Mumbai: The brand licensing industry, now in its "nascent stage" in India, is set to grow manifold in the foreseeable future with rising brand consciousness among consumers and higher penetration of modern retail and e-commerce, industry experts said.
"The owners of intellectual properties (IPs), including major cartoon, entertainment and corporate brands, are keen to enter the Indian markets. Everybody wants to tap the 1.3 billion customer-base that the country has, especially when awareness of brands among consumers in 900 cities is very high," License India Chairman Gaurav Marya told IANS on the sidelines of the recent India Licensing Expo 2017 held here.
He said international agencies that manage these assets (brands) are also looking at India as the "potential market". The country's potential licensees, who were "earlier not growing up enough to hire international brands" to push their sales, are now realising the need of brand power for improving their bottom lines.
"According to the latest Global Licensing Industry Survey, 2017, India currently ranks 20 with $1,396 million retail sale of licensed merchandise in 2016. The country's rank in the global scenario is expected to improve as it has huge opportunity and there is global optimism for India," Maura Regan, Executive President of the US-based International Licensing Industry Merchandisers' Association (LIMA), told IANS on the sidelines of the expo.
She said India is expected, in the next 5 to 7 years, to be at the level where China is today in terms of retail sales of licensed merchandise and generating royalties.
According to LIMA's Global Licensing Industry Survey, 2017, the market size is $262.9 billion with a 4.4 per cent growth over the previous year.
Brand licensing is basically renting the brand to an industry manufacturer or retailer. It is a legal process where a brand owner allows other businesses to use the brand for promoting their own products in the market.
In fact, foreign licensors have been seeing India as an advantageous destination over China because of its "positive cost benefit".
John Erlandson, EVP Business Development and Co-Chief Business Officer, ABG (Authentic Brands Group), which owns and manages a portfolio of brands including "Elvis Presley", "Muhammad Ali", "Marilyn Monroe", "Michael Jackson" (managed brand) and so on, told IANS: "India has a huge English-speaking population and they can go online and explain the brand story globally while many of the Chinese don't have that skill-set. Thus marketing of the brands can be done much more rapidly."
"Along with the Goods and Services Tax roll-out, organised retail and e-commerce are going to be the major enablers for the brand licensing industry," Marya noted.
According to industry estimates, close to 95 per cent of the retail in India is still dominated by traditional and unorganised retailers, but organised retail, which is growing exponentially, is estimated to reach $220 billion by 2023.
"This is the space where international brands need to mark their presence. As many as 32 foreign brands forayed online and 22 global brands launched brick and mortar stores in 2016. Most of them are using brand licensing as a business model," Marya said, adding that "about 460 foreign brands confirmed their entry in the consumer space either through licensing or franchise model".
The experts said the licensing model in India has been thriving in categories like fashion, media and entertainment, sports and fitness, back-to-school and so on but is yet to pick up in the real estate, fast moving consumer goods (FMCG) and packaged foods sectors.
"The industry is still restricted to metro and major cities and a lot of growth opportunity is there. I foresee at least 15 per cent growth over the next five years as with the popularity of e-commerce, the tier II and III cities would come on the licensing industry map," Viacom 18's EVP and Business Head Saugato Bhowmik told IANS.
However, the flip side is the rampant presence of counterfeit products from unorganised retail segments, where manufacturers or retailers are selling products under the name of popular brands but without giving any royalties to the brand owners, the experts said.
Another challenge is that though home-grown IPs or brands are gaining in popularity in the country, they are "not able" to penetrate "the international markets in a bigger way".
According to Marya, the owners of such home-grown brands were "limited to core functions and had not extended themselves".
Home-grown brands like "Mahatma Gandhi", "Bollywood" and others which have huge brand recall in the international market could do wonders overseas, he added.