food / travel

Canyon, The German Pirate Revolutionizing Cycling

Harder, better, faster, cheaper
Harder, better, faster, cheaper
David Barroux

PARIS â€" It’s the time of year when bike dealers are all smiles. For three weeks, the Tour de France provides the best advertising possible. But it’s a different story this year and both wholesalers and shopkeepers look a little glum. They fear that cyclists from the Movistar or Katusha teams might win too many stages, or worse, win the Tour with their Canyon bikes.

Industry behemoths loathe the brand as much as taxi drivers hate Uber, especially after Canyon accompanied Cadel Evans when the Australian won the 2009 world championship. Ten years ago it was an almost invisible start-up. Now it's swooping in on the emperors of the cycling world â€" U.S. manufacturers Trek, Specialized and Cannondale â€" after cruising past renowned Italian brands such as Bianchi and Pinarello, and leaving France’s Peugeot in the dust.

Whether on flat roads, in the woods or in the mountains, Canyon bikes are taking over, at least in Europe. These little gems, priced at more than 600 euros a piece, have sports enthusiasts falling for them like children with toys.

In Western countries, the bike market is divided in equal revenue parts between a large amount of cheap bikes sold and a small amount of very expensive, high-end equipment sold only to aficionados. The latter is Canyon’s target, and it’s eating a large chunk of it with its formidable sales pitch: premium material at relatively low prices.

The German company sells its bikes for about 30% less than its main competitors. In terms of quality, the products are comparable. It's as if a car company started selling Audis for the price of a Logan. “This is the bike everybody dreams of at a price which most people can afford,” employees like to stress.


So how do they pull it off? The idea is simple but expertly developed: Canyon sells its products only on the Internet, thus circumventing the usual distribution channels â€" not unlike how Dell, in the 1990s, revolutionized the PC market by selling machines assembled and sent out on demand. Canyon uses its own website and delivers about 100,000 bikes every year via UPS, thus giving back its clients the money that its competitors pay to distributors.

This incredible success was born almost by chance in the mind of Roman Arnold, a nearly seven-foot-tall giant who always loved to bike. “In the 1990s, Roman and his brother Frank used to ride their bikes a lot,” says Rodolphe Beyer, who created Canyon’s French branch in 2005. “But they were struggling to find equipment or spare parts to their liking. At the time, buying by mail order would cost a fortune, so together with their father, the two brothers had an idea. They traveled to Italy to buy their parts and, to pay for the trip, brought back more parts to sell in their trailer at races.”


The little family business prospered. The two brothers were selling parts in their parents’ garage in Koblenz after school. They even ended up opening a proper shop of their own. The story could have ended there. "But one day, somebody offered Roman a series of frames that had been seized by customs," Rodolphe Beyer explains. "He sold them in his store and via catalogue. That’s when he noticed there was a huge demand and he ended up ordering frames directly from Asia."


Without noticing it, Roman Arnold got caught up in a circle since, by ordering these frames, he was becoming a direct competitor to the brands he was selling in his store. That's when he decided to throw caution to the wind and start his own business. It may have seemed like a crazy move but, inspired as he was by the Internet bubble, the cyclist who became an entrepreneur told himself he would perhaps be better off alone.


In 2003, Roman the German, born in 1964, eventually realized that his frame business had made him both weak and vulnerable. Weak because he was no different than his competitors, and vulnerable because just one batch of faulty frames could have him facing huge guarantee issues.


To make himself stand out from the rest, he created Canyon, betting on an upgrade strategy that saw him work hand-in-hand with academics, engineers and researchers to reach his only goal: to make the best bike in the world.

The challenge was soon fulfilled. Canyon boasts the lightest mass-produced bike, as well as the fastest. Since then, the group and its engineering army has become a patenting machine, earning several prizes in the specialized press. Design, quality and prices between in the 499- to 8,499-euro range are the brand’s three main features.


Canyon has doubled its workforce in five years but still has only 650 employees for a turnover of 100 million euros and 3 million in benefits last year.


The company now faces three challenges. First, it must expand its market, which isn't easy when sales are online and the items cost an average of 2,000 euros. With that kind of money at stake, customers can be forgiven for wanting to "touch" the product. To address the issue, the group is investing massively on its website and in call centers. “But we’re not going to open showrooms or stores,” says Frank Aldorf, a German who worked for a long time with Specialized, one of Canyon’s competitors.

Aldorf says it would be a mistake to invest in a network of stores, as it would increase costs and remove what makes the brand special. Instead, the priority is to develop the quality of the product and continue to improve service.

