that note, I did a little more homework there. I found a few datapoints that suggest golf is a $70-80B/year industry when you count everything; softgoods, equipment, greens fees, memberships, golf tourism, pro golf, media rights etc. Callaway, the largest club manufacturer, reports equipment sales of around $1.3-1.4B/year. While I can't find a mountain bike number that is "all in" I'd be willing to put it north of $10B and south of $20B. Maybe even higher. Thinking we're even 20% (or even 10%) the size of a sport that has been around for hundreds of years and known throughout the mainstream community is pretty impressive, at least to me.
TL;DR - mountain biking is plenty big enough even when you don't count the riffraff, its not going anywhere, and it has solidified its place as a "real" sport. But we all knew that
Correct. I should have been more clear. SSG: Fox, Marzocchi, Easton, RaceFace, Ride Concepts, Marucci and Lizard Skins. They lump Lizard Skins in with the Marucci...
Correct. I should have been more clear.
SSG: Fox, Marzocchi, Easton, RaceFace, Ride Concepts, Marucci and Lizard Skins. They lump Lizard Skins in with the Marucci side. Here is a quick graph showing the breakdown year over year. This was from a presentation back in April (I think).
I do wish we had a further breakdown of sales - Fox vs Easton vs RF etc. but oh well. Not really that important.
Unrelated, look who is cited in their presentation. Kinda cool!
It is important to note that demand during Covid should be thought of pull forward and not regular organic growth that then disappeared. What I mean by that is these are people that at some point would have bought a bike to try it out but it might have been 2-5 years farther out. Instead all of that demand (and now turnover/selling) was brought into an 18 month period.
Where almost every company made a mistake was believing that every one of those people would be stoked on riding and become seriously invested in the sport. There was also market distortion based on government direct payments to consumers which lead to people buying more expensive bikes than they would have in the absence of those payments. So now all the people that would have been buying a bike for the first time in 2024 or 2025 already has one. Also impactful is that the percentage of people that then sell those bikes has been pulled forward in a similar fashion.
Regarding discounts, what we are seeing right now from the big players like Specialized is not discounting. Instead their margins are normalizing back to pre Covid levels. Perfect example is the previous gen SJ Evo. When released the Expert model was ~$4700. During Covid this jumped to ~$6500 based on high demand and low supply. When the market normalized they slowly reduced pricing showing it as a one time discount back down to the $4700 range. Looking at this from the other side, they NEVER had to discount the original intended sales price of the bike. Instead they were able to get much larger margins for a set period of time.
I bet the golf numbers don't include the cost of your local country club membership.
Jeff addressed that in his next post "I found a few datapoints that suggest golf is a $70-80B/year industry when you count everything; softgoods, equipment, greens fees, memberships, golf tourism, pro golf, media rights etc."
Anddddd the Mike’s Bikes Chain in the Bay Area. Watching the things that Mikes Bikes shops do is very interesting as it relates to the larger...
Anddddd the Mike’s Bikes Chain in the Bay Area. Watching the things that Mikes Bikes shops do is very interesting as it relates to the larger holding.
Yeah, I was just saying the bike brands. A significant portion of their revenue must also be their bike services companies, which do things like lease bikes, offer bikes and ebikes via subscription, and offer AAA-style bicycle roadside repair services.
Yeah, I was just saying the bike brands. A significant portion of their revenue must also be their bike services companies, which do things like lease...
Yeah, I was just saying the bike brands. A significant portion of their revenue must also be their bike services companies, which do things like lease bikes, offer bikes and ebikes via subscription, and offer AAA-style bicycle roadside repair services.
Hey biz thread subscribers, I met with Jeff about a month ago for an Inside Line to discuss the current state of things. It was a...
Hey biz thread subscribers, I met with Jeff about a month ago for an Inside Line to discuss the current state of things. It was a rad discussion. The podcast and its copy are below. Enjoy! I know I did.
Today we're joined by Jeff Brines, a long-time mountain biker, Litter Mag and Vital MTB fan. He's also educated and versed in finance. He kicked off a forum thread on Vital MTB that asked "Will more companies be shutting down in the next 12-24 months?" At a year old, the thread has over 100,000 views with nearly 800 replies as news about our industry has broken. We discuss the past and current state of the bicycle industry through his analysis and tools and see if we can figure out where we're headed.
Thank you Vital listeners!
THIS IS NOT FINANCIAL ADVICE.
