How Campagnolo plans to stay relevant in a changing market

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Few companies in the cycling industry have as storied a history as Campagnolo. Tullio Campagnolo invented the quick-release skewer in 1927 and introduced his famed Cambio Corsa derailleur system in 1940. Following closely on Shimano’s heels with integrated brake-shift controls, the original Ergopower was launched in 1992 — 14 years before SRAM debuted its first road groupset.

SRAM components have been used to two Tour de France overall victories — an impressive feat given how long its road range has been around — and Shimano can claim seven. But both of those number pale in comparison to Campagnolo’s 41 maillots jaunes. And while no official statistics exist on the matter, it’s a fair assumption that no other bicycle industry logo has been tattooed on more bodies.

Most of Campagnolo’s modern product offerings have been on-point, being highly competitive in terms of function and admirably lightweight — and there’s always been the uniquely Italian aesthetic that has long marked anything with that fabled winged emblem.

But what Campagnolo has been sorely lacking in recent years has been OEM spec, as well as the money that goes along with it.

Campagnolo tattoo
Has any other cycling company logo been tattooed more than Campagnolo? Probably not.

There was once a time when Campagnolo parts could regularly be found on complete, off-the-shelf bikes as a more premium option for well-heeled buyers who were willing to pay a little extra for a bit of exclusivity and the mystique of Italian heritage. But that percentage has dropped precipitously, with only a handful of brands, usually Italian, currently offering Campagnolo on some higher-end builds. Not a single Specialized, Giant, nor Cannondale road bike today is available with Campagnolo components; Trek doesn’t even offer it as an option for its Project One custom program.h

Many have attributed Campagnolo’s decreasing mainstream visibility to the fact that it’s more expensive than what Shimano and SRAM offer, but as is often the case, the full story is a bit more complicated.

Italy vs. the rest of the world

According to Campagnolo global press manager Joshua Riddle, it’s not the component companies, or even the components themselves, that have changed much over the years. Instead, he thinks it has more to do with the global business of how bikes are now manufactured and distributed.

“What’s happened during the last 20-25 years is a seismic shift in the way the market functions and the way people purchase bikes,” he said. “You used to pick out, and custom tailor, the bike how you wanted it: the hubs, the spokes, the nipples, the rims, the pedals, the crankset. The components become a centerpiece of that build. If you’re handpicking everything, then you’re going to do a lot of due diligence in terms of research, or at least pick the ones that emotionally create a visceral connection with what you see your ideal being.

“Nowadays in most countries you go into a bike shop and say, ‘I want a Specialized Venge’ or, ‘I want a Dogma’, and then whoever is working in the shop is going to say, ‘yeah, ok, I’ve got that in your size and in these flavors, built this way.’ You’re picking out a bike that a product manager has decided how to build, which is not necessarily a negative thing; it makes sense and it’s easier for the bigger companies to move products around the world.”

Trek Madone
There was once a time when it was commonplace to hand-pick every component on your bike – even at the mid-range. But these days, it’s more often than not that a product manager has already made those decisions for you.

There are plenty of reasons why this shift toward pre-configured bikes has happened. On the one hand, as Riddle pointed out, such a business model is easier for bigger companies to manage: fewer combinations and less flexibility make for more predictable supply chain logistics, as well as fewer SKUs for retail dealers to inventory. From a consumer point of view, it also makes for easier buying decisions: instead of agonizing over every individual part, now you just choose from Column A or Column B.

Either way, that shift has occurred, and whether by intent or willful ignorance, Campagnolo didn’t change how it did business to suit.

“In Italy, that seismic shift happened last, and Campagnolo was perhaps guilty of looking at Italy first and then applying what worked there to the rest of the world,” Riddle admitted. “In fact, Italy is one of the few markets where some of the bigger brands will still sell framesets today. Italy was the blueprint by which we tried to paint the entire world. We didn’t take the growing pains and make the moves necessary to be involved in the OEM game. So we lost a little bit of ground with regards to our competitors.”

Moving pieces

Coinciding with that shift in how mid-to-high-end road bikes were sold was an industry-wide move to Asian manufacturing. Shimano was already producing its components in Asia, of course, and although SRAM is an American company, its manufacturing has always been based there, too. Add in the fact that most frames were also being built in China or Taiwan, and it was a natural progression to centralize all operations for complete, pre-built bikes in that area.

Campagnolo, however, has long prided itself on its Italian roots. It’s an essential part of the brand’s identity, and to change that would tarnish one of the brightest aspects of the Campagnolo mystique. True to form, the company is still headquartered in Vicenza, and save for some electronic components for its EPS drivetrains, everything is manufactured either in Italy or Romania to this day.

