How India's Top Corporates are Riding Down the Memory Lane for Business
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Chilly, windy winters or hot, balmy summers, mornings aren’t as fresh till we see our milk vendor or paperboy riding on their comfortable cycles for delivering the required deliverables.
Owning a scooter or a car being a distant dream for the major section of this country, especially among the rural population, cycles are the most affordable way to travel even today. Hence, India hardly ever encounters the shortage of bicycle users. Deeptanshu Bansal, Brand Expert and Founder of Brandbee Consultancy, says “About 70 per cent of the rural market uses bicycles as an affordable mode of commute. Therefore, constantly bringing about changes in the way wheels have been used is what will help the buyers to get attracted.”
Indian bicycle market is projected to grow at a compound annual growth rate of over 11 per cent, during 2016-2021 (according to TechSci Research report), on account of growing population base, increasing discretionary spending, and rising health consciousness. The key domestic players catering in this sector are Hero Cycles, Avon Cycles, TI Cycles and Atlas. Let us glance through how well these legacy players are providing optimum growth source into this arena.
Two-Wheeler Mobility Medium
Many saw opportunities in the late 40s and early 50s; and among them were TI cycles (1949), Atlas Group (1950), Avon Cycles (1951) and also India’s leading bicycle manufacturer Hero Cycles. In 1956, Om Prakash Munjal loaned Rs 50,000 from a bank to start his bicycle manufacturing unit, Hero Cycle, in Ludhiana. Having started with a capacity to produce just 25 cycles a day, today Hero Cycles produces over 19,000 cycles every single day. “Beginning with Hero bicycles at the entry level, up to Firefox and Reddic towards a higher end, we have segmented our product portfolio according to the needs of various sections of the society,” says Pankaj Munjal, Managing Director, Hero Cycles.
Crossing a turnover of over Rs 3,000 crore, Hero has gained prospective momentum in mid 1960s when people began seeing cycles as a possible commuting mode, easing them off of their daily hassles of travelling long distances by foot. And, the story isn’t different for other legacy brands as well. Increase in population and income levels and exposure to the western culture, however, changed the way people looked at things.
Onkar Pahwa, Founder, Avon Cycles, claims to have segmented their bicycle range into three broader sections, namely kids range, teenagers and adults. “Earlier adults were the sole customers, but, today even a two-year-old kid is a customer of Avon Cycles,” says Pahwa. He firmly believes that unlike earlier times, bicycles are no more a transport medium, instead, it is also a fashion statement for the health freaks. The family-owned company has been managing a growing portfolio with an average of three sizes per model and three colors per size.
Speaking on the similar lines, Gautam Kapoor, Managing Director, Atlas, says, “Back in the day, only black colored bicycles could be seen on roads but now with changing needs and improved technologies, the craze towards riding a bicycle is growing.” Considering the rising fuel costs and pollution, bicycles are considered as an ideal way to commute. The Indian bicycle industry over the years has introduced a variety of new models of bicycles, viz, sports and high-tech models, both for domestic and export market.
With changing definition of high-end bikes, owning lifestyle bikes is an emerging trend. Earlier a high-end bike would cost around Rs 5,000 to Rs 8,000, however, now with global companies gaining popularity, the price-point ranges between Rs 15,000 and a few lakhs! Bansal states that “The efforts are being made by manufacturers to grab the market through interventions like entering into joint ventures with foreign brands, revisions in the marketing and distribution strategies.” He further states that people these days are reading up and researching before actually buying a bike. They want to know what alloy is being used and whether gear shifting options are available. “Now, to maintain that level of proficiency, they need superb manufacturing capabilities. Bicycles have turned into a luxury item like a watch or a jewellery piece,” says Bansal.
Growing focus on fitness and health and increasing trend of using cycles to commute to work is projected to drive sales of sports bicycles in the coming years. The consumer preferences in India across various age groups have seen a dramatic shift which has forced the industry to accelerate its innovation, design and technology while keeping in mind that India has always been a price sensitive market.
With a combined wealth of over Rs 664 crore, TI Cycles have started ‘Ciclo’ café chains, India's first cycling cafe chain, which provides sales and service of premium bicycles, merchandise, and accessories, all accompanied with impeccable hospitality. Arun Murugappan, Managing Director, TI Cycles, states, “We have always aimed at selling ‘cycling’ instead of the cycle; promoting it as a culture.” Also, TI Cycles have entered into a brand licensing partnership with the US-based Pacific Cycles, part of Dorel Industries Inc., to bring Schwinn brand of children’s bikes to India. The bicycle range will be launched in 2018.
Agreeing with him, Munjal says, cycling nowadays is a fashion statement. On any usual weekend, one gets to see people riding cycles worth Rs 50,000 with matching cycling gear which cost another Rs 20,000. “We don’t see much of competition coming from Indian brands. Our competition is with global bicycle giants such as SCOTT Sports, Cannondale and Trek. We are mapping them on pricing,” says Munjal.
The Hero Cycles is planning to take their initiative a step further with their major project to fill potholes across the length and breadth of the country to create a cycling-friendly environment. Moreover, they have announced their plans to enter European markets. Meanwhile, Avon under its sub-brand Cyclux is foraying into manufacturing high-end adventure bicycles. When the corporates are pedaling the cycleway, then why should our Bollywood stars be left behind?
Actor Salman Khan’s retail brand Being Human has recently launched a new category of products under the e-cycles brand. Khan said, “I have always enjoyed cycling. But people often drop the idea of using cycles when they have to travel long distances because of the effort involved.” But, with the current shift cycles being just a “communicating mode” to “staying fit mode”, the industry has all possible chances to reach the successive heights in near future.
(This article was first published in the December issue of Entrepreneur Magazine. To subscribe, click here)