Swix
Simon: Okay, welcome to yet another round of podcast and I'm here with: Esther: Esther
Kim: Kim
Tessa: Tessa
Susanne: Susanne
Bruno: and Bruno
Simon: Where we all recently went on a site visit to Swix, which is the main brand owned by a holding company called BRAV.
The location is in Lillehammer, so it was a pretty simple site visit.
BRAV or Swix is famous for ski wax. All skis need wax to slide on the snow, but iconically Swix branding fits very well around the grip wax, which is known as Blue Extra, and they use this iconography as a major brand recognition. To the point outside the building, they have a wax holding station that looks like a ginormous Blue Extra product of theirs. So, when we went to Swix, what did we find out?
Bruno: That it's a brand that principally was made by wax and their market was a wax market, but they're now expanding to other type of markets as such, all the clothing or things for the ski.
Esther: They are more about outdoor wear and gear now than just skiing. So, they've entered into new markets.
Simon: Yeah, so through the lifetime of Swix and the holding company, they've managed to acquire different brands. But what is their core product? What did you find out about that?
Esther: Well, it's still the wax. And they're still the world leader in selling ski wax. Simon: Indeed, indeed.
Esther: And they've got lots of different waxes, which I still don't really understand what the different waxes are for.
Simon: Fair enough. Of course, within any snow sport for alpine or downhill skiing and snowboarding, you always have a glide wax. And the glide wax has operated more effectively at different temperatures, and they all come with color coded. So, if it's classically cold, but not so cold, you put a blue glide wax on. And if it gets warmer, you can put red on or and the alike. So, spring skiing, you would have a warmer wax and in the winter, you would have a colder wax. And that's a glide wax. Yet within cross-country skiing, traditionally with classic skis, you have this grip zone, and this grip zone would have grip wax

on it. So, it's a different type of wax, it's stickier. And then Swix became famous for this one blue wax they would use for grip wax.
Esther: One guy even tattooed it on his calf.
Simon: Yes, of course, you always find people who are a little over-enthusiastic about brands and celebrities and they step a little further beyond what is normal. What else was there?
Susanne: I was really impressed that the factory from the wax was all automatic. And what you also said that there was like only two or three people working in the factory.
Simon: Yes, so actually on site they make waxes. And when we were there, they were making alpine waxes and they had a couple of people working and we went upstairs to the mixing room. What did that look like?
Esther: That was surprisingly small. There were a few raw products there and then I think it was four different mixing containers.
Kim: But those containers were huge.
Esther: Yeah, they were. But there was nobody up there when we got up there.
Simon: Yeah, so in the mixing room. But what actually was there? What did you see?
Esther: All of the mixing bowls and the raw materials.
Simon: Yeah, so there were some warehousing of raw materials but there were these big
pots and where the waxes were being mixed. Was it warm? Was it cold?
Bruno: I think it was a normal temperature.
Esther: Yeah, it wasn't that warm. I mean right over the containers it was kind of warm.
Simon: Yeah, they cooked the wax up a little bit.
Tessa: I expected it to be a lot warmer than it was actually. Esther: But the smell was quite intense.
Simon: Yeah, I can imagine. Did you remember what was in the waxes? Kim: 50 different ingredients and coloring.
Esther: Yeah, but not too much coloring because that can actually destroy the wax. So, they all have like more of a pastel color. It's a very thin pink. I'm not sure if it's supposed to be red but it looks pink.