Podcast Contents 0:00 - Intro, who is Jeff and what are we discussing? 6:11 - Why start a Vital MTB forum post about bike companies shutting down? 11:07 - Why did the *money people* think MTB would make them rich during Covid? 17:30 - Is it just greed and ego? 19:55 - Why did bikes stop selling? 23:49 - Why don't brands save money for slow times? 27:54 - Most of the bike industry is privately held 32:52 - Companies that went under, does the investment money just disappear? 38:05 - Original owners buying a company back, Family Office and Private Equity 46:25 - Private equity and how it works 51:54 - Is going bankrupt expected with venture capital investors? 53:51 - The lunacy of VanMoof being worth $500 million 1:04:23 - What does the bike industry future look like? 1:12:41 - Is there any incentive to get into the bike industry now? 1:15:41 - Is there an ideal company size? 1:17:48 - Will the business world repeat the same mistakes 10 years from now? 1:21:31 - Tools to learn about the bike industry 1:26:10 - Vital audience survey
Finally found time to listen to this and really enjoyed it; lots of good insight and the discussion was able to convey a lot of nuance that doesn't necessarily fit/carry over in forum post. Thanks @sspomer for making it happen and @jeff.brines for all your research and time!
Thx a ton for having me. Post any questions or call outs here (which is totally fair) and I'll respond. Also, apologies for all the rambling...
Thx a ton for having me. Post any questions or call outs here (which is totally fair) and I'll respond. Also, apologies for all the rambling. I was...nervous. 😬
Towards the end of the conversation, it was insightful to note that there are companies who are content at running lean and not getting out over...
Towards the end of the conversation, it was insightful to note that there are companies who are content at running lean and not getting out over their skis when it comes to growing their business. I think about what Neko and co are doing with their Frameworks project and following a "drop" model sounds like a sensible way to manage working capital and grow in an organic and predictable way.
Makes me wonder what the typical MOQ is from one of the primary frame manufacturers from Taiwan (a la Genios) and if it's a low enough order quantity to encourage a "leaner" company to operate under a similar model.
Not to nit-pick but just want to point out that what Neko and Frameworks are doing isn't some unique "drop" model, its literally how every company using an OEM supplier works, they just inform you of quantities beforehand.
Unless you pay an OEM for a an entire production line, they will make/assemble whatever quantity you ask for in batches, and then re-tool that line to make someone else's product. So for instance, Transition get their frames welded by Genie (I believe), they will make lets say 1k frames, then that line will be re-tooled and make 1k frame for, lets say RAAW, and if Transition want a 2nd run they have an option for that etc etc.But they don't have permanent line where they make their frames 24/7, if that makes sense.
The only difference that Neko has done, is tell you beforehand how many they are making, then saying we will do a 2nd run if needed. Every bike company does this, they just estimate internally how much they need, and figure it out behind closed doors.
Thx a ton for having me. Post any questions or call outs here (which is totally fair) and I'll respond. Also, apologies for all the rambling...
Thx a ton for having me. Post any questions or call outs here (which is totally fair) and I'll respond. Also, apologies for all the rambling. I was...nervous. 😬
Towards the end of the conversation, it was insightful to note that there are companies who are content at running lean and not getting out over...
Towards the end of the conversation, it was insightful to note that there are companies who are content at running lean and not getting out over their skis when it comes to growing their business. I think about what Neko and co are doing with their Frameworks project and following a "drop" model sounds like a sensible way to manage working capital and grow in an organic and predictable way.
Makes me wonder what the typical MOQ is from one of the primary frame manufacturers from Taiwan (a la Genios) and if it's a low enough order quantity to encourage a "leaner" company to operate under a similar model.
Not to nit-pick but just want to point out that what Neko and Frameworks are doing isn't some unique "drop" model, its literally how every company...
Not to nit-pick but just want to point out that what Neko and Frameworks are doing isn't some unique "drop" model, its literally how every company using an OEM supplier works, they just inform you of quantities beforehand.
Unless you pay an OEM for a an entire production line, they will make/assemble whatever quantity you ask for in batches, and then re-tool that line to make someone else's product. So for instance, Transition get their frames welded by Genie (I believe), they will make lets say 1k frames, then that line will be re-tooled and make 1k frame for, lets say RAAW, and if Transition want a 2nd run they have an option for that etc etc.But they don't have permanent line where they make their frames 24/7, if that makes sense.
The only difference that Neko has done, is tell you beforehand how many they are making, then saying we will do a 2nd run if needed. Every bike company does this, they just estimate internally how much they need, and figure it out behind closed doors.
