The Hindu Business Line : Advent of merchandising

By bagging the licensing and merchandising rights of World Cup 2003, Advent, the events and promotion arm of Lintas India Group, is setting new benchmark in the country.

IT's a bold move for an agency to venture into the arena of sports marketing with intentions of setting benchmarks for the future of licensing and merchandising (L&M) in this country. Recently, Advent, the two-year-old events and promotions division of Lintas India Group bagged the exclusive L&M rights from the International Cricket Council (ICC) for the Indian sub-continent. These rights would allow Advent to appoint sub-licensees to use the official logo, mascot and team emblems to design, manufacture, distribute and market the World Cup Cricket 2003 merchandise.

Estimating a Rs 100 crore turnover from the L&M business for the entire subcontinent, Mr Ameer Ismail, President, Advent, has made an outright purchase of the rights by paying the fee upfront instead of paying a royalty based on projected sales. Likewise, Advent has also sold the rights to its sub-licensees as an outright payment, despite the `unstructured' nature of the L&M business in the country, not to mention the menace of rampant counterfeits.

Without disclosing the amount of money paid to buy the rights, Ismail says, "We will be breaking even or even making nominal profits. In fact, with our skills we will benchmark the market and use this opportunity to get into more areas which have synergy.''

For instance, Advent has already partnered with Initiative Media (the media buying and planning arm of the Lintas India Group) to market these rights. Initiative Media will use its extensive list of clients to offer new value added propositions to its clients. In fact, Initiative Media is the AOR for clients such as Pantaloon and Britannia (which has possibly helped Advent in getting these clients as sub-licensees) and will obviously help Advent in bagging more sub-licensees from its list of clients.

Besides, Advent would also have the option of entering other areas in L&M such as film merchandising and attract clientele from Lintertainment, a new division which is into branding and marketing in the entertainment industry. For a sub-licensee such as Pantaloon, which has been given almost 60 licensed items under apparel and accessories to sell, this L&M exercise only strengthens its aspirations to delve more into the business.

Explains Mr Rakesh Biyani, Director, Pantaloon Retail India, "We need to create retail excitement at the store level and nothing is bigger than the cricket world cup. We are expecting a turnover between Rs 6 to 8 crore and this gives us a opportunity to expand the business into new areas.''

In fact, Pantaloon has already ventured into the arena of event marketing when it launched film-related merchandise for its own film Na Tum Jano Na Hum (produced by its group company). Apparel under the Biba brand and the mascot (Tutu, a soft toy) from the film were being retailed at its stores. The company has recently acquired licenses from Disney for manufacturing kids apparel. "There is no official merchandise available today. There are people who want to support India by wearing the colours of the team. It is a new segment for us and we believe this is the right time for us to explore new avenues,'' adds Biyani.

Citing a similar reason for taking up the merchandising rights for the World Cup, Mr Anil Moolchandani, Managing Director, Archies, says, "We were in the business of taking on licenses and this is an opportunity which comes once in four years. Of course, there is risk involved in terms of how India fares in the World Cup.'' Archies will be manufacturing a host of products such as crayons, mugs, posters and stationery and will be retailing its fare at its stores from January. "We expect Rs 2 crore in the first two months,'' says Moolchandani.

Similarly, relatively new company such as Nirvana Music, a subsidiary of Nimbus Communications, treats the L&M foray as an opportunity to create something out of India's biggest preoccupation.

Says Mr Rahul Guha, Vice-President and Business Head, Nirvana Music, "We have got this opportunity to create an unique product which is not going to be available for the next four years.''

The company is launching a CD and cassette (yet to be titled) on the World Cup and has roped in singers such as KK, Abhijit, Sunita Chauhan and Alka Yagnik to record songs whose lyrics have been written by Jatin Lalit and composed by Rakesh Roshan. The company is hoping to make money on the limited editions on this music offering which would include the Official song of the tournament as well.

Nirvana is also planning to promote the album through a music concert of all singers to create excitement before the World Cup and thereby bring in its own brand with that of the ICC World Cup. Advent would obviously step in as event organisers, which is part of a gamut of its L&M activities, to service the same client.

Pricing of the products is going to be the prerogative of the sub-licensee without any interference on the part of ICC. Considering the idea is to get volumes through sales, a retailer like Pantaloon believes in being `competitively' priced. Likewise Nirvana too has consciously kept prices on par with the other music albums in the market. As Guha says, "The products will be competitively priced and will be autographed by the singers."

ICC has already defined eight categories under L&M for the coming World Cup. Apart from apparel and accessories, the list includes music, home furnishing, publishing, stationery, toys and games, gifts and novelties and food and beverage.

While companies such as Pantaloon, Archies (for gifts and novelties), Britannia (for biscuits under F&B) and Nirvana (music), have already been appointed as sub-licensees, the rest of the categories are yet to be tapped and negotiations are currently on to rope in other players.

However these sub-licensees who will be manufacturing and marketing the products will not be able to offer `integrated branding' as part of the deal with ICC.

Explains Mr Hemant Dua, National General Manager, Advent, "The sub-licensee will not be allowed to use its name anywhere near the ICC brand mark unlike the sponsors who can attach their brand names next to the ICC mascot or symbol.''

For instance, for a product such as a mug carrying the `Dazzler' mascot, the name of the sub-licensee will not be visible immediately on the surface, instead it will be inscribed beneath the product as a licensee manufacturer. Adds Dua, "There will be no visible branding for the sub-licensee unlike the official sponsors who get to use their brands along with the ICC mark.'' So while official sponsors such as Pepsi and Hero Honda get the benefit of `integrated' branding with ICC for all their schemes and promotions, the sub-licensee has to make do with the ICC symbols to push their products.

The L&M rights for the ICC extend up to six months from the last day of the event (March 23) to September 2003, giving the sub-licensees enough time to recover their money and reap the maximum benefit out this exercise.

Globally, L&M business is pegged at US $109 billion. Sports- based merchandising alone accounts for US $22 billion and is considered to be the second largest revenue generating stream after acquisition of TV rights in the arena of sports marketing. Advent's foray into this untapped Indian sports merchandising market is significant especially if it can help bring in a systematic and structured approach to this business in the country.

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