“We’ve always stayed true to building things in the European Union and 100 percent in-house,” Riddle said. “Nothing’s offshore and nothing is outsourced. Everything apart from circuit boards and batteries for EPS is done in-house.”

Made in Italy
Does “Made in Italy” matter? It does to Campagnolo. Photo: Wade Wallace.

That steadfast commitment to remaining in Europe likely has just a minimal effect on aftermarket component sales. After all, since most aftermarket parts, regardless of brand, are manufactured in one place and then shipped somewhere else, the specific origin doesn’t matter much. Also, the recent and rapid rise in Asian wages has made eastern Europe more competitive in terms of labor costs than in years past.

However, as more of the component business has shifted to the OEM side, that decision has come to bite Campagnolo hard. Even though labor costs are starting to even out somewhat, there’s still no getting around the geographical challenges in moving product thousands of kilometers away — not to mention the additional complications of dealing in multiple currencies, which can fluctuate wildly over time.

James Winchester has served as a product manager for a wealth of well-known bicycle brands over the years. Currently at Masi Bicycles (and sister MTB brand, Haro), he also spent time at Fuji, Specialized, Schwinn, Felt, and Colnago — and as a self-admitted supporter of Campagnolo, he’s had a front-row seat to how the Italian company has approached the OEM side of the business.

“As bikes made their way to Asia and assembly moved to Taiwan, it became harder to get that stuff from Europe on there — and it was a lot more expensive,” he said. “Shimano is all made over there, SRAM is made there as well, so it’s really easy for an assembly factory to get the parts they need on a pretty good timeline. The Italian stuff coming from Italy or Romania is a lot harder to get a hold of — and usually more expensive because of the exchange rate.”

Shifting focus

Campagnolo has historically devoted the bulk of its attention at the upper end of the market. Often considered more of an aspirational brand than Shimano and SRAM, Campagnolo has long operated on the premise that if it continued to concentrate on high-end, lust-worthy components, the market would figure out a way to put them on their bikes. Campagnolo didn’t need to cater to the masses, or so the thinking went; they would come to Campagnolo, and the finances would just naturally iron out from there.

That approach may have worked before the “seismic shift” that Riddle references, but the fact of the matter is that high-end product alone doesn’t pay the bills. The Ford GT is a bona fide supercar, for example, but it’s the Focus and Fiesta that keep the lights on and supply the funds to develop the higher-visibility halo products. Likewise, mid-range bikes don’t generate the same sort of visceral desire as the expensive stuff, but as much as desire plays well in magazine ads and Instagram feeds, volume is what matters when it comes to the bottom line.

“It’s almost like Campagnolo was a victim of its own success,” said Winchester. “If you ask me, I would suspect that most of Campy’s sales are Super Record, Record, and Chorus in the aftermarket. It’s harder for them to sell the lower-cost stuff because of exchange rates and stuff like that. They just never wanted to play down that low [in the pricing spectrum], I think.

“But the vast majority of bikes are not at that spec,” he continued. “Yeah, it’s great to spec a high-end Dura-Ace or eTap or Record bike, but the number that you sell is minuscule compared to the 105, Tiagra, and Sora bikes, which are the real bulk of the market. Campagnolo is something you ride if you’re ‘in the know’ — the secret handshake, the secret knowing smile. Everyone knows Shimano, but [Campagnolo] isn’t as well known, especially among non-cyclists.”

Shimano Sora groupset
Shimano is a master of the OEM component spec game, excelling in segments of the market that Campagnolo doesn’t even want to play in. Photo: Shimano.

That now seems to be changing — or at least, Campagnolo has finally put in place some measures to help swing the needle the other way.

Campagnolo introduced the new Potenza groupset last year as a direct competitor to Shimano Ultegra, and recently followed up with Centaur, which is intended to go head-to-head with Shimano 105. Both options rival their Shimano counterparts in terms of price and weight on paper, and their overall performance seems on-par as well — and the long overdue introduction of its H11 road disc brake components won’t exactly hurt, either.

“Potenza was a step in the direction of getting more OEM business,” Riddle said. “We’re taking on the heavy-hitter Ultegra — the OEM par excellence groupset — so that has been an uphill battle. It’s difficult for a product manager to justify something that’s not Ultegra in that middle section. We think we have a good offering, but [Ultegra] is a safe spot for a product manager.

