What does the future hold for Italian Bike Brands?

It seems that whenever mainstream media talks about road bikes, Italian brands feature frequently as the ultimate representation of our aspirations while, in contrast, those from Taiwan are suggested as affordable stepping stones to something better.

But despite powerful brand narratives – spanning over 130 years in Bianchi’s case – virtually all famous Italian brands have pivoted to Taiwan (or further afield in Asia) for manufacturing purposes.

So here’s the question: can the premium coverage (and often premium prices) that Italian brands command over their Taiwanese counterparts be justified?

Of course, there’s much more to consider than simply where a bike is made. We take a closer look at the pillars on which the Italian brands’ narratives have been built, explore the rise of Taiwanese brands and talk to industry leaders on either side of the divide to see if there’s a clear answer.

The three pillars of legacy Italian road bike brands

#1 – CRAFTMANSHIP

Italy’s proud tradition in manufacturing – it has for a long time been only second to Germany in terms of its contribution to European output – is a powerful, tangible, asset.

It certainly does no harm for a bicycle company to be based in a country awash with esteemed producers of wheel- and drivetrain-based performance brands like Ferrari, Ducati, Pirelli, Lamborghini, Maserati, Alfa Romeo, Aprilia, and so on.

To be ‘Made In Italy’, according to Italy’s official tourism body, is to “symbolize the excellence of Italian artisanship and manufacturing. Italian products bearing the prestigious Made in Italy title are highly-coveted the world over – for their integrity and durability, design originality and creativity.”

A sense of exclusivity also lifts the appeal of road bikes emblazoned with il Tricolore and the words ‘Prodotto Italiano’. Using the basic metric of production output, it should logically be much harder to source a road bike bearing the Italian flag and ‘Made In Italy’ mark than one originating from Asia – even though legal use of both elements only means the bike has undergone “substantial transformation” in Italy.

#2 – PRO CYCLING CUSTODIANSHIP

An enduring relationship with professional road cycling lends heavily to the formidable appeal of Italian bicycle brands. Names like Bianchi, Bottecchia, Carerra, Colnago, De Rosa, Moser, Pinarello and Wilier have all enjoyed visibility in the world’s most prestigious races thanks to scrupulous attention to sports marketing.

Although a few French brands such as Gitane, Look and Time occasionally enjoyed similar levels of cachet, there was otherwise little competition at the top of the road bike food chain.

Visibility of Italian brands in pro cycling peaked in 2002 at the 89^th Tour de France; of the 21 teams that started, nine were supplied by Italian firms – namely Pinarello (three teams), Colnago (two teams), De Rosa (two teams), Fondriest and Carrera (each with one apiece).

#3 – ‘ITALIANNESS’’

A strong ‘nation brand’ wields enormous influence over what consumers are prepared to pay for a given product, particularly in a luxury segment like high-end road bikes. Countries possessing and extolling what we believe to be desirable values are viewed favourably over those who do not.

History, style, passion and creativity are examples of characteristics associated with Italy that have been successfully translated into highly desirable objects for centuries.

But although ‘Italianness’ may be thought of in a proprietary sense, the values that typify Italian culture are also associated with other Latin European countries and can only be leveraged so much.

In summary, adroit leveraging of these three pillars has seen Italian road bike brands gain unrivalled levels of distinction amongst consumers and win fawning praise from media.

Taiwan takes on Italy at its own game

It wasn’t until the final decade of the 20th century that Italian ownership over the premium road bike segment started to appear vulnerable when Taiwanese entities started heavily investing in sports marketing and specialist manufacturing expertise.

Giant burst through the Euro-centric pro cycling bubble in 1997 with its sponsorship of the Spanish ONCE squad, following a pioneering half-million dollar deal struck between American brand Cannondale and Italy’s Saeco team the previous year.

Like Cannondale, Giant supplied its team with a lightweight aluminium bicycle that was also innovative. The sloping top-tube ‘compact’ design of Giant’s TCR was an affront to the horizontal double-triangle geometry promoted by the stubbornly-traditional Italian marques.

GT (Lotto – Adecco), Specialized (Festina – Lotus) and Trek (US Postal) all followed Giant’s push into the pro peloton, further ripping apart the status quo.

THE MANUFACTURING ‘A-TEAM’

As the brand optic within the pro cycling sphere was diversifying, the manufacturing frontier which fed into it was shrinking.