Your last sentence is the kicker. Most companies are estimating their demand and place an order with their supplier. But if you have your forecast wrong, you have working capital tied up in your excess inventory.
Conversely, with a drop model, you first obtain commitment from your customers up front, then send the order to the supplier for precisely the amount of frames you need to meet demand. It's a more predicitable way to manage your working capital.
Your last sentence is the kicker. Most companies are estimating their demand and place an order with their supplier. But if you have your forecast wrong...
Your last sentence is the kicker. Most companies are estimating their demand and place an order with their supplier. But if you have your forecast wrong, you have working capital tied up in your excess inventory.
Conversely, with a drop model, you first obtain commitment from your customers up front, then send the order to the supplier for precisely the amount of frames you need to meet demand. It's a more predicitable way to manage your working capital.
Or you could make as many bikes as you want, force your dealer network to pre-buy bikes ahead of time with the promise of a small volume discount, and then they get stuck with your overstock sitting on their books and sales floors. Win win!
Or you could make as many bikes as you want, force your dealer network to pre-buy bikes ahead of time with the promise of a small...
Or you could make as many bikes as you want, force your dealer network to pre-buy bikes ahead of time with the promise of a small volume discount, and then they get stuck with your overstock sitting on their books and sales floors. Win win!
Kinda ironic that having bikes is one of the things that is most dangerous to a shop's financial well-being..
Yeah, I was just saying the bike brands. A significant portion of their revenue must also be their bike services companies, which do things like lease...
Yeah, I was just saying the bike brands. A significant portion of their revenue must also be their bike services companies, which do things like lease bikes, offer bikes and ebikes via subscription, and offer AAA-style bicycle roadside repair services.
Bikes are only part of what PON does. https://pon.com/en/about-pon/companies/Check out some of the brands on that list which PON partners with, including exclusive rights for...
Check out some of the brands on that list which PON partners with, including exclusive rights for distribution/sales a whole bunch of luxury vehicles.
Regarding vehicles, they are the official importer of the complete VAG group in the netherlands, therefore Volkswagen, Audi, Škoda and Seat vehicles with the likes of Porsche, Lamborghini, Bentley, and apparently Rimac and Bugatti too, thrown in due to them being under the VAG umbrella. And MAN trucks fall into the same category.
Towards the end of the conversation, it was insightful to note that there are companies who are content at running lean and not getting out over...
Towards the end of the conversation, it was insightful to note that there are companies who are content at running lean and not getting out over their skis when it comes to growing their business. I think about what Neko and co are doing with their Frameworks project and following a "drop" model sounds like a sensible way to manage working capital and grow in an organic and predictable way.
Makes me wonder what the typical MOQ is from one of the primary frame manufacturers from Taiwan (a la Genios) and if it's a low enough order quantity to encourage a "leaner" company to operate under a similar model.
Not to nit-pick but just want to point out that what Neko and Frameworks are doing isn't some unique "drop" model, its literally how every company...
Not to nit-pick but just want to point out that what Neko and Frameworks are doing isn't some unique "drop" model, its literally how every company using an OEM supplier works, they just inform you of quantities beforehand.
Unless you pay an OEM for a an entire production line, they will make/assemble whatever quantity you ask for in batches, and then re-tool that line to make someone else's product. So for instance, Transition get their frames welded by Genie (I believe), they will make lets say 1k frames, then that line will be re-tooled and make 1k frame for, lets say RAAW, and if Transition want a 2nd run they have an option for that etc etc.But they don't have permanent line where they make their frames 24/7, if that makes sense.
The only difference that Neko has done, is tell you beforehand how many they are making, then saying we will do a 2nd run if needed. Every bike company does this, they just estimate internally how much they need, and figure it out behind closed doors.
Your last sentence is the kicker. Most companies are estimating their demand and place an order with their supplier. But if you have your forecast wrong...
Your last sentence is the kicker. Most companies are estimating their demand and place an order with their supplier. But if you have your forecast wrong, you have working capital tied up in your excess inventory.
Conversely, with a drop model, you first obtain commitment from your customers up front, then send the order to the supplier for precisely the amount of frames you need to meet demand. It's a more predicitable way to manage your working capital.
That would be true, if it wasn't the case Frameworks said they were making 80 DH bikes as that's what was ordered, and then they went on sale to the mailing list and online after that. They then said they would make more than 80 if there was enough demand, which is what everyone manufacturer does, as they release during production with contract caveats that they can extend the line usage if necessary.
