Orbea CEO at Matins Esade: “We’ve had sustainable growth since 2016”

“Since 2016 we have had sustainable growth and we may grow by 30% in 2021”, explained Jon Fernandez, Orbea CEO, at the latest Matins Esade.

The CEO gave an overview of the long history of this Basque cycle manufacturer based in Mallabia (Biscay), emphasising the company’s international roll out. “Spain accounts for 20% of Orbea sales and the international market for 80%, mainly in Europe and USA – mature markets with a large middle class”.

As regards the company’s globalisation, Jon Fernández explained that “there is no such thing as a globalisation model, it depends on when, how and where. Our base line at the moment is concentration, taking decisions at the Basque Country HQ about our marketing and branding strategy for everyone”. “We feel stronger than fifteen years ago, and a key, shared vision is an important part of this”.

Stages in the company’s history

The Orbea CEO detailed the different stages in the company’s development since its inception in 1840 by the Orbea brothers, and explained how “a serious crisis” in 1969 prompted the workers to become a co-operative company, now part of the Mondragón Group.

“At first, the brand wanted to develop the product, generate brand traction and go global as quickly as possible to avoid going under. But by 2008, we felt we’d hit the highest heights, our latest phase had culminated with the Beijing Olympics where our bike brand won three medals”, explained Jon Fernández before adding, “in the second phase of the economic crisis, around 2010, we streamlined our company’s assets, closed our branch in Australia and adopted a different distribution model: we closed our factory in China and invested in our European facilities (Portugal and the Basque Country), apart from changing our US subsidiary – now it’s just involved in sales – and stripping down our product portfolio considerably to enable direct deliveries by air from the Basque Country”.

“Our major offensive started in 2015. We had to decide whether we wanted to trim the brand down and focus on a specific market niche or compete with the big brands in the bike industry. We opted for the latter. Our key strategy was based on our brand’s reputation and a multi-channel business model. It’s clear that the brand can provide factors to make you stand out”, explained the CEO.

Essential driving forces

As the CEO pointed out, “one of the secrets of our success has been our ability to walk away from things”, and “it’s crucial to have a dream for the brand vision and stick to it”. He also underlined the importance of innovating and knowing “what value our business contributes to the market”. “Our industry is similar to the fashion industry. We follow trends in the car industry and in off-the-peg fashion too because the visual impact of our products is crucial,” he explained.

On the subject of manufacturing, he said that “all Orbea bikes come from our factories in Mallabia (Basque Country) and Portugal, there’s no subcontracting”, although he qualified this by adding that “the configuration of our industry moved to Asia: no carbon fibre frames are made in Europe, but we’re involved in projects about new materials with a view to returning shifter manufacturing to Europe, so we’re obliged to buy parts for our shifters in Asia, but hopefully such parts will return here”.

When asked about digital strategy, he said that they were “busy learning.” “We must be able to create online integration between what our distributors offer and ourselves as a brand. We are working on this and on showcasing the high-street channel and the independent channel”. He ended by saying that “The high-street channel must understand that the value of their contribution stems not so much from their commercial operations as from the services and experience they provide and from thinking about how they can monetise them. The only Orbea store we have in the world is in Barcelona, and it enables us to experiment with the processes and strategies we want to suggest to our independent distributors”.

Matins Esade are a space for thinking about business held by Esade Alumni at Esade, an opportunity for executives from foremost companies to share their vision of the industry and the company they manage.