Not many new brands for HM International

As newer properties are premiering in India, a host of licensees want to expand their existing portfolio. But, HM International is in fact dropping some of the properties as it believes numbers of properties in portfolio is not the criteria of growth, but creates space crunch. Alok Choraria, the man behind making HM International one of the leading licensees in Back-to-school category, talks about why they are not open to many properties and the existing bottlenecks in licensing industry. Excerpts: Talk to us about your journey with brand licensing. Experience with brand licensing has been very fruitful for us. And since we have been in this business of back-to-school products from last 15 years, one can imagine the response, which has compelled us to continue with this model. We have quite a huge portfolio of Disney, Marvel, Nickelodeon and Cartoon Network spread across products. When we started there was no such awareness of wave of licensing in India. We are in import trade which gives us a lot of international exposure. It was then we realised the immense potential brand licensing holds as a retail strategy. We started licensing with Disney first and then added other brands to our portfolio. How has been the growth in this category? We are growing at quite a good rate, though five years ago; growth rate was quite high as compared to present times as then we are the only players. The market is stagnant at the moment. However, this category is promising; credits to increased competition and consumer exposure. 15 years ago, modern retail was very niche and we used to operate in wholesale market. Back then, retailers weren’t really aware of the licensed products. But right now the organized retail format has benefitted our business as people dealing in here are very much aware of brands and official licensed merchandise. What is your go-to strategy for distribution? For us, modern retail is the preferred retail channel, because of the presence of fakes and counterfeits in the wholesale or grey market. Moreover at organized retail, a genuine licensee can be assured of getting better pricing. What kind of support do licensors offer? Our 90 per cent business is generated from brands under Disney. Retail Connect is one of the best platforms wherein all the retailers can see entire range of Disney. They have taken it to various cities including some Tier II and Tier III cities as well like Ludhiana, Bangalore, Hyderabad etc. from a licensee’s perspective; such initiatives help manufacturers like us to connect with the retailers, thereby increasing our retail touch-points. So far no other brand has taken such initiatives. What other properties are you looking to add to your existing portfolio? I think adding properties to portfolio is no where proportional to growth. Overloading properties will only create space crunch that’s why we are in no mood to add many properties. But yes, we may think of dropping some of the brands. We are focusing more on Disney. Sometimes there are up and down with characters also. Say, five years ago, Ben 10 was a huge hit among kids, but now the graph has declined. Thus, there is no point continuing with it. What are the challenges while operating and do licensors support to address them? The biggest challenge is that there is a lack of awareness for licensing in India, but things are improving gradually. 5 years ago, Disney had to take legal approval from their US office to carry out any raids, but now when they have their legal team in India, the mechanism to curb parallel market has been strengthen. Disney has roped in some mechanism to track and curb counterfeits, but not many licensors take such initiatives. We ourselves can’t do much because we have no such authority to carry out raids etc. What has been the most promising product range so far? Pencil box, lunch box, water bottle and pencil pouches are the primary products that every kid requires followed by eras or, pencil and other stationary. Most of the categories are seasonal and pencil boxes are the most selling SKUs. Disney Princess and Mickey Mouse are the characters which are in demand throughout the year, closely followed by Spiderman and Avengers. What are your expansion plans? This year we are launching Disney Junior range inclusing three characters – Sophia, Jake and the Neverland Pirates and Mickey Junior. This would be a niche range with superior quality and great design catering to kindergarten kids. Also we are going to launch a complete Star Wars range by May 2016.