“Centaur is perhaps better poised to enter that conflict [with 105]. You’ve got the added design, you’ve got the added authenticity, you’ve got the ‘Italian-ness’, if you will, just to give that extra bit of bling at a similar price point.”

Campagnolo Centaur crankset
Campagnolo recently introduced Centaur as a direct competitor to Shimano 105. It’s a worthy adversary on paper, but it remains to be seen how much it will appear on new bikes moving forward.

Bike brands are understandably reluctant to show their cards in terms of MY2018 spec, but according to Riddle, Campagnolo’s recent moves are starting to bear some fruit — and in turn, the company is starting to make its way back to more widespread relevance in the mass market.

“Bianchi, for example, is really keen on partnering with Campagnolo,” Riddle said. “We’ve been partners for quite some time. They took a leap of faith with Campagnolo and built up quite a few units with Potenza, and then we, on the other hand, helped push those in stores with Campagnolo signs and what have you. It’s been more of a collaboration, if you will — not only as a consumer and client, but as team, helping to drive home the fact that there’s a little more value added behind that than what was considered to be the norm. If you can take on that risk in tandem, there are some dividends to be made there.”

Bianchi Oltre Potenza
Bianchi is one of the few mainstream brands that have steadfastly supported Campagnolo through the years. Not surprisingly, it didn’t hesitate to spec the new Potenza groupset on a few road models. Photo: Bianchi.

Winchester agrees that Campagnolo is finally moving in a positive direction, specifically praising the U.S. office — based in Carlsbad, California — for its efforts to increase the brand’s visibility.

“The more demand you can get on the sales floor, the easier it is for me to put a part on there,” he said. ” So they’re doing the right thing: driving demo cars around the country, doing shop visits, explaining their stuff. That’s how you get stuff on bikes. It’s not about forcing product managers to spec; it’s getting demand for it in the market.”

Nevertheless, that “safe” aspect is something Winchester knows all too well, and it’s clear that Campagnolo still faces a long and steeply uphill battle — and not every product manager is willing to gamble.

“For sure, we have [looked at Potenza and Centaur],” he said. “For 2018, [Masi] will have three Campy bikes in the line, which is a lot for a small brand like ours. It’s all focused on the steel side of the things, though. Potenza looks pretty great, but looking at it from an international standpoint, it’s hard to go wrong with Ultegra or 105, especially with the new Ultegra R8000 this year, which is 90% of the look and feel of Dura-Ace R9100. From a pure engineering standpoint, it’s hard to compete with Shimano, especially at those price points.

Shimano Ultegra R8000 groupset
Shimano Ultegra is the undisputed king of OEM spec when it comes to mid-range road bikes, and it’s no small feat to attempt to knock it from its throne. Photo: Shimano.

“It’s hard,” he admitted. “If you spec a bike and go out on a limb, and the bike doesn’t get any traction in the marketplace, it comes back to you. We’ve had that same issue with SRAM stuff [in Europe]. In the past, the SRAM road stuff has really been a non-starter for us. So we’re a little gun-shy on stepping outside of the norms. As a product manager, you really have to make sure you’re not trying to step outside what the market is looking for.”

Bear in mind that Campagnolo isn’t entirely abandoning its previous practices, and Riddle stresses that the company is very much looking at the long game. The past few years may have been rough, but Potenza and Centaur should certainly help the company regain some spec and mainstream visibility. The resurgence of the hand-built market is also playing in the company’s favor, and Riddle suggests that the rise of online shopping is bringing back the practice of handpicking individual components. There are plans to better serve the growing gravel and adventure markets, too.

“Maintaining true to your roots is never a negative,” Riddle insists. “Sometimes it doesn’t pay the dividends that you think, but in the long term, it’s like investing in the [stock] market: if you can keep your blood cold, as they say in Italy, and be able to ride the highs and lows, that trend is always going to be moving up. Obviously there are some growing pains associated with that, and we’ve taken our licks. But I think the longer we move forward, people will be willing to invest in those ideals that Campagnolo represents because it will become increasingly rare.”

It should perhaps also be mentioned that when it comes to the currency of cool-factor, the company still has some money in the bank. How much that plays into the buying decisions of both end-users and product managers remains to be seen in the coming seasons, but business hiccups and all, there’s still a strong sense of desire when it comes to Campagnolo road components.

“We all love Campagnolo,” said Winchester. “I have Super Record EPS on my own bike, and I love it, but it’s the kind of thing that people seek out more than anything else. If there’s a product manager that doesn’t have a Campagnolo bike in their garage, they’re lying to you.”

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