You either invest in marketing a product that doesn't exist to people to pre-buy or you market it after you've estimated. What frameworks did specifically isn't some new business method
From what i see, the bullwhip effect is still in full swing and 25 will still be oberheated. 26 could be the first year of linear growth since 19 which would mean 27 could potentially be the forst "normal" year in market behaviour.
Lets hope the industry doesnt take the fist signs of a linear market behaviour as a sign of "market is fully healed, back to overstocking"
From what i see, the bullwhip effect is still in full swing and 25 will still be oberheated. 26 could be the first year of linear...
From what i see, the bullwhip effect is still in full swing and 25 will still be oberheated. 26 could be the first year of linear growth since 19 which would mean 27 could potentially be the forst "normal" year in market behaviour.
Lets hope the industry doesnt take the fist signs of a linear market behaviour as a sign of "market is fully healed, back to overstocking"
Don't under estimate the stupidity of the industry. I sat through 8 hours of presentations from a very large manufacturer (that rhymes with Drek) where they explained to us that the huge growth in sales (mid lockdown) was down to their hard work and foresight and how we should be grateful to them and not let them down by listening to medical advice.
Clothing sucks from a shop standpoint. So much is seasonal. While companies have broken it down to two seasons which makes it a little easier, but the shops are still expected to commit a year or more out. Is that color or pattern still hot when it hits the stores? And usually they want quantities that almost guaranteed to result in a shop blowing out inventory. It's almost best for a shop to use the old Kmart Blue Light Special model..
As for bikes, the industry can't react quickly to changes in the economic climate. When demand soared, the industry needs at least 18 months to respond. Remember Trek's announcement regarding slimming down the models and how it wouldn't hit until 2025? They are banking on 2023 and 2024 bikes they already bought to carry them. 2025 will be lean and I think 2026 will be a lot of carry over.. Soon they will be looking at ordering for 2027..That will be interesting to see what happens..
If one had the money and simply loved bikes and has a decent business sense, I wonder what one could get the Nukeproof and Vitus lines for?
The group also own Ride Concept shoes now.
Interesting read by Deviate and I understand they wish for discounts to stop as soon as 2025, but is that even possible ?
I get it that other premium brands like Santa Cruz and Forbidden are doing massive sales since 2 years are hurting them, but is this going to stop into 2025 really ?
The used market is flooded and there's so many almost new bikes that it must interfere with the new market more than ever. The inventory of previous model year bikes must be so high that it'll carry on well into 2025.
Then you have your average smart buyer that is now used to see X premium brand discounted 20-30% since 2 years, how will that buyer justify forking out full MSRP for the same bike in 2025 ? Buying at full MSRP right now is crazy, you're hit with a 50% penatly just by walking it out the door...MSRP and market value is truly messed up right now.
It also includes Marucci (baseball/softball) along with Lizard Skins and Oury.
What I see a lot of in the US, and what I think @JVP is referring to, are bikes like this absolute monstrosity. The bikes you're describing could reasonably be considered "real" mountain bikes, while the below is, well, I'm not really sure what it is.
I think it's very unlikely that the discounting will stop any time soon. There's going to be a hangover to this as well with people delaying purchasing a new bike at full pop because of years of deep discounts. Unless you're buying an e-bike with a significantly better motor or battery, the differences between each successive generation of a mountain bike is narrower and narrower. Take the newest Hightower or Sentinel as examples: they're both great bikes, but if you own the previous generation and it's not entirely clapped out, what's the incentive to upgrade at MSRP?
It's going to be a great time to be a buyer in the used market for a while yet.
Correct. I should have been more clear.
SSG: Fox, Marzocchi, Easton, RaceFace, Ride Concepts, Marucci and Lizard Skins. They lump Lizard Skins in with the Marucci side. Here is a quick graph showing the breakdown year over year. This was from a presentation back in April (I think).
I do wish we had a further breakdown of sales - Fox vs Easton vs RF etc. but oh well. Not really that important.
Unrelated, look who is cited in their presentation. Kinda cool!
A handful of notes on industry data
This keeps coming up, and for good reason, so I wanted to give a little more context and color around the industry data I cited in my presentation. In short, this data is incredibly messy and not to be relied upon in any sort of social studies project, business school presentation or internal pitch at whatever company you work at. I think I put the above disclosure on the slide, but you guys are doing a good job articulating the various ways it may be misleading. There are a few things I want to note here...
Primarily Private: The industry is comprised mostly of private companies upstream all the way down to the retailer. This makes it incredibly difficult to aggregate sales data of any kind.