UPS delivers the bikes in pieces, meaning customers have to do the final assembly (putting together the wheels, handlebars, pedals) themselves. When they need help, they sometimes have trouble finding it, since traditional stores often refuse to repair these bikes sold by the devil. “It’s a shame because the Internet is less of a threat to them than it is to bookstores. Their future is in the service,” Rodolphe Beyer says.

Some traditional makers, worried by Canyon’s rise, have already tried their own hands at direct-to-customer sales, though these have been limited to just a few series. Brands are wary of getting on the wrong side of resellers.


Canyon’s second challenge for the years to come, therefore, is to reassure clients worried about after-sales services. For that reason it is considering developing a network of mobile independent repairers who would go out and meet clients directly. The company estimates that for the 100,000 Canyon bikes in France, some 20 mechanics would suffice and that they would provide better service than traditional stores do.


The company's third and final challenge is both industrial and global. Although it does sell some of its bikes to Asian customers, 90% of Canyon’s business is still done in Europe. To continue growing, the group needs to expand its sales outside of the Old Continent and start competing in a very demanding U.S. market.

“We don’t sell to the U.S., but people there know about us, through the specialized press. And some American customers have come to Koblenz to pick up their order directly from us," says Frank Aldorf. If they eventually enter the U.S. market directly, "American brands will see it as a declaration of war,” believes Ward Grootjans, the head of strategy and of the group’s global expansion.

To succeed in its bid to take over the cycling world, Canyon will open this fall a new ultra-sophisticated 15-million-euro factory on a stretch of land big enough to triple the company’s size.


“We drew our inspiration from the car manufacturing production techniques and we’ll be able to produce 450 bikes with every eight-hour shift,” explains André Koch, head of production and logistics. The goal is to be able to produce more and do it faster, and “also to be able to fulfill the clients’ demand for personalization,” he says.


“Our competitors have almost no growth now. Our problem is meeting demand. And keeping cool. We need to grow, but not too fast. Before we can be the biggest, we first need to become the cyclists’ favorite brand,” Franck explains bluntly. “The most important thing is to last.” And also, maybe, to win the Tour.

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Green

In Argentina, A Visit To World's Highest Solar Energy Park

With loans and solar panels from China, the massive solar park has been opened a year and is already powering the surrounding areas. Now the Chinese supplier is pushing for an expansion.

960,000 solar panels have been installed at the Cauchari park

Silvia Naishtat

CAUCHARI — Driving across the border with Chile into the northwest Argentine department of Susques, you may spot what looks like a black mass in the distance. Arriving at a 4,000-meter altitude in the municipality of Cauchari, what comes into view instead is an assembly of 960,000 solar panels. It is the world's highest photovoltaic (PV) park, which is also the second biggest solar energy facility in Latin America, after Mexico's Aguascalientes plant.

Spread over 800 hectares in an arid landscape, the Cauchari park has been operating for a year, and has so far turned sunshine into 315 megawatts of electricity, enough to power the local provincial capital of Jujuy through the national grid.


It has also generated some $50 million for the province, which Governor Gerardo Morales has allocated to building 239 schools.

Abundant sunshine, low temperatures

The physicist Martín Albornoz says Cauchari, which means "link to the sun," is exposed to the best solar radiation anywhere. The area has 260 days of sunshine, with no smog and relatively low temperatures, which helps keep the panels in optimal conditions.

Its construction began with a loan of more than $331 million from China's Eximbank, which allowed the purchase of panels made in Shanghai. They arrived in Buenos Aires in 2,500 containers and were later trucked a considerable distance to the site in Cauchari . This was a titanic project that required 1,200 builders and 10-ton cranes, but will save some 780,000 tons of CO2 emissions a year.

It is now run by 60 technicians. Its panels, with a 25-year guarantee, follow the sun's path and are cleaned twice a year. The plant is expected to have a service life of 40 years. Its choice of location was based on power lines traced in the 1990s to export power to Chile, now fed by the park.

Chinese engineers working in an office at the Cauchari park

Xinhua/ZUMA

Chinese want to expand

The plant belongs to the public-sector firm Jemse (Jujuy Energía y Minería), created in 2011 by the province's then governor Eduardo Fellner. Jemse's president, Felipe Albornoz, says that once Chinese credits are repaid in 20 years, Cauchari will earn the province $600 million.

The Argentine Energy ministry must now decide on the park's proposed expansion. The Chinese would pay in $200 million, which will help install 400,000 additional panels and generate enough power for the entire province of Jujuy.

The park's CEO, Guillermo Hoerth, observes that state policies are key to turning Jujuy into a green province. "We must change the production model. The world is rapidly cutting fossil fuel emissions. This is a great opportunity," Hoerth says.

The province's energy chief, Mario Pizarro, says in turn that Susques and three other provincial districts are already self-sufficient with clean energy, and three other districts would soon follow.

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