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Niche High-End Mountain Bikes Doing Well

Published October 16, 2007

BY ERINN MORGAN

GRAPEVINE, TX (BRAIN)—Enthusiasts are clamoring for high-end mountain bikes. Strong sales figures in the first half of 2007 from bike shops and high-end companies indicates a strong growth trend. The only problem is that a large number of consumers have yet to receive their bikes.

“Our sales are growing with high-end bikes, but the downside is that a lot of these guys aren’t spectacular on their availability,” said Clarence Muller, owner and buyer at Mad Duck Adventure Sports in Grapevine, Texas, which carries brands like Santa Cruz, Titus, Turner and Yeti. “It’s really bad for everybody in the business. It ties up the bike shop time with answering all the ‘Where is my bike?’ calls. And it really makes us all look rinky-dink. All we want from these guys is to give us a date and hit it.”

Frustrations on the consumer and retail level have grown exponentially as suppliers continue to miss delivery dates. High-end bike companies point to increased demand, production issues with retooling new products, and manufacturer lag-times as the causes of their delays.

High Times for High End. Still, despite delivery woes and higher price tags, consumers continue to covet high-end mountain bikes and sales volumes are increasing across the board.

“It is growing really well and the increases in the high-end mountain bike category have been steady,” Muller said. “For us, it’s increased about 20 percent a year for the last five years.”

Suppliers also confirm this trend. Jeff Titone, marketing director at Titus Cycles, said the company’s volume increased 54 percent from 2004 to 2005 and about 44 percent from 2005 to 2006. He predicts growth close to 30 percent this year, with dramatic improvements in delivery.

“We project that 2007 will kind of pale off just a little bit—internally we wanted to manage our growth in a responsible way,” Titone said. “As a small company we need to focus on our core high-end mountain range.”

At Turner Bikes, increases were realized even in the face of a significant lack of product. “Five years ago I would not have guessed we would be doing the numbers we are doing, even with our production delays,” said Dave Turner, Turner Bikes’ founder. “We are going to exceed last year’s sales with a whole spring of no bikes.”

Why is such a high-ticket item—with significant availability issues—seeing this kind of sales boom?

Titus’ Titone said it boils down to a veteran mountain bike population. “As the consumer base matures there is more disposable income and people are willing to spend money on quality products,” he said. “They just don’t have a problem dropping $2,500 to $4,000 on a frame if they know it’s something great.”

At Mad Duck Adventure Sports, $4,500 to $5,500 is the sweet spot for a high-end complete bike. According to Muller, this number has covered some distance in the last few years.

“Five years ago, $4,000 was a stretch,” he said. In addition, his shop typically sells complete bikes—about 75 percent of the time. “Some people do it but it’s an odd selling cycle to come in looking for a new frame and adding old parts onto it,” Muller said. “Most people just don’t want to hang old stuff on a new frame.”

Another factor in the consumer’s general lack of price resistance to high-end bikes relates to the overall trend toward aspirational spending. “We have a mature, stable mountain biking customer right now,” Turner said. “These are not beginners or rookies—these guys have bought a lot of bikes and done a lot of research and now they are looking for something that is truly special.”

Changes to Meet Demand. With the future in mind, most high-end companies are stepping up efforts to ensure their deliveries meet both the customer’s and retailer’s expectations.

Chris Conroy, Yeti’s president, said it all boils down to a commitment to deliver. “As a small manufacturer we have been very careful about choosing dealers and suppliers carefully,” he said. “The key is if they can deliver. If you can’t deliver you have created a difficult situation for the store. Rather than open up as many dealers as we can, we open up only the dealers we can support. But at the end of the day it means we can deliver pretty consistently. It’s a critical part of the relationship with the dealer and our customer. If you create excitement and don’t deliver, you end up managing the lack of delivery instead of doing the other things you need to do to progress your business.”

At Ellsworth Handcrafted Bicycles, founder Tony Ellsworth said he is trying to meet demand by stepping up production in the company’s two-year-old 6,000-square-foot production facility in Vancouver, Washington.

“Our biggest challenge is to be able to deliver,” he said. “We are committed to high-end bikes handmade in America. So we are trying to figure out how to make more out of our facility.”

Imagine the possibilities for this market segment if supply can actually meet the demand. With consumers in mind, many companies are introducing new products and refining existing ones.

One direction follows the move toward lighter-weight, longer-travel bikes. Ellsworth has revised the six-inch-travel Moment for 2008 to align with this movement. “We have incorporated new design work to make it a little lighter, a little stiffer, a little stronger and a little sexier,” Ellsworth said.

In addition, Titus has crafted its six-inch El Guapo from titanium for 2008, shaving off a half pound from the original aluminum frame’s weight. “Following the successful introduction last year of our new El Guapo, we decided to take the challenge thrown down by our competitors, who have made frame weight as important a consideration as the amount of travel,” Titone said. “While we agree that a lighter bike is a more efficient bike in terms of pedal-ability, we don’t feel that carbon fiber is necessarily the key to achieving this goal given the intended use of long-travel trail bikes.”

All-mountain bikes in the core four- to five-inch travel range are also a focus at the high end. “For Titus, we see most of our sales being driven in this travel range,” Titone said.

At Turner, the 5.5-inch Spot (formerly the 5-Spot) is the best-selling bike in its lineup.

Conroy said Yeti’s core is also in all-mountain bikes. “The biggest category for us is all-mountain,” he said. “We were pretty early adopters of long-travel lightweight bikes. The trend probably started in areas where riders most needed it, like Colorado and California. Longer-travel bikes are not perfect for somebody pedaling in a flatter environment, but they are great for somebody who wants a bike that does it all really well.”

Yeti will also introduce several new models for 2008, including a redesigned 303 DH, a carbon ASR cross-country bike, a 575 all-mountain bike, and a seven-inch-travel bike called ASR7.

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