An updated bird’s eye view of the market for premium bicycles in India. This article is ideally read in conjunction with the earlier market overview posted on this blog in August 2013.
The Indian market for bicycles, for long stuck in unappealing product lines and then nudged to change by the entry of Firefox and Trek, continues to evolve. The pace of change has been slowly picking up; according to those in the business, the biggest change has been the Indian customer. Disposable income has risen and many traditional bicycle retailers have moved up the value chain to selling premium bicycles. But the critical question is – how much share does cycling command in the customer’s growing disposable income? Given the worry over climate change and consequent relevance of environment friendly transport, cycling worldwide has a bright future. It is limited by inadequate infrastructure in developing markets and the continued low penetration of the bicycle as means of transport in very poor countries. In India, rising number of automobiles, unruly traffic and lack of roads with proper bicycle lanes has meant urban environments that are far from futuristic. Although news reports in 2016 said that 41 per cent of the country’s population is younger than 20 years of age and nearly half the population is aged between 20-59 years, the shortage of enjoyable space for cycling may affect the pace at which cycling grows. Till Indian life and urban planning appreciate physically active lifestyle and environment friendliness as core values, the true merit of cycling won’t be adequately experienced.
Globally, bicycles and products related to cycling are among biggest silos in sale of sports equipment. As per a market study done by Paris based-NPD Group, the global cycling market was worth 47.4 billion US dollars (including revenue lines like parts & accessories, footwear and cycling apparel) in 2014. The survey estimated that around the world roughly 133.1 million bicycles, including e-bikes, were sold. Another study by Persistence Market Research (PMR) – the main points of which are available on the Internet – said that the global market for bicycles is expected to expand by 37.5 per cent over 2016-2024, from 45.08 billion US dollars to 62 billion dollars. Asia-Pacific is forecast to be the most lucrative market. There are several such studies accessible online; period of study and forecasts vary but there seems to be general agreement on factors driving the market.
For the earlier overview posted in August 2013, please click on this link: https://shyamgopan.wordpress.com/2013/08/24/cyclings-second-youth/
In India, the premium segment, where the bulk of the action has been, retains its fundamental segmentation into four product lines (segmentation as perceived by this blog for purpose of simplicity) – road bikes, mountain bikes, hybrids and other varieties like folding bikes, touring bikes and electric bikes. Road bikes, also called racing cycles in India, are truly performance category products. They are meant for speed. To this end they possess rigid frames, are built light and given the rider sits with a forward stance, demand a certain amount of competence on the part of the cyclist to be handled well. Mountain bikes have more moving components on them to cushion passage over uneven terrain and are typically geared for climbing. Hybrids straddle a mix of properties drawn from road and mountain bikes. A blended package of speed and some ability to tackle uneven terrain, they are now a product line, many Indian cyclists are taking to. According to the PMR study, hybrids are expected to account for the major slice of bicycle sales worldwide, going ahead. The category of folding bikes and touring bikes is still quite niche in India as are electric bikes. E-bikes can be pretty expensive. Still, according to the website statista.com, 32.8 million e-bikes were sold in Asia Pacific in 2016 with Western Europe a distant second at 1.6 million units. China was the biggest market. In several market studies, the e-bike segment has been forecast as a significant driver for premium bike sales, globally. A new, promising sub-category, which opened up in India would be that of stylish commuter bikes. They are typically partial to road bike in frame design but sport a straight handle bar eliminating thus the need for a hunched-over position while cycling.
In terms of market, the Indian story is roughly so: as Firefox tapped the market with its products and those of the American bicycle manufacturer -Trek, longstanding players like Hero Cycles and TI Cycles were forced to respond. Hero launched its new line of bicycles called Urban Trail (UT) and then proceeded to acquire Firefox. TI on the other hand, commenced its now well-known Track and Trail outlets, feeding them with a distribution pipeline offering foreign brands like Cannondale, GT, Bianchi, Mongoose, Ridley and Schwinn. It also launched an in-house brand – Montra – for the emergent premium segment of the domestic market. Put together, UT and Montra span MTBs, hybrids and road bikes. TI has also introduced Mach City, a line of practical, elegant and more affordable bicycles that can be used for commuting. Over time, some of these brands have expanded their product line-up; some have become focused. Both Trek and Cannondale have grown the variety in their product line-up for India while Mongoose has narrowed its portfolio to focus on BMX cycles. Among major brands entering the market after Trek’s early arrival and Track and Trail’s bouquet of imported models, were Giant, Scott and Specialized. Giant – one of the world’s biggest bicycle companies – partnered Starkenn and opened a series of showrooms with Pune as base. Specialized tied up with Bengaluru based-Bums on the Saddle (BOTS); they opened a flagship store in that city. Scott appears happy to sell through multi-brand outlets. Other foreign brands like Merida (incidentally one of the early entrants into India), Ghost, Focus, Fuji, Polygon, Bergamont and KHS – plus high performance niche brands like Merckx, Colnago, Pinarello, Cervelo and NeilPryde, which can be ordered – are also available in the Indian market. Not to mention, Rockrider and Btwin, sold by the French sports goods major, Decathlon. Even touring bike specialist, Surly, has dealers in the country. The Indian market also features electric bikes. E-bikes have cornered much attention overseas. But the significant market development domestically, post-Firefox, would have to be the advent of brands like UT, Montra, Kross and Mach City and what these brands and their product portfolios speak by way of promise for large Indian manufacturers going ahead. It is still early days.
