Article: Bell Buys Giro
Summary: Here is an article from Bicycle Retailer and Industry News (used with their permission).
Bell Buys Giro
By Steve Frothingham
SCOTTSDALE, AZ-"If you're number one and you can buy number
two, it's usually a good idea."
Bell Sports Adds Giro To Roster
That's how one Bell Sports executive described the company's latest
move, the purchase of archcompetitor Giro Sports Design.
Bell officials expect to complete the sale in early January, following
a 3~day filing period required by the Securities & Exchange
Commission. The price paid for Giro, which did $15 million in
sales in 1994, is confidential.
"Giro's a great brand to add to our portfolio. We've always
been a branded company," said Terry Lee, Bell's chief executive
officer and chairman.
Lee is promising Giro executives that the Santa Cruz, California,
company will continue to operate its sales, marketing and product
development departments separately from Bell's other brands.
Giro also will have a separate booth from Bell Sports at this
fall's trade shows.
It's a different strategy than Bell followed after purchasing
Blackburn, VistaLite and Rhode Gear, which were lumped into Bell's
'The Giro acquisition was more strategic in terms of our longterm
ability to lead the marketplace. Preserving the brand is more
important than any dollars we could save consolidating sales and
marketing," Lee said.
Lee also has no plans to sell Giro helmets in the mass market
where Bell sells BSI, Bell and Cycle Products
brands. 'We don't need Giro there. It's a specialty brand,"
While Lee admits that Giro has been chipping away at Bell's market
share lately, Bell is continuing to offer its Pro Series line
exclusively to specialty retailers.
Staff at Giro's and Bell's specialty divisions will go head-to-head
in the marketplace. "they'll be competing for bragging rights
at the company picnic," joked Paul Thatcher, Bell's marketing
Giro's founder, chief executive officer and largest shareholder,
Jim Gentes, is continuing to work for the company, reporting to
Lee. Bill Hannemann continues as Giro's president.
In 1985, Gentes left Blackburn, where he was a designer, to start
Giro. The company's first product was an aerostyle triathlon helmet.
In 1986 he introduced the ProLite, the lightweight, Lycra-covered
helmet that built Giro's reputation as the most innovative, high-end
helmet maker in the U.S.
While Bell never regained control of the upper high-end market,
Giro was never able to follow Bell into the mass market
Two years ago Giro attempted to sell a line of LeMond helmets
to mass merchants, but soon discovered it was unable to compete
on price. And Giro's line of baseball cap-style helmets, the Fat
Hat, also flopped.
"We realized what we're not It's not in our skill sets to
go into the mass market. We're a highprice helmet maker,"
After years of competing with Bell, Gentes is still adjusting
to the situation. "Our industry is growing up. This is the
way the business world works. It took a while to get over the
competitiveness with Bell. I'm looking forward to working with
Terry and learning about how a public company runs," Gentes
Competitors estimate Bell's and Giro's combined share of the specialty
market at 50 to 70 percent. But they are betting that the two
companies will be unable to maintain that market share now that
they are together.
"I think Giro's product will go downhill," said Brent
Knudson, who, as president of Epic Team Manufacturing, is in charge
of Specialized's helmet program.
Specialized's research indicates that Specialized is ahead of
Giro, but well behind Bell in specialty retail unit sales. But
in dollar sales, Specialized is a close third behind Bell and
Giro because of Giro's higher average price, Knudson said.
"We are really enthused about the opportunity this gives
us to solidify our position," Knudson said.
It's easier to compete against one company than two, noted Al
Stonehouse, president of Diamondback, which reentered the helmet
market last year with its Avenir brand.
"As they consolidate, they will gain some efficiencies that
will help them compete. On the other hand, they will have more
commonalty in their product and in the way they approach the market
with programs. That gives a company like us more opportunity to
be competitive," Stonehouse said.
"The purchase will probably have the desired affect of reducing
the level of competition in the industry, which will cause an
upward affect on helmet prices, which we would welcome,"
Copyright 1996 by Miller Freeman, Inc, Santa Fe, New Mexico. All rights reserved.
This page was reformatted on: October 4, 2017.