Niche: Mountain bikes are a niche within a niche that has little interest from "big money". There simply isn't a lot of incentive to do these highly challenging deep dives into the state of the industry when the sport is pretty far from what most investors, founders and capital allocators are interested in. To add, a lot of this becomes academic and not all that important when deciding what kind of company you are going to build. IE - I don't really care if the mountain bike industry is a $4B or $14B market, I'm still going to start the company I am aiming to start.
Participation: Unlike almost every other sport, mountain biking has no hard lined way to track participation. Golf has greens fees and memberships, (alpine) skiing has lift tickets and passes, ball sports have team sign ups. Mountain biking requires you to tell nobody when you go ride a trail, making it really hard to track how many people ride and how often they ride. To add, even if we did have a way to track participation, what do we do with it? Do we count someone as a mountain biker if they ride off road once a year? Does a gravel bike path count? How about a trail I could comfortably ride my gravel bike? It gets super messy, super fast.
Equipment: As many have demonstrated, there are a number of flavors of "mountain bikes" we wouldn't really consider to be a mountain bike the way we see mountain biking, but get lumped into the equation.
In short I'm sure the numbers floating around out there includes a lot of riffraff and stuff we wouldn't consider to be "core" to the sport. However, I do know with confidence the sport is actually larger than I used to think it is. Fox alone doing over $500M per year tells me "yup, sales are well into the billions for the entirety of mountain biking". The sport is healthy, and more on par with other larger sports like skiing, and yes - even golf.
On that note, I did a little more homework there. I found a few datapoints that suggest golf is a $70-80B/year industry when you count everything; softgoods, equipment, greens fees, memberships, golf tourism, pro golf, media rights etc. Callaway, the largest club manufacturer, reports equipment sales of around $1.3-1.4B/year. While I can't find a mountain bike number that is "all in" I'd be willing to put it north of $10B and south of $20B. Maybe even higher. Thinking we're even 20% (or even 10%) the size of a sport that has been around for hundreds of years and known throughout the mainstream community is pretty impressive, at least to me.
TL;DR - mountain biking is plenty big enough even when you don't count the riffraff, its not going anywhere, and it has solidified its place as a "real" sport. But we all knew that
It is important to note that demand during Covid should be thought of pull forward and not regular organic growth that then disappeared. What I mean by that is these are people that at some point would have bought a bike to try it out but it might have been 2-5 years farther out. Instead all of that demand (and now turnover/selling) was brought into an 18 month period.
Where almost every company made a mistake was believing that every one of those people would be stoked on riding and become seriously invested in the sport. There was also market distortion based on government direct payments to consumers which lead to people buying more expensive bikes than they would have in the absence of those payments. So now all the people that would have been buying a bike for the first time in 2024 or 2025 already has one. Also impactful is that the percentage of people that then sell those bikes has been pulled forward in a similar fashion.
Regarding discounts, what we are seeing right now from the big players like Specialized is not discounting. Instead their margins are normalizing back to pre Covid levels. Perfect example is the previous gen SJ Evo. When released the Expert model was ~$4700. During Covid this jumped to ~$6500 based on high demand and low supply. When the market normalized they slowly reduced pricing showing it as a one time discount back down to the $4700 range. Looking at this from the other side, they NEVER had to discount the original intended sales price of the bike. Instead they were able to get much larger margins for a set period of time.
I bet the golf numbers don't include the cost of your local country club membership.
Jeff addressed that in his next post "I found a few datapoints that suggest golf is a $70-80B/year industry when you count everything; softgoods, equipment, greens fees, memberships, golf tourism, pro golf, media rights etc."
Typed up a whole thing an lost it, so here is a link. Translate and read. Lots of good bits
https://www.mtb-news.de/news/pon-santa-cruz-cervelo-produktion-schliess…
PON Revenue 2.3 Billion Euros. DAMN
How about 2.6 million bicycles in 2023?
Pon owns Caloi, Cannondale, Cervélo, FOCUS, Gazelle, GT, Kalkhoff, Mongoose, Santa Cruz, Schwinn, Urban Arrow, Public, and Veloretti bicycle brands.
Anddddd the Mike’s Bikes Chain in the Bay Area. Watching the things that Mikes Bikes shops do is very interesting as it relates to the larger holding.
Yeah, I was just saying the bike brands. A significant portion of their revenue must also be their bike services companies, which do things like lease bikes, offer bikes and ebikes via subscription, and offer AAA-style bicycle roadside repair services.
