French ski manufacturer is buying Felt Bicycles. It’s a dramatic turn for the scrappy brand based in Irvine, California. This is not Rossignol’s first foray into the bike market. In an effort to diversify their holdings they bought Time in 2015, and while they sell Look ski bindings, they have nothing to do with the Look bike product line.
Rossignol also owns ski brands Lange and Dynastar; Rossignol Group is, in turn, owned a Swedish equity group known as Altor Equity Partners, meaning Felt is now another pawn on the board in a world where companies are assets that are traded like so many baseball cards.
So why was Felt on the block? From where I sit, the single greatest weakness the brand has shown here in the U.S. has been its dealer network. The rise of the concept store model for Specialized, Trek and Giant has been a blow not just to Felt, but also to brands like Bianchi, Cannondale, GT and Fuji. Remember how Fuji bought Performance last year? That was a genius strategic move meant to combat how they are being squeezed out of dealers. Being in the right dealers is an important piece of getting the public to respect your line. In the greater Los Angeles metropolis, I got to see how this played out first-hand because the shops that really supported bike culture and sponsored teams didn’t sell Felt. As a result, if you saw a Felt bike on a group ride, chances were you were riding next to me.
Felt also suffered from an imbalance in resource allocation. Compared to what they devoted to engineering and product development, they spent next to nothing on marketing and advertising, and as a result, they simply didn’t have the reputation they deserved. Ironically, having such a stellar product line posed a separate issue in that brands like Specialized didn’t want to have to face off against them on the shop floor. Because Felt was such a lean operation and because CEO had been the head product manager at GT under Richard Long (a doctorate degree in how to shave $10 off a bike’s landed cost to bring the consumer better value), Felt’s bike line was a study in value.
Their recent abandonment of the model-year system of product introduction was a terrific way to combat the problem every brand faces in forecasting. Order too few of a bike and you run out in June. Order too many and you end up with a warehouse full of dead product in November. Getting it right seems as much a matter of luck as it does insight.
However, the move to static product that is updated once a new design supplants the old one seems to have come too late to save them. It’s a frustrating turn for one of the more exciting brands in the bike market. For the bike-buying public, it’s easy to underestimate Felt’s size and reach, and hence the value of this purchase for Rossignol.
In the U.S., Felt is known as a road and triathlon brand. The DA set the standard for aero road bikes more than 10 years ago. More recently, the tri-only IA raised the bar and was the first triathlon-specific frame introduced, starting a fresh arms war among aero bike manufacturers. But in Europe, Felt is largely known as a low-end maker of kids bikes, trekking bikes and other categories like mountain and ebikes. They aren’t known as a high-end road brand. Market perception aside, the brand has clout thanks to distributor Sport Import, whose owner, Michael Müllmann, was Felt’s majority owner. Müllmann had been GT’s distributor during its rise in the ’80s and ’90s, and when GT informed him they would be setting up their own distribution, but gave him three years notice, he dumped them and joined forces with Duehring (with whom he’d had history due to GT) to revive the shuttered Felt brand.
What Rossignol has purchased is Ford Pinto with a Hemi inside. Or in our terms, Peter Sagan riding for a continental team too weak to provide a leadout. The brand produces some of the best road bikes on the market from the standpoint of both technology and value. They make amazing mountain bikes and even have a patented suspension system in Equilink. They are a category killer in triathlon. They produce a broad and popular line of cruisers. Their BMX/freestyle line is huge in Europe, if not as well known stateside, and more recently they expanded their line of city bikes to include a range of ebikes. There’s not a bike segment out there that Felt doesn’t have expertise producing.
So what will Rossignol do? That of course, is the question. It’s unlikely they will lay off anyone Duehring hasn’t already laid off. Felt has always been an operation drum-head tight. To work at Felt is to have a hat collection. Would they dial back product development? It seems possible, but the cost would be high. The guys working there would get snatched up by Specialized or another bike brand lickety-split. Loyalty goes only so far if you have nothing to do.
Rossignol CEO Bruno Cercley has given some indication of the new direction. First, he has said he wants to double Felt’s annual revenue from $30M to $60M in the next five years, which is an unsurprising goal for a company just purchased by an equity group. Would the distribution model change? One must hope so. They need to do something to get into more dealers that really foster culture so that word better spreads about how good the bikes are. But setting the Rossignol sales force loose on their existing ski accounts won’t get the job done. That would alienate some existing accounts and wouldn’t suffice for much of the country.
But Rossignol has resources Felt has badly needed. With some investment they could sponsor a ProTeam riding the Tour de France come 2018, granting the brand woefully lacking exposure. Given Rossignol’s distribution might one wonders if Sport Import might be kicked to the curb at this juncture.
There’s one other notable clue to the future of Felt and its employees. Rossignol plans to develop a line of Rossignol-branded mountain bikes, and they’ll need to add to Felt’s team to free up the talent to produce a second line of bikes. Rossignol has, like many forward-looking brands, recognized what the future holds: a warmer climate that has already hurt the ski industry and will continue to do so. We’re going to see ski areas closing due to lack of snow, or not enough snow and for Rossignol to survive long-term, they’ll need to invest in warm weather recreation, which is why purchasing Felt is a strategic move to ensure their future.
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