Enve celebrates it’s Independence Day
The news this weekend that Amer Sports has sold the Enve business to a new owner has landed hard with some commentators wondering what’s going on at the Ogden, Utah based brand famous for its high end wheels, and Tour-ready carbon race bikes.
Mark Hancock of PV3 Investments has acquired the brand for an undisclosed amount from Amer Sports. Utah based Hancock, is billed as an enthusiastic fan of the brand who has direct experience of the company as a customer. His credentials? Well in cycling terms, none reported. But he’s just concluded a $450 million dollar IPO and he’s clearly got deep pockets.
Amer Sports paid $50million for the brand back in 2016. They then put Mike Stimola in to find the secret sauce, and since they’ve completely revitalised the product offer with a more focused range which is winning accolades seemingly everywhere. You might wonder why they’ve decided to divest the business now?
Enve’s progress into the complete bike market over the last year or two means it stands alone in the custom-lite bike game with some compelling USP’s. Because of the way they retail the product - the bar, stem and seat pin is all customisable - the bikes just work better for more real cyclists.
It’s product strategy also so clearly responds to it’s customer needs too, not the needs of a pro team (although it also has one of those to please now too).
And for retailers, they’re leaving drivetrain parts to them. Sharing more of the upside, whilst exposing themselves to less of the headaches. That is certainly a life-line for specialist IBD’s who can attract the right customers.
It’s a compelling offer going in the right direction, so why offload it now?
Clearly at Amer it’s a small fish in a portfolio of outdoor apex brands, and in straightened times, you focus on your established stuff, and that’s roughly what the Amer press release said, but it’s not just there that the stark differences lie.
Also, Amer aren’t alone in getting cold feet on cycling investments. Almost every week another portfolio owner pulls their backing for an established brand we know and love, with the same excuse - they’re ‘diverting resources to concentrate on core business’.
So why isn’t cycling core business any more for some and why don’t our favourite brands fit as well as the big-money-backers once thought they did?
I can’t help thinking, that perhaps it was just never core business. And it’s that realisation landing hard that I think is causing cold feet in some corners of the box-shipping investment community.
Clearly cycling is in a pickle right now. There’s stock everywhere, and it’s not shifting at anything but disposal rates, unless you can offer something special. But is that any different to say, the paddleboard or baseball bat market?
Of course not. Demand is lower everywhere you look, thanks to a worldwide slump in consumer confidence.
So, if we’re not the only industry under the cosh, why are cycling businesses seemingly the first to be off loaded at the big brand box shippers?
I believe the problem lies in the fact that outwardly a cycling business looks like any other boxed consumer goods offer. And that’s undoubtedly created all the initial interest. Discretionary spend was going only our way in the boom, and the cycling market must have looked like a winner for a business that is expert at shipping big brand boxes to consumers.
Bicycles just aren’t ‘boxed consumer goods’ in the way that makes sense to those guys. Shipping good bikes comes with some unique challenges that makes traditional box shipping models hard to apply. That reality must bite hard if you’re struggling to hit the numbers in your comfort zone brands too.
The VC’s must also have felt like a decent cycling brand would slide nicely into an outdoor brand portfolio, capturing more spend from similar customers. If they could just apply their smarts to the business model, they must have been very confident they could extract more value, and find some of that capitalist magic their investors love.
But cycling isn’t the same as say, technical clothing or even skis. Jackets and skis ship ready to go, direct your customer or retailers door.
Bicycles just don’t.
It’s that’s fundamental difference that I think has some experts non-plussed by the numbers. They get into these businesses, look under the hood, look for the savings and find themselves tied in knots. Locked in extended arguments with the new acquisition about the fundamentals.
I’m definitely not saying Amer ownership has been bad for Enve. This is all about timing. And the timing couldn’t be better in Enve’s case.
If private equity pulls the eject handle on their cycling investments and that in turn means more of the brands we love end up back in enthusiasts hands who can stay the course and want to, that is definitely not a bad thing.
Just last week we heard that Kona is no longer secure, as owner Kent Outdoors has concluded it would prefer to sell it. Preferring instead to focus resources on its Watersport brands. It won’t be the last loved brand that comes up for sale and if an enthusiast owner can pick up that brand for a song, it is a loved brand with intrinsic value and they will carry it into it’s next exciting chapter.
The brand part is the hard part. Boxing stuff up and getting it out of the door isn’t difficult, but building a brand underpinned by an emotional connection with die hard fans, that does what it says it’s going to do, and does it consistently is harder. Managing that struggle alongside the inherent complexity of a bicycle, where up to half the value in the box comes from at least one other brand that you’re forced to ship half assembled is another.
Add in some unavoidable complexity in the delivery of the product, and it’s that value that the consumer packaged goods industry is failing to understand and realise returns from when it applies their methodology without recognising the idiosyncrasies of the bicycle trade.
It’s no secret we’re heavily invested in Enve. We’re one of the biggest Enve dealers in the South East. We’ve shifted our strategy of building and creating custom bikes under our own brands Spoon Customs and WyndyMilla to work well alongside it, and include more of the Enve offering we know our customers love.
That’s thanks in no small part to Enve’s progressive approach to geometry and our ability to specify stem length, seat post offsets bar width and a number of fork options. We’re finding 95% of our customers can achieve a custom fit with zero compromises and for the customer that just can’t wait for our fully custom bikes, the Melee, Mog and Fray is an outstanding example of what can be achieved in an off the peg offer and it suits our fit first, custom everything approach perfectly.
If new owner Mark Hancock can work alongside the existing CEO (stick around Mike it looks like you’re having fun!) and Hancock has the patience and force of character to get out of the way and let Enve continue on it’s existing path without too much interference, then this latest news is the best thing that could happen to Enve at this point in it’s development and it, it’s talented team, and it’s new owner have an incredibly exciting adventure ahead of them.