The Hindu Business Line : Licence to bill

Popular comic character Chacha Chaudhary and Sabu have been vanquishing enemies with brains and brawn for years. Harbhajan Singh ‘Bhajji’ threw a googly to his on-field rivals and automaker Ford’s beauty on wheels made you drool.

If you have admired any of the above examples at any stage, then you are the target audience that brand licensors are looking for. Character, brand and personality licensing is the next big thing waiting to happen in India with a slew of players making a beeline to license merchandise and characters.

Licensing of brands, designs, characters, celebrity names and photographs, sporting league logos and event names is gaining popularity in India where these are being used in various products such as jewellery, apparel, lifestyle accessories, toys, gifts and games. This has created immense interest among Indian brands, manufacturers, retailers, designers, lawyers, financial consultants and licensing agents.

“The potential for India to benefit from the licensing industry is huge. The emergence of modern and more organised retail in India, estimated at $200 billion, has been projected to grow at 5 per cent annually and has set the pace for new collaborations between international licensing companies and Indian business houses,” says Gaurav Marya, President, Franchise India.

According to Harish Bijoor, brand domain expert and CEO of Harish Bijoor Consults, brand licensing generates new revenue streams and other commercial benefits for brands, with little direct cost. “It is important, however, to manage the system so licensing strengthens brand value,” he says.

While companies build brand licensing programmes for a variety of reasons, for the brand owner (licensor), licensing gives them the opportunity to strengthen their brand while generating revenue and protecting their company’s trademarks. Core to the licensor in any brand licensing programme is the opportunity to enhance their brands’ image and grow the value of their brand.

“By adding new categories through licensing, licensors can attract new consumers to the brand and offer existing consumers an opportunity to exhibit their love for the brand,” says Bijoor.

Market analysts observe that licensing the brand enables licensors to provide consumers genuine alternatives to unauthorised products that are currently being sold in the market. It also generates incremental revenue for licensors through increased sales of core product and royalty revenue from the sale of licensed products.

Interestingly, over the last three years, the merchandise licensing business in India has been growing at more than 50 per cent, and total character licensing sales in India are estimated at Rs 500 crore.

Says Nicholas Bloom, Associate Vice-President (Brand Management), Beanstalk Group, “For licensees, acquiring the use of a brand enables them to increase their market share in their category and often results in gaining incremental shelf space at retail. Having a prominent brand licence can open new channels or regions for a licensee’s product that were previously unavailable and also help a licensee acquire additional licenses or even raise capital. Ultimately, licensing generates incremental revenue through the sale of licensed products.”

Beanstalk is the licensing agency of record for 35 major brands and has developed more than 4,000 brand extensions in every big product category, resulting in more than $3 billion in retail sales in 2006 alone.

The company works with blue-chip brands and other high-profile clients to leverage licensing. Beanstalk also works with manufacturers to help identify and acquire compelling properties to help them gain competitive advantage in the marketplace.

Harbhajan Singh unveiling his signature line of apparel and accessories.

License India, which has licensed Chacha Chowdhary, Sabu, management guru Shiv Khera, Ford and Pepsi under its umbrella, says it will leverage on each personality’s and character’s popularity.

As Marya explains: “The animation and character licensing industry in India has bright prospects due to its large population that accounts for a major chunk of the world’s population. Also, the vast majority of India’s $75-$100 million in retail sales comes from licensed merchandise in children’s properties.”

According to Gulshan Rai, Chairman and Managing Director, Diamond Comics, “We have heard much about Disney cartoons, clothes and stationery; now is the chance for Indian comic characters to be visible worldwide. India is a large country and is manufacturing a large number of children-oriented products. In the present scenario, our characters such as Chacha Chowdhary can be used in stationery, bubblegum, candy, ice-creams, and shoes besides products such as school bags, t-shirts, tattoos and transfer stickers, among other things.”

