There are hundreds of bicycle brands existing today: from the big consumer brands like Trek, Giant or Cannondale that offer a fully comprehensive product portfolio, to the small workshop that is specializing in hand-welded steel frames. Yet, when we take a closer look at road racing bikes, for example while attending a pro- or amateur race, we will immediately notice that most of the athletes are riding only a few number of brands. This is also true for triathlon races.
Not your average shopping bike
Innovation in Competitive Cycling
Triathlon bikes are a very small segment in the sport bikes category, which itself is a small segment of less than 5% in the total global bike market. The development and production of triathlon bikes is costly for two reasons: Triathlon bikes are for the bike industry, what Formula One is for the automotive industry: The rate of innovation is the fastest in the industry and basically unlimited. This is mainly due to regulations stipulated by the UCI (the world governing body for bicycle races) that limits the usage of new designs in road racing. Except for triathlon for which the UCI has no mandate.
In road racing the minimum weight of the bike (6,8 kg) has been set by the UCI in the year 2000. 17 years later many consumer brands offer bikes with a lower weight for less than $ 5.000. The UCI has also limited the usage of disc brakes, the aerodynamical design of frames, the integration of suspension and many more technical developments which are now making inroad to consumer bicycles.
The development of triathlon bikes is costly as the technology involved is complex and made for a single purpose: Too ride fast long distances, preferably straight. One can buy a road race bike and ride to work or go shopping with it from time to time. None of this can be done with a triathlon bike, it serves only two purposes: Triathlon competitions. And training for triathlon competitions.
As the market for these bikes is small, high development cost must be distributed over low production numbers. In addition, the market is very sensitive to innovation, so bikes most be upgraded and replaced within short intervals which leads to short product lifetimes. So even lower production numbers of one model.
One would assume that only a few number of makers will therefore engage in the development, production and sales of triathlon bikes and that bike pricing would be very steep. Surprisingly enough that is not the case. How do we know?
Bikes lined up at the Ironman Competition in Kona, 2017
The Kona Ironman Bike Count
The Tour de France of Triathlon is the Ironman World Championship hold annually in Hawaii since 1978. 2009 Lava Magazine, a publication for triathletes, started to send staff to count the brands and components of the competitor’s bikes on the day of the event. The data is published on the internet and provides a valuable and free source for the bike industry.
Each year between 1.600 (2009) and 2.400 (2017) athletes are fighting to become the “Ironman” or “Ironwoman” respectively. Over the course of nine year, more than 17.700 bicycles have been looked at and as a result 172 bicycle brands have been identified. This would mean, that the average brand accounts for about 100 bicycles over the course of nine years, right? Not quite, because only 22 of the 172 brands identified have brought 100 or more bikes to the event. Not only this, but these 22 brands together account for more than 91% of all bikes used.
With some more number crunching we found out, that 33 brands (20%) account for roughly 95% of all bicycles used at the Ironman. The remaining 139 brands, among them famous makers and big brands such as Merida, Focus, Bianchi, Neil Pride, Time or Simplon account for a meager 5% of the total. These brands often lack specific triathlon bikes in their portfolio. Instead they offer time trial bikes, which can be described as a UCI-compliant version of a triathlon bike. This type of bike is used at UCI road racing time trials; however, compared with triathlon bikes they are at a technological disadvantage, mainly in terms of aerodynamics. Given the level of overall competition at the Ironman, one cannot expect to achieve a top Ironman result riding a “simple” time trial bike.
The Main Brands in the Triathlon Bike Industry
We took a closer look at these 33 major brands and found out that still only a handful of them are important. The undisputed leader since 2009 is Cervelo with a share of almost 26% in the period between 2009 and 2017, followed by Trek with 11%, Specialized with 9% and Felt with slightly more than 6%. No other brand, except these four has a share higher than 5%. These four brands are accounting for 46% – 56% of all bikes at the Ironman in every single year since 2009.
Or with other words: The big four are accounting for roughly half of all bikes, 18 other brands for further 40%, 11 more brands for 5% and 139 brands for the remaining 5%. There are only 22 relevant brands in the world of triathlon bikes.
Only 22 relevant brands? Well not quite. Among the 22 brands which capture 90% share of the total, there is Guru which has become defunct and some other brands, that do not play the role any longer they used to play, such as Kyoto, Kestrel, Look, Orbea and Pinarello. On the other hand, Ventum was only founded in 2014 and has become one of the top 20 players already last year. So, in total it can be stated that the triathlon bike world is dominated by 4 plus 13 brands: Cervelo, Trek, Specialized, Felt, Scott, Argon 18, Cannondale, Quintana Roo, Giant, BMC, Ceepo, Canyon, Fuji, Planet X, Dimond, Blue and Ventum.
