MONTEREY, Calif. (BRAIN) — Emerging from two years of sequestered gatherings, Nyle Nims eagerly anticipated this year's Sea Otter Classic. The founder of Cycle Force Group has a lot to share with the industry.
First, months after starting a Chapter 11 bankruptcy reorganization, Cycle Force Group was acquired last year by Messingschlager GmbH, a German distributor, with the sale closing on Dec. 31. CFG and subsidiary distributor North America Cycles had been working with Messingschlager for more than a decade.
Then last month, Head Sport GmbH Austria awarded its North American licensing and distributor agreement for bikes and accessories to CFG for the next four years. Its focus with Head, Nims said, will be a sports and IBD channel approach with minimum advertised pricing and positioning the brand as the best value and spec'.
Furthermore, at the end of the month, CFG — and the industry as a whole — received some good news from the U.S. Trade Representative's office reinstating 352 expired product exclusions. That affected bike products from China that have been subjected to a 25% U.S. Section 301 tariff since Jan 1, 2021, when the previous exclusion expired. CFG sells a variety of China-made bikes — including Joey Kids Bikes — along with parts and accessories.
"The tariff relief on children's bikes and e-bikes is very welcome news," Nims said. "We anticipate that this savings will somewhat mitigate the ongoing freight cost increases, though we see Chinese material costs rising and holding our head above water on pricing is probably the most hopeful outcome."
The rollout of Head's spring collection at the CFG booth is the focus of Sea Otter and test rides will be available. Head features e-bikes, MTB full-suspension and hardtail, gravel, city, and kids models.
"We are only showcasing Head bikes as Sea Otter," said Nims, who's at Booth M216. "We hope to spread the word that Head is actively in the bike business, and that we, as the North American distributor, are ready to meet the public with test rides and answers to questions about our new product launch. ... I am certain we will all leave Monterey with a mission accomplished feeling."
Cycle Force Group — which has distributed high-end brands in the past in addition to its own Joey/Apollo and Piranha brands — held the distribution rights to Head previously, focusing on sports channels, but now is in position to sell to IBDs and will be announcing some key European distribution and 3PL partnerships in the near future.
"We have held numerous licenses over the years and working with Head has been simply different and better than any others," Nims said. "They know the sports market. They are active in our field with a complimentary European distributor, and they are patient with growth while actively protecting their brand and image. We wanted a brand with known consumer awareness, one that represented the outdoors and sports in particular and one that could compete with other private brands without the appearance of simply 'rebadging' a name on a product. Simply the brand conveys bikes well."
Like many in the industry, year-over-year growth was halted last year when CFG's supply chain couldn't meet customer needs, said Nims, who added the company is on track to rebound in Q3 and Q4 this year.
Based in Ames, Iowa, the CFG warehouse provides U.S. advantages for shipping, but the supply-chain cost increases and disruption of normal shipping challenges "has forced us to use alternative ports, cross-docking and transloading," Nims said.
The result? Extended lead times like for other suppliers in the industry.
Sustainability has been an industry topic of interest, and Nims said as he came away from the Bicycle Leadership Conference last month ready to pass along a message to his staff and supply chain. "We have much to do."