Rai says there has also been a steep increase in the number of ways to consume animation content than ever before. “An increasing number of TV channels, greater accessibility to the Internet, the proliferation of mobile devices and the increasing popularity of mobile, video and computer games, offer humongous potential for animation and character licensing in India,” he adds.

Personality Licensing

Shiv Khera, best-selling author and the founder of Qualified Learning Systems Inc, USA.

Personalities are part of the enterprise too. People such as Shiv Khera and cricketer Harbhajan Singh are among those keen to lend their names to merchandise.

“Personality licensing, in my opinion, can be good depending on the label attached to the personality. Celebrity branding is a big responsibility on the person himself as the personal value of the celebrity reflects on his endorsements,” says Shiv Khera, management consultant and author of the best seller You Can Win. The author, who is in the process of setting up the Shiv Khera Institute of Leadership and Management, said its aim is to create leaders.

In the first year, 25 institutes will be opened across India and the number will continue to grow. To develop the franchise model and effectively launch the institutes across the country, Khera has roped in Franchise India Holdings Ltd for the growth of franchising in India.

Similarly, cricketer Harbhajan Singh is lending his name to a line of apparel and accessories besides launching a restaurant called Bhajji Da Dhaba, which will also carry these items, besides enabling customers to play with his brand of sports equipment and learn the art of spin bowling.

“Setting up a restaurant has been a part of my plans for years; hence Bhajji Da Dhaba would be the best fit for my first licensing deal. I’m also eager to launch my first signature product in a few months and look forward to develop additional sports equipment and academies in the coming years,” said Singh in a statement.

Of Fords and Pepsis

Pepsi merchandise on display.

The US-based Ford Motor Company, which introduced a range of merchandise in apparel, toys and auto accessories, is also looking to capitalise on its brand name.

“The growth in organised retail is a sure-shot platform for us to hawk a range of products in India. Ford’s global licensing programme has already witnessed major success in global markets and we want to replicate it in India. Our range of products will be out in the market by the last quarter of the current fiscal,” explained Mark W. Bentley, Ford Global Brand Licensing Manager, said.

Asked about revenue projections at the launch of the merchandise, Bentley said it was too early to estimate. Globally, Ford’s licensing programme last year generated over $1.5 billion in retail sales with over 350 licences. “India, China and South America are the next big markets with potential for licensing of our brand,” he added.

The company is also looking to leverage on Ford dealers to retail the lifestyle merchandise. It will license Ford’s Blue Oval logo, besides its subsidiary Mustang and Ford Truck’s ‘Build Ford Tough’ logo.

Bentley said the company will select partners on the basis of good manufacturing practices. “We are very clear we will not have manufacturers who employ children and cause environmental harm. We will be very rigorous and if it doesn’t reflect positively on our brand, we will not undertake it.”

Beverage major Pepsi too is eyeing India for its merchandised business. Its licensing agency, Bradford Licensing LLC, will be working with manufacturers and retailers to create merchandise that are genuine extensions of the PepsiCo brand.

PepsiCo draws a revenue of $400 million in retail from its merchandise business globally. “We estimate this to touch $568 million by 2010. The emergence of organised retail in India has set the pace for new collaborations,” Sally Barnes, who is heading the Pepsi Licence programme in India, said.

“Pepsi’s brand licensing programme in India will further cultivate brand loyalty. It is already a roaring success in markets such as the UK, France, Germany, Japan and China and is seen as an emerging fashion brand,” Barnes said, adding the licensing programme in India will consist of attracting manufacturers, merchandisers, retailers to design and produce new Pepsi, 7UP and Mountain Dew-branded apparel, footwear, accessories, games, home furnishing and even bicycles.

“We are also evaluating the possibility of a standalone store in India. Parleys are also being held with various retailers to set up shop-in-shops,” she added.

On its revenue target, Barnes said, “In the next three-six months, we are looking at expanding our presence. It is difficult to put a number to the revenue, but we anticipate it to be millions of dollars over the next couple of years.”

Licensing’s time has indeed come.

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