Consistently amongst the top three UCI AsiaTour nations, Japan has been a force within the professional road cycling scene long before 2005, when the UCI Continental Circuits calendar was born. Regional success aside, Japan still punches below its weight at a WorldTour level – but Cannondale has a development plan.
CANNONDALE IN JAPAN | THE BEGINNING
In 1992, when Cannondale was still a US-based manufacturer, it established a trading company in Japan to source Shimano components and bicycle parts for export back to Cannondale’s assembly factories in America and Europe. A few years later, a domestic sales function was added, which meant Japanese consumers could buy Cannondale “direct” from the subsidiary. [Note: Cannondale Australia was the next subsidiary formed, in July 1996].
Throughout the 1990’s, whilst setting up both European and Japanese subsidiaries, Scott Montgomery – son of Cannondale founder Joe Montgomery – was also VP of global marketing. Cannondale’s first foray into professional cycling’s top tier came via a three-year supply deal with the Saeco Cycling Team in 1996.
Montgomery recalled in this 2011 interview with Cyclingnewsasia.com that he “was sitting in a beautiful Italian villa in Tuscany with the owner of Saeco coffee and we were negotiating to sponsor the team. Word was spreading among the old school Italian brands that a fat-tubed aluminium company from America was going to sponsor Mario Cipollini and all of a sudden the cell phone was ringing and the price offers were coming in $100,000 higher with each call. Zapella (owner of Saeco) had Mario on the phone and he was lobbying for one of his friends Italian bike brands. Zapella said, “Mario you can still ride any bike you want (under the decals).” That iced the deal, but within days Mario was riding a Cannondale and proclaiming in broken English on television, “the best bike, Cannondale.”
This pivotal investment returned instantly, with an overall win in the 1997 Giro d’Italia (Ivan Gotti) and, two months later, a pair of Tour de France stage victories; courtesy of maillot jaune (for four days) Mario Cipollini. [Note: see also these videos at 07:22 and 02:36 for fun Cipo’ outtakes].
Though Cannondale would declare bankruptcy in 2003, the company’s sponsorship deal with Cannondale continued and the three wholly owned foreign subsidiaries – Cannondale Europe B.V., Cannondale Japan KK and Cannondale Australia Pty Limited – remained independently solvent. At the time, it was stated in Cannondale’s Securities and Exchange Commission filings that “business done through Cannondale subsidiaries in Europe, Japan and Australia accounted for approximately 42% of the Company’s total sales in fiscal 2002.”
Pegasus Partners II, Cannondale’s primary lender and largest secured creditor, bought out Cannondale in early 2003 for a reported USD60m. Pegasus quickly closed the failed motorsports division and transitioned the business into ‘Cannondale Bicycle Corporation’. The three subsidiaries were also acquired along the way.
At the end of 2004, Saeco blended with Lampre to form Lampre-Caffita. This alliance squeezed Cannondale from the ProTour (now WorldTour) peloton – an absence which would last until 2007, when Cannondale inked a supply deal with Liquigas. [Note: This supply deal transitioned into co-sponsorship in 2010.]
While the deal brokered with Liquigas excited Cannondale fans, several years of elbow grease had once again polished Cannondale into an attractive, if not under-appreciated, target. Dorel Industries, a Montreal-based home furnishings, recreational and juvenile goods company with USD2b turnover, swooped on Cannondale in February 2008, forming Cycling Sports Group (CSG) – a portfolio built upon GT, Schwinn and Mongoose; previously-acquired ‘Pacific Cycle’ brands – the following year. In 2010, CSG appointed ex-Proctor & Gamble marketeer Mario Stein to head up CSG Asia-Pacific and also preside over Cannondale Japan’s domestic business development.
In summary, Cannondale has a long history with professional road cycling sponsorship and a 20-year direct presence in Japan. Granted, I could have just written that at the beginning and saved you ten minutes, but it’s not what we do here at Cycling iQ.
ROAD CYCLING IN JAPAN
To a casual onlooker, Japan appears to have a vibrant domestic road cycling scene and many fans; an observation supported by GreenEDGE pro Fumiyuku Beppu, who told Cycling iQ earlier this year “The fans in Japan are fun and crazy (but) they also have respect for the riders. I did the Japan Cup Criterium before the Japan Cup race, which was like an exhibition race, and there were 60,000 people watching. I did the Tour de France in 2009 and it was the same feeling, same atmosphere. So many people calling my name, it was huge! I’ve stayed a long time in Europe and, that one time in Japan; it was unbelievable.”
