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The Globe and Mail

Toronto-based bike maker shares in Giro d'Italia victory

Phil White had more reason than most Canadians to cheer on Victoria cyclist Ryder Hesjedal's win in the prestigious Giro d'Italia road cycling race last weekend: His Toronto-based company, Cervélo SA, made the bicycle Mr. Hesjedal rode to win the race.

"People will always associate us with the first time a Canadian won [a professional cycling event]and did it on a Canadian bike. That's pretty special," Mr. White, Cervélo's chief executive officer, said Monday.

Although bike manufacturers often benefit from a bump in sales when one of their machines ends up in the winner's circle – notably Trek Bicycle Corp., the sponsor of past Tour de France winner Lance Armstrong – "the Giro is not going to do the same thing for us," Mr. White said.

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Rather, he expects a more significant boost from Cervélo's sale three months ago to Dutch giant Pon Holdings BV, which will give the company much needed clout and financing to improve chronic supply challenges that have held back its growth. "This will help us, and over the next three to five years we could certainly double our sales," Mr. White said.

Cervélo is already accustomed to the winner's circle. The company, founded in 1995 by Mr. White and fellow McGill University engineering graduate Gerard Vroomen, gained a reputation as an elite maker of triathlon and time-trial bikes that sold for thousands of dollars and were more renowned for their superior engineering than slick appearance.

In 2003, European pro team CSC began to use Cervélo bicycles, a first for a Canadian brand. Then, Spaniard Carlos Sastre rode a Cervélo to victory at the 2008 Tour de France. Cervélos also became the bike of choice for Iron Man competitors.

While Mr. Sastre's victory led to a 10-per-cent boost in unit sales for Cervélo in 2009, the company's sales increased by less than that in each of 2010 and 2011 (Cervélo doesn't release sales figures, but industry observers estimate it sells 20,000 to 40,000 bikes a year). "If we'd had 50 per cent more bikes, we would have sold every one," Mr. White said.

Pon, a European distributor of vehicles including Volkswagen, has expanded into bicycles in the past year, buying control of Derby Cycle, owner of the Raleigh, Univega and Kalkhoff brands, and Dutch bike maker Gazelle Holdings BV.

With the backing of Pon, Mr. White said Cervélo can for the first time afford to buy materials off-season and warehouse them – something it could never afford to do before. "It was always just-in-time or just-late [manufacturing]" he said. In addition, he is working with other Pon companies to secure a steadier supply of materials.

Mr. White said that while Mr. Hesjedal's victory will have little effect on hardcore cyclists who already know the brand, it will improve Cervélo's reputation with well-to-do, middle-aged newcomers to the sport. "That's certainly a booming area for us," he said.

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