Pon’s Global CEO is Upbeat About Industry’s Future
Adelaide, SA
At the start line of Stage 3 of the 2023 Tour Down Under, all eyes of the huge crowd were on the elite professional cyclists. Few people would have noticed the casually dressed Janus Smalbraak unobtrusively visiting some of the teams.
A study of his online media shows that Janus likes it that way. For a man who has built of one of the world’s largest bicycle companies in little more than a decade, he’s kept a remarkably low profile.
Those spectators would be equally surprised to learn that the company Janus leads supplies the bikes and equipment for several of the teams they were watching. That equipment displays a wide range of brand names, but none of them include the name of the company he leads that owns them all, Pon.
Janus has been CEO of Pon Holdings since 2010. According to its website, Pon employs more than 16,000 employees across automotive, bikes, equipment and power systems, industrial mobility, agricultural products and services and venture capital. The company, which can trace its origins back to 1895 when it sold soap, sewing machines and bicycles, is still a private company, solely owned by the Pon family and with its headquarters in Amsterdam.
After the TDU riders rolled away from the start line, we spoke to Janus and started by asking how often he’s been to Australia. It turned out that, far from his first visit, he’s a regular at the TDU, estimating that 2023 was his fifth time to Adelaide.
“You get the whole industry here,” he explained. “I think it’s a great moment to come down and meet and greet, to say ‘hello’ and understand what’s happening in the market down here.”
Janus was already CEO of Pon before it re-entered the bicycle market many decades after its historic involvement in the late 19th and early 20th centuries.
Its first purchase in 2011 was Royal Dutch Gazelle, an iconic Dutch bike company that was founded in 1892 but had fallen upon hard times.
“I made that decision – always with the team,” Janus recalled. “We consciously took the decision to get into bikes. We first looked at the Accell Group but that was too expensive.”
Accell was more recently purchased by US investment firm KKR for A$2.37 billion.
Janus continued: “We could buy Gazelle for much less money. But at the time it was, as we would call it, a pretty old lady. It needed a little bit more than just a paint job … but it’s been very worthwhile, the ride over the past 10 years.”
Purchasing a mid-sized Dutch bicycle company was one thing, but becoming a global bicycle market leader was another. Did Janus initially anticipate such a rapid rate of major acquisitions that followed Gazelle?
“No. Not at all,” he said. “We are a car company from our origins. We’re a distributor and we felt that it would be good to have our own brands – to create our own destiny with the brands. And Gazelle … although the product at that time was not that great, it was still in the top five recognised brands (all brands, not just bike brands) in the Netherlands.
“So it was a great platform to build on, bring the right products in and grow it.
“Then by luck we met Gerard Vroomen and Phil White (founders of Cervélo) and they were in financial stress so we helped them out with Cervélo. Then the next step was Derby Cycle, which included Focus and Kalkhoff. A competitor had some shares in it and wanted to make a bid and we thought ‘okay, then we’d really be very small with only one comfort brand’ so that’s why we aggressively pursued that.
“In the meantime, we bought Santa Cruz and last year the Dorel activities, which is predominantly Cannondale and GT. So it’s a nice pack of brands.”
After all these and other acquisitions, including BBB and Urban Arrow, Janus said bicycle activities now constitute 25% of the group’s overall turnover.
“It’s a significant part of our business,” he stated. “We do €$10 billion (A$15.2 billion) and of that €$2.5 billion (A$3.8 billion) is bikes. And the gross margin for cars is much smaller as the distributor, than being a bike manufacturer.
“In bikes, we own the brands instead of just being just a distributor so it’s really a significant part of our business.”
Janus reveals he spends no less than 50% of his personal time as CEO looking at Pon’s bicycle industry activities and the remaining 50% across all its other divisions that still constitute 75% of its turnover.
“We really take the bikes seriously,” he confirmed. “If you build a bike business of €2.5 billion, you need to take it seriously. And I love the bike industry. It’s a fantastic industry. It’s a young at heart industry. It’s a dynamic industry. And it’s a sustainable, healthy industry.”
Pon has a long and deep involvement with not just automotive importation, but even influencing product development. There is a 1947 diary on display in the Rijksmuseum, Amsterdam’s world famous gallery, of Ben Pon senior’s hand drawn sketch of what would later become the Volkswagen Transporter, or Kombi Van as it’s known in Australia. Pon has distributed the Volkswagen range into the Netherlands since 1947, along with many other automotive brands.
Given this long and deep automotive involvement, is Pon well placed to foresee both business opportunities and closer product correlation between bikes and cars into the future?
“For sure,” Janus responded. “Once we stepped into the bikes, we saw a huge correlation. Imagine 10 years ago, when we started, we sold 14,000 e-bikes per year. Now we sell more than half a million e-bikes per year. In north-western Europe, the e-bike is not only something you use for relaxation but it’s really becoming a go-to-work vehicle.
“I think our e-bike sales are now about 50/50 with our non e-bike sales, if you first take out our mass market non e-bike sales in the US with Dorel (referring in particular to Dorel brands Mongoose and Schwinn which sell large quantities of non-electric juvenile and lower-priced adult bikes.) But if you look at north-western Europe, we do 50/50.
“We see a lot of trends that we saw in the car industry as well. For example, leasing has long been part of the car industry but is now becoming part of the bicycle industry in north-western Europe, so companies are becoming B2B businesses instead of only B2C.
“Let’s take a big bank: ABN AMRO or Rabobank. We provide their personnel with bikes and they use the bikes to go to the office and back home.
“I’m surprised with the low electric car penetration in Australia. It’s probably a range issue, but that will come. The electric car and electric bike, by drivetrain, are already coming closer together and you will see micro cars on the road. In cities that will be a big help in congestion.
“But if you look at the e-bike, it’s fun, it takes away congestion, it’s healthy, it’s sustainable. I always say it’s the only product – until we can fly… and we still can’t – which has those four categories that we are all aiming for.
“I think there’s still huge potential for e-bikes to play a big role in micromobility.”
Predictions Around the Current and Future Bike Markets
Janus thinks the Covid bike boom was somewhat overhyped but is still very positive about long-term bike industry prospects.
“Don’t panic. I think the long-term trends are incredible for biking.”
“We all talk about the boom,” he explained. “But if you really look at the numbers, there were not that many more bikes being produced during Covid than before – just more bikes being sold (resulting in all levels of the supply chain running out of stock). It’s fair to say that the supply chain has been pretty broken. It’s a very fragmented supply chain. That’s something the bike industry has to look at – how to better organise it going forward.
“Currently we see quite some overstocking at all levels – dealers, wholesalers and manufacturers. We see quite a mismatch of stock in manufacturing, between how many of each component you need to make a bike.
“But I think the longer trend is very good, so I think let’s have a little bit of patience. Don’t panic. I think the long-term trends are incredible for biking.”
The time of our interview was not long after Specialized announced substantial lay-offs across its global workforce. Would Pon be following suit?
He answered: “I saw the news. I don’t know their situation so I cannot judge that. But we have not laid off staff. We have the patience. We’re a private company so we’ll ride it out.
“If we have a little bit of patience, take care of this broken supply chain, get back to a more normal situation – I think inshoring (moving production closer to the final markets) is going to play a big role – I think the trends for biking are fantastic. Sustainability, anti-congestion, fun, healthy – it’s what the population is looking for.
“But we have to make sure it’s safe. That’s the other part where the industry has a major role to play.”