Just surprising- almost 2x size of KTM, and none of those brands are 'big' in my opinion like a Trek, Spec, Giant.
Trek claim their revenue is circa $1b.
Crazy good deals if you want an ebike with a spare battery.
I wonder if they'll still make motors? Could cause Giant some problems if not.
Bikes are only part of what PON does.
https://pon.com/en/about-pon/companies/
Check out some of the brands on that list which PON partners with, including exclusive rights for distribution/sales a whole bunch of luxury vehicles.
Finally found time to listen to this and really enjoyed it; lots of good insight and the discussion was able to convey a lot of nuance that doesn't necessarily fit/carry over in forum post. Thanks @sspomer for making it happen and @jeff.brines for all your research and time!
Not to nit-pick but just want to point out that what Neko and Frameworks are doing isn't some unique "drop" model, its literally how every company using an OEM supplier works, they just inform you of quantities beforehand.
Unless you pay an OEM for a an entire production line, they will make/assemble whatever quantity you ask for in batches, and then re-tool that line to make someone else's product. So for instance, Transition get their frames welded by Genie (I believe), they will make lets say 1k frames, then that line will be re-tooled and make 1k frame for, lets say RAAW, and if Transition want a 2nd run they have an option for that etc etc.But they don't have permanent line where they make their frames 24/7, if that makes sense.
The only difference that Neko has done, is tell you beforehand how many they are making, then saying we will do a 2nd run if needed. Every bike company does this, they just estimate internally how much they need, and figure it out behind closed doors.
Your last sentence is the kicker. Most companies are estimating their demand and place an order with their supplier. But if you have your forecast wrong, you have working capital tied up in your excess inventory.
Conversely, with a drop model, you first obtain commitment from your customers up front, then send the order to the supplier for precisely the amount of frames you need to meet demand. It's a more predicitable way to manage your working capital.
Or you could make as many bikes as you want, force your dealer network to pre-buy bikes ahead of time with the promise of a small volume discount, and then they get stuck with your overstock sitting on their books and sales floors. Win win!
Kinda ironic that having bikes is one of the things that is most dangerous to a shop's financial well-being..
Regarding vehicles, they are the official importer of the complete VAG group in the netherlands, therefore Volkswagen, Audi, Škoda and Seat vehicles with the likes of Porsche, Lamborghini, Bentley, and apparently Rimac and Bugatti too, thrown in due to them being under the VAG umbrella. And MAN trucks fall into the same category.
I am missing Ducati though...
That would be true, if it wasn't the case Frameworks said they were making 80 DH bikes as that's what was ordered, and then they went on sale to the mailing list and online after that. They then said they would make more than 80 if there was enough demand, which is what everyone manufacturer does, as they release during production with contract caveats that they can extend the line usage if necessary.
You either invest in marketing a product that doesn't exist to people to pre-buy or you market it after you've estimated. What frameworks did specifically isn't some new business method
From what i see, the bullwhip effect is still in full swing and 25 will still be oberheated. 26 could be the first year of linear growth since 19 which would mean 27 could potentially be the forst "normal" year in market behaviour.
Lets hope the industry doesnt take the fist signs of a linear market behaviour as a sign of "market is fully healed, back to overstocking"
Don't under estimate the stupidity of the industry. I sat through 8 hours of presentations from a very large manufacturer (that rhymes with Drek) where they explained to us that the huge growth in sales (mid lockdown) was down to their hard work and foresight and how we should be grateful to them and not let them down by listening to medical advice.
Just listened to the Podcast with Jeff...
My couple of thoughts..
Clothing sucks from a shop standpoint. So much is seasonal. While companies have broken it down to two seasons which makes it a little easier, but the shops are still expected to commit a year or more out. Is that color or pattern still hot when it hits the stores? And usually they want quantities that almost guaranteed to result in a shop blowing out inventory. It's almost best for a shop to use the old Kmart Blue Light Special model..
As for bikes, the industry can't react quickly to changes in the economic climate. When demand soared, the industry needs at least 18 months to respond. Remember Trek's announcement regarding slimming down the models and how it wouldn't hit until 2025? They are banking on 2023 and 2024 bikes they already bought to carry them. 2025 will be lean and I think 2026 will be a lot of carry over.. Soon they will be looking at ordering for 2027..That will be interesting to see what happens..
If one had the money and simply loved bikes and has a decent business sense, I wonder what one could get the Nukeproof and Vitus lines for?
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