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Suppliers Upbeat Following Healthy Quarter

Published May 4, 2011

By Jason Norman

MONTEREY, CA—Company officials at the recent Sea Otter Classic pointed to strong sales during the first quarter. But many said rising raw material and shipping costs are forcing them to raise prices, which could cut into profits in the second half of the year.

“That’s really going to slow down the growth the industry is hoping for,” said Patrick VanHorn, corporate communications manager for Giant Bicycle. “That’s Giant’s biggest concern right now. All of the manufacturers were forced to raise prices primarily because of the cost of raw materials, and also because of rising fuel costs.”

VanHorn said retailers are adjusting their buying habits due to rising fuel prices. “They realize ordering one or two bikes is just not going to be a good idea for them,” he said.

First quarter sales at Giant exceeded projections by 10 percent, VanHorn said.

Marin Bikes product and marketing manager Mark Vanek said the company was able to hold pricing on 2011 bikes by absorbing the increase in raw materials. But he doubts Marin can maintain pricing on 2012 product.

“For 2012 it’s definitely on the way,” Vanek said, “because we’ve heard it from our vendors that ‘it’s coming.’ Some manufacturers have already increased prices to cushion the blow for what’s happening next year.”

Because of sluggish sales in Europe at the start of the year, first quarter sales remained flat for Hayes Bicycle Group, according to director of marketing and product management Scott Struve.

“We’re not seeing the first quarter growth that we anticipated, but that said we’re starting to see things turn pretty rapidly for us,” Struve said, adding that Answer product along with Sun Ringle’s new Charger and Black Flag series wheelsets have been selling strong.

For Raleigh America February was a record month, according to Jon Kennedy, marketing manager for Diamondback. “We’re seeing a tremendous surge in sales in the 29-inch category,” Kennedy said. “We’re completely out of those; they went quick.”

Santa Cruz also reported having one of its best months ever in March. Marketing manager Scott Turner attributed the growth to its 29er push, including its popular carbon fiber Tallboy and more price-friendly aluminum offering.

Continental Bicycle Tires NA brand manager Brett Hahn said the company’s first quarter was strong, but that supply remains a concern industry wide. Continental recently increased prices of tires and tubes by 6 to 8 percent, Hahn said.

“That’s on the low side compared with our competitors,” Hahn said. “We held off as long as we could. Many announced increases several months ago. We tried to protect the IBD as much as we could on that, but found ourselves having to pass it on.”

Strong first quarter numbers carried over into Sea Otter as well, as exhibitors reported that consumers were willing to open up their wallets a little bit more this year. Zoic saw a 20-percent sales increase at Sea Otter compared with last year, according to sales manager Matt Manuel.

“This proves that Zoic has meaning to many consumers in the cycling world,” said Manuel, adding that the company is seeing a high amount of reorders for its spring apparel line. “Every day we hear from retailers and consumers that they love their Zoic clothing. Having the opportunity to talk with many of our loyal consumers at events like Sea Otter affirms the strength of our brand.”

Blackburn brand manager Jeff Titone said based on some of the new products the company is launching this year he forecasts positive sales gains, citing very good feedback from Sea Otter attendees that stopped by its booth.

Blackburn’s local retail partner, Joselyn’s Bicycles, sold Blackburn accessories at its own booth and reported strong sales.

“Based on the positive reactions to our products and that our product sold well over the course of the weekend, I believe there is a high demand for quality bicycle accessories and consumers will be asking for Blackburn products in their local shops,” Titone said.

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