Simon: The pink will be for a particular type of temperature, that would be that simple. So upstairs in the mixing room they cooked the waxes up and then that comes down to the factory floor and where they process into the containers. And then there were people simply setting containers and packing it up as it goes. Pretty labor intensive by the looks of it. I mean one area where you can imagine where the automation will be coming along soon.
Esther: And they had a fully automated warehouse that was also bonded and I think you don't see that that often in Norway to have bonded warehouses.
Simon: So, can anybody explain what that exactly means?
Kim: Well, the products that come into the warehouse, SWIX doesn't have to pay tax on it. But when they go out to the country, I think the countries that receive the products, they have to pay tax on it.
Simon: Yeah, so what a bonded warehouse allows manufacturers to do is that when they import finished goods from whatever market it is, the producer market, they import it and it stays inside the bonded warehouse and partly they don't know where it's going to end up. Maybe it gets exported to a market far away. Maybe it gets exported into your home market. But wherever it gets exported, the administration and the appropriate customs and importation tax is then applied once it leaves the warehouse. So, what this allows companies to do is not have that importation cost to where it's stored until it is sold. So, they effectively delay their actual cost of importation. However, there's extremely strict security protocols on this and the alike. And it can be inspected by the customs authority at any point in time. And so, it is quite rigid. And in a way, it's more expensive warehousing than regular warehousing. But there will be a tactical advantage where you don't pay your import costs on everything. Because you can well imagine if import into Norway on certain garments, for example, and then as you will pay a cost. And then if it gets exported again, it's very difficult to recover the initial import cost. And therefore, the advantage is to have a bonded warehouse. But was there many people in the warehouse?
All: No
Simon: No one at all.
Esther: I think I saw one guy.
Kim: Yeah, there was one guy driving around. He was the only person we saw.
Simon: Like so many of these kind of more modern situations in warehousing, it's highly automated. So, within the computer system, they know exactly where anything is at any point in time. And then the automation can simply pick that product, that size, that color, and put it into that particular order. And this allows for very low labor cost. Of course, upfront investment for such a situation is significant. But in the long run, once you've got it in position, you don't have any labor costs at all. And then what does this suggest for the future of people working warehousing?

Susanne: It's not good. Their jobs are going to be gone.
Simon: Yeah, it's one of the where AI and automation will eclipse this traditional job sector.
Esther: Well, it looked very small. The whole production side was kind of small. There's not a lot of people working. I was kind of surprised that they still produced so much wax every year. I think you said 100 tons of Alpine wax, and then like 30 tons of Nordic skiing wax. There's a lot to go through such a small factory.
Simon: Well, that would suggest it being quite efficient. And of course, Norway, where this is produced, this manufacturing process, is known as an expensive labor cost market. And so you would want as most efficient system as you can manage and afford to put in place in order to control your costs. Because as we know, in the last five years, the Norwegian kroner has lost its value. And therefore, you need to mitigate against risks and exposure to rising costs in terms of your raw products as well.
Kim: But I was actually also surprised by the size of the warehouse. It's the main warehouse they have, and it was actually quite small.
Esther: I don't think we went through the whole thing. Kim: But it didn ́t look that big. I mean, Swix is a big brand.
Esther: All the shelves were like really close to each other, because there's no need for big machines to go through there, just the automatic ones. I think they can actually store a lot more than it seems like.
Simon: So, think about the supply side of how it's going to be and how they cope with demand. So, if you get a whole bunch of products in
Esther: You need to sell it.
Simon: And you probably have sold it through pre-orders. So, it will land, come into your bonded warehouse, and probably within a handful of days, most of it's gone. And that would explain why the warehouse is small. Because the products in the warehouse may only be for things like gloves that are, if it's a cold winter, all of a sudden, more thicker gloves may need to be sold. And then your customers, the shops and the like, all of a sudden want a top-up order of thicker gloves. And this kind of product may be in the warehouse in more volume than, let's say, alpine wax or certain ski poles.
So, within the buying cycle of any sports equipment, it's all about pre-ordering. Launching your product, getting your pre-orders in, and then you as a supplier, what you want to be doing is invoicing everyone who's taken delivery. And you wait for your income on whatever terms you have. And then you're not sat on stock, not sat on too much stock. Because in the end, that's your money. And if it's just collecting dust in your warehouse, it's not making you money. And this may reflect on the efficiency of how the sale cycle is at Swix, is that they don't need a big warehouse because it's all based on pre-orders. And it's in and out in a quick snap. So maybe they get one week, all their Nordic ski poles arrive. By the end of that