Consumer Brands, Sport Brands and Triathlon Brands
We can now group these 17 brands in three categories: A consumer brand is a brand that enjoys worldwide recognition with consumers outside of the triathlon segment and offers a very wide product portfolio catering to many needs. Typical representatives of these type are the big three American brands Trek, Cannondale and Specialized.
A sport brand is a brand that has focused on the development, production and marketing of sportive bikes such a road racers, MTBs and triathlon bikes. These can be well known or less well-known brands with a limited portfolio compared to the consumer brands. Cervelo, BMC, Argon 18 or Canyon are typical examples.
Lastly, a triathlon brand is a brand that focused exclusively on triathlon bikes. These brands are not known by the public, have a very limited range of products and low production numbers. Quintana Roo, Ceepo, Dimond and Ventum are the respective brands.
We assigned every of the selected 17 brands to one of these groups and the total share of each group can be seen in the following diagram.
While it could be expected that the big consumer and sport brands would have a high share, it came as a surprise, that the specialized triathlon brands account for only 9%. How can a brand survive in a niche, that has a market share of less than 9% (triathlon brands) in an insignificant sub-segment of 4% (triathlon bikes) in a small segment (5% sport bikes) of the total world bike market? Even if this company would be the market leader making individual triathlon bikes, it would account for a maximum of 0,009% of the total worldwide bike market.
In contrast to this, consumer brands and sport brands can survive by selling other types of bikes from their wider range as they don’t rely on the sales of triathlon bikes. For consumer and sport brands, the development of a triathlon bike offers the same benefits as the development of a Formula One car to a car manufacturer: Faster innovation and better, sportive brand image. Therefore, we wouldn’t bet our money on the survival of specialized Triathlon brands, who are the Lotus, Braham or Fittipaldis of the Triathlon industry.
Some brands have disappeared or lost share during the last nine years, others have entered or gained share. However, Cervelo has been the number one supplier of bikes for nine out of nine years, Trek, Specialized and Felt had the second, third and fourth highest share for the last six years. So, there is hardly any change with the big four, who firmly stay in control of more than 50% of the triathlon bike market during the last nine years. This is somewhat surprising, because a high rate of innovation and short product lifetimes often lead to fast changes in company industry leadership. Think about Cola, where Coca Cola is the undisputed Number One for many years in an industry with almost zero innovation (soft drinks), compared to mobile phones, where we have seen a leadership shift from Motorola to Nokia to Apple during the last 10 years and further perhaps to Samsung, Xiaomi or Oppo in the future. Cervelo, Trek, Specialized and Felt have stayed at the top of the game as they constantly innovate, but not to a degree which give them a significant competitive advantage over their peers.
Compared to 2009, some of the 17 significant brands increased their share by more than 200% in 2017. Among the winners are Argon 18 from Canada, BMC from Switzerland, Canyon from Germany and, among the smaller players, Dimond and Ventum. One can see the impressive development of Argon 18, BMC and Canyon in the following diagram; in 2009 they accounted together for 3,6% of the Ironman bikes, in 2017 already for 14,5%.
With the entry of Canyon into the US market in autumn 2017, we expect a further growth of the German company that was in the 7th spot already in 2017. Canyon and BMC will become members of the big Four by 2020 latest if this development continues and we are curious to see, which of the big American consumer brands will hit the deck. So yes, smaller brands have a chance to survive in this segment, provided that they have a presence in the sport bike segment – not only in the triathlon segment.
Out of the relevant 17 brands, 11 brands are from America and account for 81% of all bikes between 2009 and 2017 at the Ironman competition. Cervelo, although owned by a Dutch holding, has been counted as North American brand due to its operating base in Canada. As the Ironman has its roots in the US one expects a strong showing of US brands. If we look at events in Europe, we would expect a higher share of European brands; still the market is dominated by the North American brands with European brands like Canyon und BMC catching up lately.
Conclusion and Outlook
Over time, not the big consumer brands, neither the specialized triathlon brands will control the market, but those brands that have a continuous high rate of innovation that fits in their overall product strategy and image: The sport brands. New technologies for triathlon bikes can be used in the design of other sport bikes; a good point in case is integration of handle bar, seat post and other components to make a bike more aerodynamic. However, these innovations offer no immediate benefit in design and production of trekking and city bikes. The sport brands could profit even more, if the UCI would let go if its aged regulations that are currently limiting technological progress.
There will always be small brands coming and going in the Triathlon market, driven by enthusiastic engineers and riders rather than by businessmen. This is nice as it is offering variety and choice. However, not too many riders will look for choice and variety beyond the offering of 17 well positioned brands.
US brands, in particular Cervelo, will continue to be the dominating force in the market, but the Europeans are catching up. Canyon from Germany, combing excellent products with a direct sales business model, will become the brand of choice for many in the very near future.
However, all of this will take time. Judging from the development of the last 9 years, we do not expect too much change for the next three to four years to come. And this is surprising.
[orginally published on cyclyng.com]