The times are changing

Yowza. So the first thing I did when starting to write this post was re-read this series of posts from over 4 years ago. And let me tell you, time flies, but also let me tell you that I think we had it pretty well laid out then. How right either Mike or I was is subject to interpretation and opinion, but I think we covered all the salient points quite well. And for the record, the brand that is our fulcrum in that series, Dengfu, has become irrelevant in wheels (which were never their big thing) and I don't know where they are in frames since I don't pay much attention to frames.

So why did I want to re-read that series? Because people are getting out of this wheel business, and the wheel business is changing quickly, and my hypothesis is that the influence/effect of Chinese brands is the lever to which these dynamics are happening.

To lay it out, Sugar Wheelworks, which we always respected as a peer and a shop that does good work, has been sold to Breadwinner Cycles. Mavic was just sold by Amer Sports to Regent, a US private equity firm. Still-owned-by-Amer Enve has been having a real s--t go of it lately. Seriously. No, really. American Classic shuttered a little over a year ago. And there is one more US-based minor- to mid-range player (bigger than us, smaller than Zipp) that's being shopped around hard for a get-out plan by its owner.* That's a pretty active year in the brandscape ( a portmanteau I just coined and which Mike has verified is not in use in the marketing world, so huzzah for me and royalty payments are payable through every major payment portal). 

What does all this mean? Depending on your take, the shift to disc brakes lies somewhere between the absolutely logical progression and a desperate hail mary thrown by the industry to sell more product to the alpha consumers on whom it increasingly depends. Each "unit sales down, average selling price up" report means that the alpha consumers are holding more weight for the industry, and those are the only kind of reports you read these days. But as we posited some time ago on several occasions, the shift to disc brakes has meant that heat resistance, once the prime differentiator of "high class" carbon clinchers, is irrelevant. So the disc switch gets driven in some part by the industry's desire to get out of the still-problematic carbon clincher rim brake frying pan, but sends it straight into the fire of "now we're not nearly as differentiated as brands which are selling for 1/3 our price." 

This business is tough when things are all going your way. When they aren't? Yikes. There is a finite number of builders like us who are out there doing good work. Few of them are able to make it go full time. It's either a side hustle or semi-retirement work or part of a regular bike shop. It's Tough, with a capital T. 

The implications for us? Can't say because I don't know. Our business for the period from November through February was unbelievable. As in "we're going to have to make some decisions about handling growth" good. What caused that, and what might cause that to go away? Can't say. By volume, we've become a disc brake wheel builder, and though we can't yet say we've become a carbon disc brake wheel builder, it seems headed that way. A broken clock is right twice a day, are we just at our moment, which will pass just as quickly? Again, can't say because I don't know. Also worth saying - we still advocate for the viability of alloy rimmed wheels, every darn day. 

My crystal ball says that some big brands are going falter and maybe fall. The casual observer would put Enve as highest risk for this, but look - how much share can the Far Sports and Light Bicycles of the world gain without Zipp and DT and Reynolds et al feeling the pinch? The middle ground, which I guess we call home, may be a temporary fire break or it might be the only viable place. Can't say, don't know. The only thing I do know is that it gets more and more interesting to learn what's up in the market. 

*said brand is not one we do any work with, so that can narrow it down for the curious