week, it's out. And then a whole bunch of clothing arrives within one or two weeks, that's all gone. And they may have it all completely scheduled like this, which in the end means they don't need a large warehouse.
Anything else? What we found out?
Esther: They were sponsoring a lot of different ski events pretty early on and found ways to put basically advertisements down where normally sponsors or advertisements are not allowed. So, they branded banners in race competitions and flags that mark the racecourse. I think that's pretty clever to produce something that the race needs and print your name on it.
Simon: Yeah, I think very early on, the rules about logo placement within World Cups, World Championships and Olympics were not as strict as it is now. If you go to the Olympics now, even brands of products have to be, they cannot be overtly, certain rules cannot be overtly projected. However, in early days, when Swix was building its market share, they were able to put their logos in places that were very helpful for them. Yeah, and I think that certainly helped them early on. But what else was in the company? We only talked about Wax at the moment. What else do they have there?
Esther: They have acquired a lot of different brands over the last years.
Simon: Can you recall what those brands were? Any of them?
Susanne: Like they have Toko.
Simon: So, Toko is another Wax brand. It was a competitor, and they purchased it so then they gained more market share. But they've kept that brand going as a brand in itself.
Susanne: And also Lundhax.
Simon: It's a well-known Swedish outdoor brand with kind of its traditional focuses on a
classic Nordic outdoor. Susanne: And Ulvang.
Simon: Yeah, Ulvang, ull which is wool in Norwegian. So, this is a wool brand, you know. It's pretty popular out there.
Esther: Yeah, I've seen it in a lot of different stores all over Norway. When you go into like even like the tourist information stores, they often have Ulvang there as well to sell to tourists that freeze their butts off.
Simon: Yeah, absolutely. You know, in the Nordic sentiment, in terms of underwear, which you would wear next to your skin to do outdoor stuff in during inclement times, such as winter. You would wear wool underwear. The brand leader in Norway is Devold. But Ulvang has great distribution and can be seen elsewhere.
Susanne: And we have Helsport.

Simon: Helsport. Yeah, this is like more of a camping brand. Tents and sleeping bags and other accessories for camping. So again, more summer focused. So, the last two brands we talked about are very much outdoor, more particular summer.
Has, I would argue, probably has stronger sales there. And any other brands they had?
Susanne: Hard Rook, original team wear. He said it in the podcast from last year. Or for the other one. And they have like the digital platform for the ski sport, for the alpine ski. Oh no, for the cross-country ski.
Simon: Yeah, so they, I think the team thing was about where different clubs where teams can get a limited run of their colors and their own logos on that product. Okay. Of course, and there's knowing the amount of clubs and teams around in the Nordics. This would be definitely obvious and pretty easy way to supply because it's a captive audience. Your brand is known. If I think about my local ski club, they all have that Swix kind of large jacket to wear between racing and doing stuff.
And then they have a digital platform. This is Skisporet. And this is, I use it for cross-country skiing. And what it's really good at is telling you where the trails are, when they've recently been groomed, they have gradient profiles on it. And it's most destinations that are on it. Not all of them though, but most are on it. And it's particularly good. But when we interviewed the previous CEO of Brav, he has big aspirations for this platform, whether it's going to be for summer use for hiking and biking. And this hasn't happened.
Tessa: And do they get money for the app or is it for free?
Simon: There is a free version and a premium version. Yeah. And the premium version is 29
kroner a month.
Kim: That's just for Norway, right?
Simon: Yeah. And that would suggest that, I think, again, from the previous interview we had with the CEO, he had aspirations for the platform, to it being a far wider platform. Something more like Trailforks, which is owned by Outside Magazine, the group in North America, where you as a user can add where you go, and then that could be shared so you can follow them. So, if you go mountain biking and you've never been to a destination, you could go: oh look, here's Olaf, and he's done this route, and his route is being recommended by 300 people.
Esther: Kind of like Komoot or Strava?
Simon: Yeah. And so I think the previous CEO had aspirations for this, and it doesn't look like much has happened. Its core usage is particularly good, but there's not been any expansion into other sports or other territories.
So with all these different brands, this is known as the House of Brands concept, you know, and in Norway there's one called Active Brands, which owns the likes of Sweet and Kari Traa and Björn Dæhlie, other brands, and so this is a kind of a common strategy for an entity to build its market share by buying other brands, okay. And it's often investment groups that do this, to build up their investment portfolio, and what may happen, that investment group

