The world got a good laugh when Hermès announced the impending release of its collection of $13,000+ handmade bicycles in October 2013. The Paris-based luxury brand, known for its $7,000+ Birkin and Kelly bags, however, was not joking. It seemed as though Hermès was getting serious about its new motto: “A sporting life!,” adding bikes to its roster of “sporting” goods, such as $14,600 baseball gloves and $1,850 baseball bats. Now, roughly three years later, Hermès’s arch-rival, LVMH Moët Hennessy Louis Vuitton SE, wants in.
This week brought the news that L Catterton – an investment fund backed by the luxury conglomerate that plays parent to brands ranging from Louis Vuitton and Givenchy to Starboard Cruise Services and Princess Yachts – is the frontrunner to acquire a stake in Italian bicycle maker Cicli Pinarello SpA. Launched in the early 1950s, Pinarello’s hand-made bicycles have made the Treviso, Italy-based brand one of the most successful on the market, with models like the Bolide used by Tour de France winner Bradley Wiggins selling for as much as $18,000.
LVHM and Hermès are not alone. In 2012, famed trunk maker Moynat introduced the $33,000 Malle Bicyclette, largely as a means of selling its new picnic basket. That same year, Dolce & Gabbana introduced a $2,000+ leopard-printed bike; that – not surprisingly – turned out to be a one-off. Chanel, Fendi, and Gucci tried their hands at limited edition bikes, as well. And Shinola, the Detroit-based brand celebrated for its (mostly) American-made watches, launched a collection of bikes a few years ago.
Not exactly a wild card, the introduction of bikes (in Hermès’s case, for instance) and the acquisition of companies (presumably for LVMH) largely makes sense. As Bloomberg’s Kyle Stock noted in 2012, “Luxury retail is a savage game, and finding a new product category is a savvy way to squeeze more sales out of the sector. Selling something like a bike, for example [and “Bike accessories,” such as Hermès’s $4,700 “Saddle bag and bike pump”] – is probably a lot easier than pitching another cashmere shawl.”
Hermès – and the others – was likely attempting to tap into the luxury lifestyle. Its former CEO, Patrick Thomas, who was in place at the time of the bike launch, is an avid cyclist. He was, after all, famously disturbed while cycling through France's rural Auvergne region in October 2010 when his LVMH counterpart, Bernard Arnault, called with a short message: LVMH had acquired a 17 percent stake in Hermès and was planning to buy more – a fact that would be announced to the press in two hours.
Hermès is an apt example, as the famed brand has effectively worked the same strategy with its handmade saddles. It’s pricey saddle-buying or Birkin bag-carrying customers are unlikely to flinch at spending a similar amount on a handmade, carbon-fiber bicycle. Moreover, consider the fact that luxury biking tours – and even weekend cycling as a hobby – is big business. Many cyclists, like LVMH-owned yacht company clients, are not opposed to spending large sums on their pastimes. The average luxury road bike will set you back upwards of $10,000.
As for LVMH, the potential acquisition is also meaningful, as wellness and leisure continue to take center stage. As New York magazine noted earlier this year, “These days, people aren’t above paying $40 several times a week to ride a stationary bike to nowhere, followed by another $8 to cool down with a watermelon juice.”
Similarly, Vogue stated: "There are the $180-a-month gym memberships, the daily $10 cold-pressed green juice, the pricey all-natural and organic skincare products, and the piles of fresh produce and hard-to-find supplements from Whole Foods…not to mention some of the more extravagant options out there ($500-an-hour trainers, $750 facials) and the sporty designer duds to complete the look ... For most people, spending so much on staying fit and healthy would be a preposterous indulgence, but for a growing percentage of individuals with high discretionary income, wellness has become an important part of the luxury lifestyle." If five years ago it was a Céline bag, today’s ultimate status symbol might just be a SoulCycle hoodie and a green juice.
The wellness travel sector – which includes an element of activity, whether it be hiking, swimming, or biking, etc. – is also booming, slated to exceed $600 billion in 2017, according to a forecast by the Global Wellness Institute. “Since the recession there’s been less of an emphasis on things, and a greater emphasis on experiences. So we see people with means also engaging in extreme vacations and paying more for these extravagant experiences, which might be travel, private flying, or an expensive hobby," says Larry D. Compeau, professor of marketing and consumer psychology at Clarkson University.
Not surprisingly, the desire for mental and physical wellness is driving purchasing behavior and luxury brands recognize this. In this way, a bike is more than a bike, and LVMH’s intent to expand into this territory is well founded. Pinarello will be one of its primary purchase objectives, but it will almost certainly to be followed up by like acquisitions.