26, 27.5, 29: battle of the twenty somethings
Against the above market scenario, trends carried over from the international bicycle market, made their presence felt. One trend that kicked up plenty of conflicting views, dealt with wheel dimension. Internationally bicycle tyre sizes are many. Until recently the average customer of a premium bicycle in India had to contend with two tyre sizes in the main – 26 inches (with room for width and tread variations therein) for mountain bikes and similarly, the 700c for road bikes and hybrids. The longstanding 26 inch size was both the leading dimension in mountain bikes and a favorite with cyclists into technical riding as it made overall bicycle size compact and maneuverable. Over a span of maybe two years, this dimension was faulted by bicycle manufacturers for less distance covered for every rotation of the crank, besides less surface contact and greater difficulty in rolling over obstacles.
One leading manufacturer pushed for 29 inch wheels (at which point technically speaking, a 700c tyre should also fit that mountain bike) as new standard; another promoted 27.5 inch. It wouldn’t be incorrect to say that this move – with no pressing demand from customers for it – caused confusion. YouTube videos exist in which industry representatives can be seen asking angrily, why customers can’t cope with change. Some manufacturers resorted to models that could accommodate more than one wheel size as though to hedge market risk. The problems were several. A bicycle is an aggregate of many parts, each connected to the next. When you alter the dimensions in one part, it cascades down the chain. Wheel size is a major change having immediate impact on a bicycle’s fork and the geometry of its frame. Given a big chunk of mountain bike users was running 26 inch wheels with matching fork and frame, what the manufacturers were pushing for had the capacity to leave existing users with outmoded designs they couldn’t easily modify to take on the new specifications. The transition to 27.5 inches and 29 inches caused anxiety with some chats on the Internet citing reduced fresh production of 26 inch tyres by reputed tyre manufacturers. Premium bicycles are not use and throw consumer products in India. Altering wheel size and potentially rendering an existing size obsolete affects users / customers in emerging markets like India because premium bicycles are still seen as an investment. In the premium segment of the Indian market, both 29 inch and 27.5 inch models are now on offer. The old 26 continues to be around.
The emergence of new generation bike builders
According to the NPD survey mentioned earlier, the composite of bicycle sales plus related revenue like parts & accessories, footwear and apparel would make cycling, the single biggest category in the global sports market. That’s a measure of the opportunity. Asia Pacific is portrayed as the market to look out for in the future and therein, India is a big market. Firefox’s biggest selling point when it debuted in the Indian market was how different its products were compared to the bicycles Indian manufacturers made. While big foreign brands followed and palpable difference by performance DNA set in, the next step – that of Indian cycling enthusiasts realizing in flesh and blood, the blue prints in their head, commenced. Pune based Psynyde Bikes – founded by committed cyclists – started out with custom built bikes. By 2017, they were in the market with a mountain bike called Furan,’ which they had designed themselves and got made overseas. Psynyde also makes bicycle components. Such developments are not to be discounted. If you trace the history of some of cycling’s iconic brands, you will find this is how their journey started. Are there more such stories brewing in India? Time will tell. Interestingly being a cyclist needn’t by itself make you good at the business of bicycles. One leading retailer described how he gets a lot of enquiries from people passionate about cycling, to join his team. Among the first things that can happen when a cyclist goes into business is that his / her personal time for cycling may go down as the business needs attending to. “ Cycling and managing a bicycle business are two different things. You have to be prepared to handle the difference,” he said. He thought Psynyde made the cut because Praveen Prabhakaran – one of its founders – had been at it for long. The Furan is the result of a long journey, patiently done. It wasn’t passion alone. It was also hard work, sustained for several years.