may simply sell that House of Brands to another company. And if you think about it with Swix, it's simply, the main product is almost like an accessory to skiing or cross-country skiing. There's the skis, there's the poles, there's the boots, which are arguably the main hardware, and then Swix, that's an accessory.
Esther: Can you actually ski without applying wax?
Simon: You can, but it's pretty slow, yeah, and it's pretty slow, and depending on the base, it can absorb the moisture, because if the ski gets pressed into the snow and glides with your weight on it, pressure on anything frozen makes it liquid, depending on how cold it is, of course, and depending on what wax you have. But some bases will absorb the water, and they will be, especially if they've been grinded and a bit old, so wax is what you need, and it makes a big difference on the effectiveness of the ski, even if you're a beginner.
Esther: So, it's an accessory, but a very essential accessory?
Simon: Yeah, yeah, but in terms of the spend of the user, it's minor, that's what I would say.
Yeah, but with so many users, that's how they make their market. Kim: How often do you have to apply wax on skis?
Simon: Depends how much you use them, that's the thing. Kim: If you go skiing like twice a week?
Simon: Different people would say different amounts, but probably like every 10 times I go alpine skiing, I would wax the skis.
Esther: You iron the wax on, right?
Simon: Yeah, you iron it on, and then you try and get it flat, and then you can scrape the excess off, brush it, and put another layer on. That's for the glide wax, and then for the grip wax, you want to do it where it's warm, but yeah, you put layer upon layer on, but you don't want too many layers, because otherwise it creates friction.
Esther: And I do remember that Swix has a waxing school on YouTube, where they try to teach people, but you could also bring your skis in and they will do it for you. That I remember, and me as a non-skier, I would definitely do that.
Simon: Yeah, like so many products that are out there, where if you get it right, it works really well for you. But of course, if you're new or you're trying to work out what isn't working with your wax setup, you could go in, for example, or you can see these educational videos online. And it's not uncommon that brands that have these kinds of products, where it's like mountain biking, they would have all kinds of learning videos to help you.
And some are, of course, done by third parties. That isn't just always the key brand. But this house of brands, what I liked about Brav setup was that they spread the appeal across the seasons. So, they had wax, Swix has a clothing brand, skisporet they have now. So they have products for the winter market. And then conversely, with the outdoor brands, they have

stuff for the summer market. So, they have helped their probably their sales curve through help with their seasonality and demand and revenue, of course. Yeah, no business wants to be like a farmer where you wait for the crop, sell it, and then you wait until the next year and hopefully the money lasts.
Esther: But now that more and more people use skins on their skis, is that going to be a problem for Swix?
Simon: Yeah, in terms of the grip wax, yeah. So, when we had the interview a few years back with Madshus, they let out that 80% of all Nordic skis would now have the skins on it. And then 10% were skate skis, not classic skis at all. And then only 10% and ever smaller percentage were of the classic skis where you needed grip wax. So yeah, you're right, the grip wax market is diminishing. Absolutely. And people coming into the sport now almost certainly would get the skin skis. So, then they would know that they're easy to maintain. And they work across a whole host of different temperatures. It doesn't really matter.
And you just need to clean them occasionally.
Esther: But you still need glide wax. There's no substitute product for glide wax, right? Simon: You absolutely need glide wax if you want to be more efficient. Yeah. Across the
different temperature zones. Yeah.
Bruno: They only sell the products or do they also have like at the ski stations, some places where they put the wax for the people who need it. Like, for example, if I go tomorrow and I want to wax my skis, is there any place I can do it with Swix inside the ski station, for example?
Simon: At the ski hill? Bruno: Yeah.
Simon: No, you would go to the sport shop at the hill and buy your grip wax. Bruno: So, there's no service about putting?
Simon: No. Bruno: Okay.
Simon: Yeah. And what tends to happen if you go in different temperatures, you have a small collection of different grip waxes. And that's simply how it goes.
Bruno: Why don't they go to this type of market?
Simon: The servicing. Again, I would imagine this might have been a fair idea 10 years ago when the skin skis were not as popular or that technology product innovation hadn't occurred. I would imagine that it could have been a viable solution where you could go to

