The Federation of Sports and Play Associations (FSPA) held an India Day at its head office in Stoneleigh Park last month, to mark the release of an in-depth 300-page report on the Indian sports market compiled by EDM Publications, the publisher of Sporting Goods Intelligence Europe, as part of its strategy to increase coverage of fast-growing emerging markets.

Attended by members of the federation, operating in categories from cricket to football and golf, the meeting highlighted the attractions as well as the pitfalls of a market that has been drawing increasing interest in the last months.

Bineet Desai, trade adviser at U.K. Trade & Investment, which provides support to British companies investing abroad, summed up the economic and business developments of the last years. Among the most interesting statistics is a forecast that overall consumption should grow by about 5 to 10 percent each year, on the back of sustained economic growth and more scope for discretionary spending. With regard to investments by small and medium-sized companies, Desai recommended the establishment of joint ventures, which are relatively efficient and cost-effective in India.

Barbara Smit, who led the research into the Indian market on behalf of EDM Publications, outlined its findings about the dynamics of this fast-growing but intricate market. Counting only the apparel and footwear sold by foreign sports brands in India, mostly through mono-brand stores, the total value of the business at retail is estimated at about €550 million. The equipment market can be estimated at an additional €380 million. Adding cheap Indian sneakers and unbranded products, the total value of the market at retail could be estimated at about €1,650 million, according to our findings. Details are given in the report about foreign trade, company results and various product categories.

The research found that sports participation was still very low, with less than 1.5 percent of the population regularly practicing sports as a form of leisure. However, a consumer survey conducted as part of the research for the FSPA showed that this proportion was much higher among urban Indian youth – with more than 25 percent of youth in Bangalore and Hyderabad pointing to sports as their favorite form of leisure. This is encouraging, since these urban young adults are the primary targets of many consumer brands, among the rising urban middle class.

As in most other sectors, sports retailing remains highly dispersed in India. Apart from the hundreds of mono-brand stores opened by leading international brands, consumers are mostly reached through thousands of independent stores – with little space and even less cash. However, as reported in our previous issue, the market is getting more organized, with the rise of Planet Sports and several interesting regional retailers. The FSPA report provides in-depth information on the supply chain, and the best ways to operate in this complex and highly price-sensitive market, requiring significant commitment and adjustment.

A practical example of successful investment in the Indian sports market was provided by Richard Lowy, owner and sales director of the Unicorn group. It started off with darts sold under that brand but then acquired the Gunn & Moore cricket brand as well as the Powerglide billiards brand. Unicorn has a fully owned manufacturing unit in China, along with a factory making cricket bats in Nottingham.

The group's brands have long been distributed in global markets. Yet when Lowy first traveled to India in 2004, he was surprised to find that the Gunn & Moore brand was already sold widely in the cricket-mad country – as counterfeits. He started taking orders from independent retailers who appeared more reliable than others, but sales were hampered by the price of the products.

Lowy therefore decided to enter a licensing agreement w ith Delux, a manufacturer based in Punjab, who had just started moving into distribution of international brands, such as Head, Donic, Ulhsport and more. This enabled the Unicorn group to eschew import duties and to offer products at much lower prices, adjusted to the Indian market.

As witnessed by our researchers, the group's brands are very strongly distributed in India, through reliable independent sports retailers and many larger accounts, from HyperCity supermarkets to Reliance and Décathlon (which has only one cash-and-carry store in Bangalore). As Lowy pointed out, another reason behind the success is that the owner himself regularly travels to India and met about 50 retailers in person, which has been hugely appreciated and enabled him to keep a close eye on the distribution of the group's brands. A major advantage of the tie-up with Delux, and the production of relatively cheap equipment, is that the counterfeits have almost disappeared.

Although the Unicorn group has done very well in India, Lowy also pointed to some of the unexpected issues that businesspeople are confronted with in the country. While anybody who ever set foot in India will know about the shortcomings of its infrastructure, he did not realize that mechanical handling was scarcely available in India, meaning that packages had to be moved around by hand. On journeys of thousands of kilometers, involving several changes of transporters and other handling, pool tables weighing nearly 200 kg had little chance of arriving in a single piece. The packaging of the products had to be entirely adjusted for India.

Most positively, however, Lowy pointed out that trading conditions and the level of demand were improving, in line with the findings of the FSPA report. Import duties have declined substantially since the Unicorn group started doing business in India, while consumer demand has upgraded. The cheapest products sold by Delux at the start of the licensing agreement no longer generate the strongest demand, as many consumers have moved to products of higher quality.