On numbers alone, Japan lies well within the top twenty cycling nations in terms of male professional road cyclists registered with the UCI. However, less than 6% of these cyclists compete in ProContinental or ProTeam squads. The Japan Cycling Federation’s national road cycling calendar is replete with high-level events and, anecdotally, the racing is of a very high standard – not only in terms of the prerequisite physiological conditioning; there is also a ‘bunch intelligence’ not yet developed in neighbouring NE Asia countries like Korea or China.
So, how to relieve this ascension bottleneck? At this point, we return to Cannondale’s Mario Stein to discuss his company’s involvement with Japan’s newest UCI Continental team, Cannondale Space Zero Point.
CANNONDALE SPACE ZERO POINT
Prior to our meeting at Melbourne’s International Airport, Stein – who graciously changed to a later flight so we could extend our interview – had emailed me a breakdown of his vision for the new team.
“Cannondale Space Zero Point seeks to grow road cycling in Japan by developing up and coming young riders into future top athletes that can compete at the highest level of the sport. We want to equip the best young Japanese riders with the best road bikes, the best training and the best racing in Japan to achieve this goal. Cannondale Space Zero Point will aim to:
– Be the top development team for riders aspiring to ride for Pro Tour teams in Europe and beyond
– Grow the awareness and appeal of cycling road racing in Japan among cycling enthusiasts and the general public.
– Inspire more people to enjoy cycling through the team’s positive attitude and success.
Our roster for 2012 includes 8 riders, led by Shinri Suzuki, formerly of Shimano Racing. Our team will include with a mix of young up and coming riders and experienced riders who can serve as mentors.
We have completed all the steps for registration with the JCF and will be racing in the JBCF series at the pro level from this year. We are seeking to get an invite to the major UCI events in Japan including Japan Cup. We are not intending to race out of Japan this first year but will seek to expand our race calendar from 2013.”
Mario Stein: VP CSG Asia-Pacific, Cannondale Japan President, cyclist
OVER TO THE INTERVIEW
Before we get to the team – you came across to CSG from Proctor & Gamble. Many people would hear that and ask how you found out about the opportunity?
“I never really told anybody that I was interested in cycling. I got a call from a recruiter one day saying “you’re probably not interested in this, but what do you think about working in the bike industry” and I was like “Actually, I am interested in that!” so it was a lucky chance that somebody had my name by word of mouth, and I got connected to the company.
I worked for 14 years at Proctor and Gamble; in brand management, mostly. I started my career at Gillette, which was acquired by P&G. I worked in a variety of marketing roles, from regional marketing to product development roles, then moving up to more of a general manager position. I started in the US, then worked in Germany and came to Japan with P&G to work on the Braun appliance business and oral care products at the end of my career there. So, pretty different from bikes! But I’ve always had a strong passion for cycling. I was a triathlete when I was a college student, then continued into road race. I went to see the Tour de France four times, Liege-Bastiogne-Liege and Paris-Roubaix twice, all before I joined CSG. So, when I heard about the chance to work in bikes it seemed like the dream job, you know.”
Can you contrast your perception of the bicycle versus the reality?
“Tough question. I guess it has pretty much met my perception. Most people who work in this industry are here because they’re passionate about cycling, whereas people in other companies I’ve worked for may have been passionate about business, or marketing, but they were not necessarily passionate about the product they were working on. I worked on oral care; I wasn’t passionate about toothbrushes, per se, but I enjoyed the experience of building that business. So I think that’s a difference. I think it’s exciting because you can work in something that you love every day. I always say my job is to read cycling magazines and go riding – not all of the time, but some of the time – and I’m still, like, “wow” sometimes. I have to wake myself up and say ‘this is not a dream it’s reality’. I think there’s still a lot of opportunity for the cycling industry to apply some of the principles of brand management and structured business planning and process; perhaps that’s a contribution I can make to the company and the industry.”
Back to road cycling in Japan; can you compare the level of development in Japan compared to established nations like Europe, US or Australia?
“Maybe in a very biased, non-scientific, way. There is more racing in those nations. I think the Japanese physiology suits pro cycling. I can see no reason why Japanese cyclists can’t become top in the world. When a Japanese baseball player goes into the National League and becomes MVP that becomes a huge source of passion and pride in Japan. Just as when the Japanese women’s soccer team, as underdogs, beat the US in the World Championships last year. I think that’s my dream; that we would get a Japanese rider one day not just riding or participating in the Tour de France, but actually being a top contender. There’s no reason that rider isn’t out there; we just have to find enough chances to develop him.”
There’s obviously a deep pool of talent. Japan has eight continental teams.