It started with American brands offshoring production of so-called entry-level road bikes to manufacturers in Taiwan. Factories with aluminium fabrication expertise, such as Giant, Hodaka (partially owned by Giant), Ideal and Merida were the main beneficiaries of this vast transfer of production.

To capitalise on the influx, Taiwan’s two biggest bicycle manufacturers, Giant and Merida, formed the ‘A-Team’ in 2002; the peak year of pro team sponsorship by Italian brands.

Along with 11 other parts suppliers with roots in the Taiwanese bicycle industry, the A-Team was established to ensure Taiwan would maintain its status as the preferred destination for ‘innovation value’; namely, advanced fabrication using high-end materials with production systems expertise borrowed primarily from the Japanese automotive sector.

Every benefit of the manufacturing ecosystem the A-Team oversaw – comparatively low labour cost, control over raw materials, proximity to parts suppliers, increasing expertise in composites – proved irresistible to US brands not already producing in Asia.

ITALIAN RESISTANCE WEAKENS

With a decades-long legacy of road bike manufacturing to preserve and protect, prestige Italian brands initially resisted offshore production, but their racing bikes were expensive and the Italian economy had been stagnant since the early 1990’s.

Colnago was the first to blink, at least publicly.

On 25 February 2005, Colnago issued a press release headlined ‘Colnago Chooses Dual Sourcing Strategy To Serve Global Markets’ which stated that “all high-end Colnago bicycles (were) to be Made in Italy” while “mid-range complete bicycles (were) to be produced in Taiwan for 2006 Model Year.” Furthermore, the Italian marque with 53 years of manufacturing history in Italy would join the A-Team as a “sponsor member”.

“This is a major step forward for the Italian bicycle industry”, stated company founder Ernesto Colnago in the communication. “At this point in time, in Italy, and in Europe it is unfortunately no longer feasible to cost-effectively manufacture mid and low end bicycles. At Colnago, we understand that it’s important for people who are buying their first racing bicycle, or don’t have a lot of money, that the bicycle they buy offers the best performance and value for their money. This is what our customers have been asking for.”

Defeated

Colnago’s founder continued to frame the announcement as a product of long-term planning rather than an admission his company felt there was no other option than to begin taking production offshore. The announcement shocked Colnago’s most die-hard fans, though nobody in the bicycle industry was surprised. To Ernesto Colnago’s credit, he was frank with his customers in a communiqué published only two months later.

“Of course, a few years ago, I would have never considered taking a partner in Taiwan,” he said in the Colnago April 2005 newsletter. “But now the time is right. I am the first Italian who has officially decided to move part of my production to Taiwan. So I’ve joined the A-Team because when I to do something, I always try to do it in the most serious and clearest way possible. I am not trying to hide anything here. Colnago wants to collaborate only with the very best Taiwanese companies.”

There was now no turning back and anyone in Italy who tuned into the Gran Galà Ciclistico Internazionale – Italian cycling’s version of the Oscars held every October since 1985 – on RAI Sport would have known it.

Though the Gala was conceived initially to celebrate Italy’s best professional cyclist, the Mondiale costruttori (World Manufacturer’s) prize was introduced in 2001. This was awarded to the bike manufacturer whose sponsorship across National and World Championships, Olympic Games and the WorldTour riders aggregated the most UCI points in one season.

In the first five years of the awards, Pinarello and Colnago each won the award twice, with Look winning once. Colnago’s last Mondiale costruttori win came in 2007 and Pinarello’s last in 2012 (ironically, courtesy of its sponsorship of British squad, SKY). North American brands Specialized and Cervélo won every other year until the final edition of the Gran Galà Ciclistico Internazionale in 2014.

Romantic Nostalgia

In a little under two decades, two of the three important pillars of Italian bicycle manufacturing – endemic manufacturing expertise and sports marketing – had crumbled.

Bianchi (a long-time client of Giant and Hodaka who in 2012 also moved some of its production to Cambodia, beginning with a small trial order in November that year), Colnago and Pinarello (whose website once stated “Our frames are made in the Far East” in the now-absent FAQ section) were still present at last year’s Tour de France, but with one team apiece.

By comparison, five teams were supplied by US brands, while Giant and Merida (a relative newcomer to the WorldTour after squeezing out Wilier as supplier to the Lampre team) each supplied teams that they were co-headline sponsors for.

