Rishabh Singla and Pranav Anand, managing partners at LicenseWorks, chat with Mukul Yudhveer Singh, shedding light on the global brand licensing industry, with a focus on electronic products. The duo has successfully brought global brands like Black & Decker, Thomson and Blaupunkt to India through licensing partnerships with Indian entrepreneurs.
Singla, highlighting how brand licensing works in the consumer electronics industry, says, “In the brand licensing business, typically, the owners of a brand appoint only one partner for a particular line of business in a country, and both partners commit to this with a long-term intent. The better the brand does, the better the licensee does, and the better off we are. So, everybody wins in the same way, or they lose on the same scale. It’s a very nice business model.”
Anand adds, “What happens in a brand licensing partnership is that since you are partnering with a powerful brand, you get immediate traction and are able to scale up your business at a much faster pace.
EB: How does LicenseWorks operate in the field of consumer electronics?
LicenseWorks is a brand licensing agency that facilitates partnerships between internationally recognised brands and Indian entrepreneurs, who are looking to scale up their businesses. We enable these partnerships and manage the business in terms of overseeing ongoing activities in the Indian market, on behalf of the brand owners.
One of the verticals that we operate in is electronics and appliances. We are working with a lot of brands in this space, helping them to find the right partners in India and to manage the business on the ground, such as overseeing their local offices in India.
EB: So how many consumer electronics brands have you actually brought to India through the brand licensing route?
Recently, we helped Thomson relaunch television sets in India and now we have helped the company expand into audio products as well. It is now also exploring opportunities in some other related categories. Similarly, we have helped Blaupunkt launch audio products and television sets in India. Black and Decker is another client, and we have helped the firm launch its entire range of small domestic appliances in India. We are now in discussions to launch its smart home solutions as well. These are some of the more recent examples.
EB: If somebody from the consumer electronics industry is interested in reaching out to you to become a licensee for a global consumer electronics brand, what would the procedure be?
We keep getting enquiries from companies that are already active in the consumer electronics business. They might have their own brand, run a large distribution business or a retail chain and want to launch their own brand under a licence.
So, depending on their needs, the profile of the company, their strengths and based on what categories we believe will be best for them for such a collaboration, we work with them to identify the best brands that might fit their requirements. This is how we facilitate such partnerships.
EB: How different is reaching out to brands as compared to reaching out to individuals?
We have been in the licensing business in the Indian market for almost ten years. So, we have a fairly good understanding of the market and know who the key players are. We know who to reach out to in a particular category, and what the strengths and weaknesses of each player are. We have very good relationships and networks in the Indian market.
As far as reaching out to the brands is concerned, the brand licensing industry is fairly large globally, but we’ve been in this business for a long time and we know people working with most of the leading international brands. We reach out to our contacts as and when a suitable opportunity comes along and similarly, these brands reach out to us when they are looking to expand their business in India.
EB: How big do you think the brand licensing industry is, within just the Indian consumer electronics domain?
We believe the brand licensing business in the Indian consumer electronics segment helps generate a revenue of around US$ 1 billion annually.
EB: Are you working on any new ACE brands that we may see in India very soon?
We are in discussions with a couple of big international brands to help them expand their business in India. We should be able to share some exciting developments very soon.
EB: Typically, when there’s a contract signed between a brand and an individual or a company, how long is it valid for? And what are the general terms and conditions?
Each contract is customised to the situation but, typically, the terms of the agreement could be anything from three to ten years. And these contracts are also renewable, in most cases – and that’s what usually happens if everything goes well. We have seen brand licensing partnerships that have been going on for as long as 20-25 years! It all depends on the way the business is executed. If things are running smoothly, the contracts keep on getting renewed every three to five years, and can go on for a very long time.
Once you join hands through a brand licensing partnership, then you are in it for the long term. It’s quite different from a distribution partnership, where we have seen brands change their partners every few years. Or when the business grows very big, they split it between three to four partners or more. In the corporate brand licensing business, typically, a brand appoints only one partner for a line of business for the entire country, and it commits to
the partnership with a long-term intent.
EB: To somebody looking to foray into the consumer electronics business, what would you suggest – to create a new brand identity or get the licence of an established one?
Building new brands requires a significant amount of time and investment, and may not always be successful. Brand licensing is a very effective strategy to enter a new market segment using the power of partnering with a strong brand. It enables you to expand your distribution network at a much faster pace, as retailers are keener on selling a known brand which has consumer pull.
Brand licensing also enables you to achieve higher profitability through better pricing, and it helps you ramp up sales and market share much more quickly. In a cluttered and competitive market like India, brand licensing can be a far more effective way to differentiate your products, and enable more consumers to discover and experience them.
EB: Thomson TVs are retailed by SPPL and Thomson audio products will now be retailed by Envent; so what will be the service approach?
The communication to consumers is very clear for each of the product lines, and they know what route to take in case they experience any product issues. The brand team ensures the service processes are well structured so that the end consumer has a delightful brand experience.
EB: How are multiple brand licences handled by the same partner? What are the advantages of doing so?
Several companies run multiple brands in the same product category, whether these are owned brands or licensed ones. Typically, they design their product portfolio strategy in such a way that different brands are positioned distinctly in terms of target consumer, pricing, communication strategy and channel strategy. For instance, a company may operate two brands of television sets with different feature packages at different price points targeted at two distinct consumer segments. This brand portfolio strategy enables companies to capture a larger pie of their target product category, enhance their clout among channel partners and build a sustainable, dominant position in the market.
Brand licensing can be a very effective tool for companies to build a brand portfolio quickly without large investments in brand building. These new brands, acquired through licensing, complement the existing brands in the portfolio (instead of cannibalising them) and represent significant revenue opportunities.
EB: What do you look for in a company that wants to become the local licensee of a global brand?
Typically, we look for partners who, first, can develop a strong, high-quality product range consistent with the brand image and positioning. Second, the partner must have strong distribution and service networks. And third, that partner should have the acumen to grow and manage a world-class brand.
So, typically, product development, distribution and marketing capabilities are the three main things that we look for in a licensee and then there are various other factors that are a part of our due diligence.
EB: And how important are investments?
A partner must be in sound financial health and should have adequate capital to be able to invest in the new business under the terms of the brand licence. This is a hygiene requirement. The investments will be commensurate with the ambitions and the scale that both parties desire to achieve.