Aspiration grows but local environment limits
Finally, Indian cycling – as in what the cyclists are up to – has also evolved and come of age. There are people now travelling overseas to compete at races. Milestones coveted by the domestic cycling fraternity are being achieved. The first team-finish and the first solo finish by Indians at Race Across America (RAAM), one of the most grueling endurance races on the planet, have happened. A few years ago, Bengaluru based-Kynkyny Cycling Team was in the news for meriting sponsorship from Specialized (it is understood that sponsorship contract has since expired). Given aspiration is what pushes up benchmarks in any market, these developments will have an impact on what products / models can be sold in the Indian market or accessed from here. A good market also needs scale. Notwithstanding enterprising cycling groups and growth in available product line-up, cycling stays challenged by the lack of a proper bicycling environment in Indian cities given few to no bicycle tracks, growth in vehicular traffic and general contempt by motorists towards their non-motorized brethren on two wheels.
Try this for perspective: In February 2017, the media reported that as per figures released by International Data Corporation (IDC), the Indian market for smartphones registered shipment of 109.1 million units in 2016, a marginal annual growth of 5.2 per cent. Obviously smartphone manufacturers are not thrilled. This is the digital age and they would like stronger figures. Reports have indicated there is a migration issue in the market; smartphone prices are still high and Indians love value for money. Roughly two years earlier, in August 2015, media reports quoting IDC also forecast that by 2017 the Indian market for smartphones will be bigger than that of the US. This is the smartphone ecosystem in India. Not all digital technology is a blessing. Debating that or the growing specter of smartphone obsessed people isn’t the purpose of this article. What is clear is that cycling can work as an antidote for sedentary life. Theoretically, a problem and its solution should grow hand in hand, provided tax rates, infrastructure, policy – they don’t adulterate the market.
The Indian bicycle market has no sales figures of the sort comparable to the Indian smartphone market. Unlike the bicycle, the smartphone is an easy purchase, which once done, sits in your pocket. You don’t have to worry about storage space at home (although using it, you can cram your home with more consumables!) But the reason this comparison of two seemingly unrelated products, engages, is because their costs are near similar and the nature of lifestyle they inspire, contrasting. According to a news report in April 2017, the hot spot of the Indian smartphone market is in the Rs 10,000-20,000 price bracket (this roughly matches the lower strata of the Indian market for premium bicycles, where incidentally the bulk of the action for domestic manufacturers is). During 2015-2016, after four years of sluggishness, the average sale price of smartphones in India rose by four per cent. Two things strike you about the growing market for smartphones in India – the ability of wireless connectivity to overcome a physical world characterized by poor infrastructure, clutter and congestion; an exploding ecosystem of content and things to do using the smartphone. Juxtapose on this, what a committed cyclist and bike retailer I spoke to quipped, “ people spend up to a lakh of rupees on an iPhone.’’ What prevents them from spending so on bicycles, which are clearly products delivering good health and zero pollution? The biggest likely reason for this lay in the larger Indian ecosystem, still partial to sedentary life, unimaginative infrastructure, chaotic traffic and the rule of might is right. With a car or SUV, you can dominate. Unlike a smartphone, which opens doors to a virtual world, a bicycle is a refined way of living in what is still, the old physical world. If the bicycle has to have as much share in your disposable income as a smartphone, the attraction for cycling has to be that compelling. The cycling environment matters. “ Abroad also, there is a price you must pay to own the type of bicycle you want. But once you own it, you can cycle around, you can enjoy cycling,” the person I spoke to said.
The best civic authorities are yet able to serve up are fads like shutting down roads to traffic for a few hours every month to host healthy recreational activities including cycling. Once or twice a year, these authorities, companies and other interested sponsors also get together to organize a group ride for publicity. Photos taken and splashed in the media, cycling is back to where it was. In 2012, the government hiked import duties on bicycles. Now under the new Goods & Services Tax (GST) regime, bicycles and components merit 12 per cent tax while accessories lay scattered across the 12 per cent, 18 per cent and 28 per cent tax slabs. “ A bicycle helmet attracts 18 per cent tax under GST. I wish we are able to acknowledge the fundamental merit in bicycles and position cycling solidly for the future instead of treating it like this. For sure, GST puts a structure in place and that is good. But I don’t think cycling deserves the tax slabs it has been cast in. Why not five per cent?” a leading retailer said. If its any comfort – a May 30, 2017 report in Times of India, said, smartphones fell in the 12 per cent GST slab. In comparison to this Indian predicament, countries like Germany are building roads exclusively for cycling. In end-2016, Germany opened its first stretch of a 100 km-bike autobahn. That’s the equivalent of rolling out telecom network, of which we saw much in India. Cycling’s relevance for the future is clear. Question is – when will India take notice of it?
(The author, Shyam G Menon, is a freelance journalist based in Mumbai.)