For those brands, it seems only Italianness remains – and few people are as unconvinced of its value as Merida’s VP William Jeng.

“It is just a perception, a romantic nostalgia,” states Jeng, when he’s asked to explain the perception that Italian brands are for the true cycling connoisseur. “The reality is whilst the brands may be Italian, the vast majority of product is Far Eastern.

“Looking at some of the scientific testing that Tour magazine in Germany do to discover the best performing bikes, the Italian brands are absent. Again, the issue (is) defining when a bike is Italian and when it simply wears an Italian name. Pricing of Italian brands in the market usually carries a premium for the nostalgia rather than the technical performance of the product. Value for money wise a Merida will offer much better performance.”

When asked exactly what Merida (which also holds a 35% stake in Specialized) does better than any Italian brand, Jeng pulls no punches: “Manufacture bikes.”

ITALIAN PRIDE

Unlike its fellow A-Team founding member Giant [CEO Tony Lo pulled out of a scheduled interview] Merida has nothing to lose from issuing such blunt assessments. It has no Italian clients.

“We respect everybody’s opinion, but we are not willing to judge other companies’ performances,” wrote Alex Colnago, when informed of Jeng’s comments. “We are proud of what we do, and keep doing it in the best possible way.”

Pressed further, Alex, Colnago’s Manager and nephew of Ernesto, politely declined to offer additional comments on the views of Merida’s VP; although he did respond to claims made online by several self-described industry commentators that Giant has a stake in Colnago, saying “Colnago is still fully owned by the Colnago family, and it will be like that for a very, very, long time.”

The importance of communication

Fortunately for the Italian road bike brands who have off-shored a significant portion of their production, Jeng’s hard-line views don’t resonate widely across major Asian markets where road cycling remains under-developed. Consumers in countries such as India, Indonesia and China may still be prepared to pay a premium for Fatto in Italia bicycles, however sentiment may turn as the conversation amongst enthusiasts about the products they use becomes more sophisticated and probing.

Italian brands who resisted offshoring are using their now uncommon status as a unique selling proposition, albeit with liberal amounts of rhetoric.

“Ask yourself; where did my bicycle frame come from?” reads a prominent passage on the home page of Tommasini’s website. “Did it come from a huge factory in a polluted Chinese city and by workers toiling for long hours at minimal pay? Or did your frame come from a small artisan shop where highly skilled craftsmen built your bicycle frame with care?”

Newcomers such as Scappa and Mario Cipollini’s eponymous brand MCipollini have avoided the generational change altogether, with both companies dedicating significant online copy to their domestic manufacturing approach. Scappa goes as far as re-producing its ‘100% Made in Italy’ certification – issued by the Institute for the Protection of Italian Manufacturers (partially funded by the Italian Ministry for Economic Development) – on its website.

For its part, Italy’s bicycle industry peak body appears to agree more communication is essential to preserve and protect an important economic asset, without explicitly stating what should be said.

“Besides its industrial value, the bicycle sector has great cultural importance. Our companies have written and keep writing cycling history at world level and we must narrate these success stories,” says Fulvio Acquati, of Italy’s National Association of Cycles, Motorcycles and Accessories (Confindustria ANCMA).

Time to choose?

For now, the only success stories are coming from Taiwan. Recent market reports from Italy showed that road bikes still accounted for 6% of the 1.6m bicycles sold in Italy in 2014, but imports from Taiwan have soared. In late 2015, Taiwan’s Ministry of Economic Affairs released Customs data showing that Q1-Q3 exports to Italy increased by more than 250% compared to the same period in 2014. It noted that Italy had become “a major potential market for the Taiwan bicycle industry.”

Keith Bontrager coined the phrase “Strong, light, cheap. Pick two” in the early 1990’s – ironically, when over-engineered (heavy) Italian bicycles were still apex products.

Bontrager’s ditty used to be regarded as a sacrosanct engineering truth but, thanks largely to the rise of Taiwanese brands, consumers are today able to secure all three elements in a much more competitive package than ever before.

Indeed, the road bike market has changed markedly in the past 20 years and most of the growth now accrues to Taiwanese producers.

Though opportunities still remain for legacy Italian road bike brands, it seems this depends on how far they’ve strayed from their heritage and whether or not they can recover an authentic narrative.

It might not be easy for the once-dominant Italians to take on giant Taiwanese manufacturers, but perhaps they can start by revisiting the three pillars – and pick two.