“The JBCF series, which is the one our team is going to be focusing on, has a lot of new interest behind it. There’s a lot of interest to try to get more televised coverage of the sport in Japan and get it onto cable TV – it’s not really televised today. There is a team called Utsunomiya Blitzen [Note: UCI Continental team]; they basically have the most loyal fan base right now, because they’re very much associated with the city of Utsunomiya, which is where the Japan Cup races every year. If we could form four or five more teams like that with the same type of loyal following – people who may not be cycling enthusiasts themselves, but support the team – that would be what it takes to get the sport off to a much stronger sport.”
In your email, you stated “we will tap into Cannondale’s global racing sponsorships to create opportunities for our young riders to join our top ranked athletes in training camps and as stagiaires.” How much influence can Cannondale have on creating that pathway with the WorldTour teams is sponsors?
“At the end of the day, the team managers have to pick the riders that they feel can win races and we definitely want to make sure we have a team that can win and be competitive. What we can do is get the opportunity for a team like Liquigas-Cannondale to be aware of a rider, (who) they may never have been aware of, or had access to, in the past. As a sponsor of Liquigas, we have that opportunity.
We also sponsor another road cycling team in Japan. We started about a year and a half ago with the best university team in Japan (Kanoya University). They’ve had a really successful run, winning U23 championships in Japan two years running and pretty much winning every single race.
We decided to take it to the next level by creating the Cannondale Space Zero Point team. The vision there is we wanted to create a path that allows young riders to get from the “I want to be a pro” dream to maybe actually having a shot at that. You could come into the University team then, if you want to go further, go to the Cannondale Space Zero Point team. If you succeed there we’re trying to establish some way these riders could get introduced to our European team. We think that’s going to create more passion for the brand, but we’re not just about bikes – we’re here to grow the sport.”
OCBC Singapore Cycling team was reported to cost around SGD400,000 per year. Are you looking at a similar budget for Cannondale Zero Space Point?
“We’re a little more modest. In year one, we’re only going to focus on Japan. As the team gets more mature we’ll seek to go beyond. The team would actually love to get invited to Australia. We have a good mix of experienced riders and up-and-coming riders and we really do view it as a way to develop young riders.”
What other partners do you have with the team?
“It’s a collaboration between Cannondale and one of our leading shops (Space Zero Point) in Japan who had an amateur team and wanted to step up and develop a pro team. It was really their concept that they brought forward to us. We thought it was a great idea. In addition to us, we have support from Mavic and Shimano – we sell a lot of Shimano-equipped bikes in Japan – as key equipment sponsors and a few other smaller sponsors as well.”
What are some of the unique marketing programs that you’ve run for Cannondale that might work in building the fan base mentioned before?
“One of the things we’re doing is the Cannondale Owners Group (COG). It’s an online community that we’ve created for Cannondale owners. You just have to punch in the serial number for your bike online and, once you get access to the community, it’s basically like a Facebook where you can become friends with other Cannondale owners, form mini-communities and meet, share insight, brag about bikes.
We started this about one and a half years ago and have grown to 5,000 users. It’s really become a point of difference for our brand, and we’re taking that to the next level. We’re going to be doing more offline events, and we’ve done things recently like offering a jersey and shorts, which only COG members can buy. We made three designs and invited all members to vote on which one they wanted us to make, so there’s some participation. That’s something we consider quite unique and best in class within our company.”
Will there be a high level of interaction between COG and Cannondale Zero Space Point?
“Absolutely. We expect members will become a strong source of support for the team, and the team gives us opportunities to provide content, be it training tips or what it’s like to race or be in a team. We’re not going to force them to write, but we’d like them to be active participants.”
How critical is it for Cannondale to have a WorldTour team?
“It’s very important. Obviously, the team is a great platform to market our bikes. We had great success in 2010 and 2011. That showcases our product, no doubt. It also gives us a great opportunity to test and develop our product. The EVO, for example; we went through a lot of testing with the team a long time before it ever saw the (commercial) light of day. To have world-class athletes riding your prototype and giving a perspective on what it takes to make the best bikes in the world. If we didn’t have that I don’t know that we’d have as competitive bikes that we have. We see it as a key for development as well as marketing.”
Does grassroots development give the same return?
“If we didn’t have a ProTour professional team, would our sales drop precipitously? After a year, probably not. Over time? Maybe. Being associated with racing is critical for the DNA of the brand. We seek to find ways we can maintain our presence in racing. Athletes are validators for the performance we bring.”
Finally, do you need a lot of money in marketing to build a cycling brand in Japan?
“What’s a lot, what’s a little, right? You need to be smart in how you spend your money. There’s a famous saying in marketing” half the money I spend in marketing is wasted, the problem is I don’t know which half”. That’s probably the same for cycling as any industry. I still think today that buying a bicycle is an overly complicated process. You go into a bike shop, can you really tell the difference. That’s a huge in-store opportunity that will take some money. You can easily burn through money and waste it.”
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