one place and maybe different ski shops offered that, you know, come in, we wax your skis up for a service fee, rather than you buying the grip wax.
In terms of core markets, so where's all this stuff sold?
Esther: Well, mainly in Sweden, the USA, Canada and Germany, they are the biggest export countries. I mean, of course, they also have other countries they export to, but those are the main ones.
Simon: Pretty much where traditional winter sport is. Yeah.
Esther: And Sweden is pretty extensive, because Swix started out from a Swedish guy, and got later on sold to Norway. But originally, it was Swedish. So, a lot of Swedish people know Swix as well.
Simon: Yeah, and that would have been in the 50s and 60s, as wealth grew in the post-war era, and places like Norway were still traditionally not as rich as it was now. Same with Finland, right up against, you know, both were had involved in conflicts during the 40s. And so, and in North America, the expansion of cross-country skiing, like in Minnesota, there's a traditional load of people who have Norwegian or Nordic heritage, where this is definitely done there. But arguably, in terms of monetizing as a destination, if you think of all the ski hills in Colorado, yes, there are places where there is cross-country done, but the main focus, of course, is alpine. So how the development of cross-country skiing as a commercial sector is slower and more organic, I would imagine.
Esther: But it did got really popular in Germany in the 70s. I know that my parents told me that.
Simon: Yeah, I mean, the other side of it, of course, it's cheap. Once you've got the skis, you can go where the trails are set, you know. So, it will have driver around that and you don't necessarily have to drive to the Alps. You can go to the foothills or places like the Black Forest, or the Bavarian Forest or the foothills of the Alps where it's flat. And you can Ski there, so the accessibility, no doubt, in a period of time, would have been quite appealing where it wasn't so cost prohibitive.
Esther: Well, nowadays you can't really cross country ski in a lot of places in Germany anymore, because they don't have snow.
Simon: Yeah, yeah, the reliability of Snow now has diminished, very much so.
Okay. So, to sum up, what was the... we got quite a lot out of this, I think we got this kind of whole house of brands and how investment companies look to beef up revenue, try to combat seasonality and productivity savings and where core market you know, we looked at where the core markets were. It's the traditional winter sports markets. And they used to likes a bonded warehouse to ensure this in a more efficiency in the workflow of the the product as it comes in from their supply and out to their customer. Any other big takeaways from you guys?
Esther: Well, they are really clever with their marketing where they get people to wear their heads. um and they're now the main sponsor for the World cup in Trondheim that it's

happening right now. So, they focus on getting teams to wear their products and happily do so, with their name on it, and of course, those sports competitions nowadays get streamed worldwide, so they get a lot of media time for their brand.
Simon: Yeah, anything else? I thought that yeah, absolutely, and then we had the Harald who was our host, he talked about this colored, almost rainbow-colored hat, which had all the different ski wax colors in their range, and they tried to use this as part of their iconography of the brand. And then now they're accessorizing that iconography.
I think we're done on this one.
Hey, thank you very much for joining us as we looked at our recent visit to Swix and considered a previous video from interviewing in the CEOs of both Swix and Madshus. Until next time, goodbye.
All: Goodbye