Hero Cycles has announced the acquisition of Firefox Bikes as part of its strategy to cement its position in the fast-growing premium cycling segment in India. However, according to the deal, Firefox Bikes will continue to have its distinct brand identity and remain a separate business entity post the acquisition.
Firefox Bikes is the country's largest premium bicycle brand while Hero Cycles is the world's largest manufacturer by volume. The promoters have divested their entire equity stake in Firefox Bikes in an all-cash transaction to Hero Cycles. The deal includes Firefox brand of cycles, accessories and spares along with exclusive distribution rights of 'Trek' and other global brands.
The acquisition will not just aim at consolidating Hero's market share, but is also at expanding the horizon for Firefox Bikes. The acquisition will see transfer of key technology, and rich global experience garnered by Hero Cycles over the last 60 years, to Firefox Bikes which is often credited for creating the premium range in the Indian cycling market. Firefox, which has an established presence pan-India through a network of 160 outlets, has been growing at a 3-year CAGR of 35 per cent in revenue. "The aim is to provide our customers with world-class products at every price range as per their fast evolving tastes and requirements" added Munjal.
The premium cycle segment in India, which started with humble origins in the early 2000s, has been growing at a CAGR of 25 per cent over the past many years. Today, it has emerged as one of the fastest growing by clocking more than 2 lakh units a year. Among the factors which helped it register rapid growth was the evolving customer preference, especially in urban areas, shifting to fitness, recreation and lifestyle segments. Growing awareness for fitness and recreational activities in urban cities over the past few years also helped the premium cycle segment to grow aggressively in India. Firefox was among the first players in India to enter this segment and created a niche for itself by clinching more than 40 per cent of this segment.
Speaking on Firefox's journey through the last decade, Shiv Inder Singh, founder and managing director at Firefox Bikes, said, "We were fortunate to have entered the cycling market at a time when Indian consumer had just started to expect more from their cycles. It was enriching and an exciting role to play where we not just created the premium cycle segment in India, but also introduced the next generation of performance and recreational cycles to the Indian consumer. We are very happy today that our effort into creating this segment has been recognised by market leader Hero Cycles and have now decided to take our young and an extremely vibrant brand to the next level."
As part of the deal, Singh will continue to lead Firefox Bikes post the acquisition as the chief executive officer. Currently, Firefox sells over 70 different models of Firefox bikes and 25 Trek models through a network of 160 company-owned and franchise outlets. Firefox also has tie-ups with international brands, such as Tern, Shimano, Saris, Finish Line, Kryptonite, Super-B and Slime.
The investment by the Ludhiana-based cycling giant, which produced six million cycles last year, will also help Firefox further increase its dominance in the premium cycle market through an expansion of the product portfolio, creating better customer reach through greater market visibility and exposure and introducing it to the latest global innovations being pioneered by Hero.
Hero Cycles also announced its decision to set up a 'Hero Innovation Centre' in India aiming to build the world's most hi-tech R&D centre for engineering, innovation and designing of the next generation of cycles for India and international markets. The Centre will further help in reducing Hero Cycles' dependence on import of technology and design elements for its products without compromising on the quality of its product offering to its customers.