Aditya Birla Fashion & Retail will take over Reebok’s Indian operations

Authentic Brands Group (ABG) and Aditya Birla Fashion and Retail (ABFRL) have announced a long-term licencing arrangement to distribute and sell Reebok products in India and other ASEAN (Southeast Asian) nations. ABFRL’s entry into the sports and activewear area, one of the fastest-growing in the fashion and apparel industry, is marked by this agreement.

“Over the last several years, ABFRL has expanded its portfolio into a powerhouse of brands across all key fashion and lifestyle areas, and this transaction marks a critical milestone in that journey.” The addition of Reebok, a well-known worldwide sports and sportswear brand, would “cover a significant gap in ABFRL’s portfolio,” according to a news release.

The wager on sportswear

ABFRL, which is known for lifestyle and formal wear brands such as Allen Solly, Louis Philippe, Peter England, Pantaloons, and VanHeusen, has recently been on an acquisition binge, acquiring a number of brands across several fashion segments. The company has showed a particular interest in expanding its ethnic wear portfolio, and has purchased significant designer names. It bought a 51 percent share in Sabyasachi, a bridal couture brand founded by Kolkata-based designer Sabyasachi Mukherjee, in January and teamed with Tarun Tahiliani in February, purchasing a 33 percent investment in his men’s ethnic wear label house. Finesse, Shantanu & Nikhil’s fashion line, was also acquired by the retail behemoth in 2019.

Reebok, on the other hand, marks the company’s entry into the sports and active wear market.

“ABFRL is a leader in the fashion and apparel area, with some well-known brands, but men’s formal wear has been their staple so far.” “However, the company has recognised the market transition from formals to casuals and has made a move in that direction,” said Ankur Bisen, senior partner and head (consumer, food, and retail) at Techopak Advisors.

ABFRL, according to Bisen, has a clear goal of maintaining its position as the leading apparel retailer, and its strategy supports that goal.

The trend toward athleisure and casualisation has fueled growth in the sports and sportswear market in recent years.

According to ABFRL, the segment is expected to increase at a 14 percent annual rate to $13 billion by FY24. According to industry estimates, since the outbreak of the pandemic, the sports and activewear segment has been an outlier in the apparel retail category, growing 15-18 percent while demand for other categories (in apparel) has fallen.

For a piece of the athleisure, activewear pie, ABFRL will compete with athletic brands like Puma, ASICS, Nike, lifestyle brands like H&M, Levi’s, Zivame, and private labels from e-commerce giants like Dressberry and HRX.

A calculated move

“As Indians become more active, athletic, and health-conscious, their consumption of garments and accessories is likely to increasingly evolve in step with these trends, creating a potential to establish iconic brands of worldwide repute,” said Ashish Dikshit, general director of ABFRL.

“Over the last two decades, Reebok has created a very strong presence in the Indian market as one of the leading brands in the sporting goods business. We want to accelerate Reebok’s business in India in collaboration with ABG, combining its global appeal and relevance among Indian young. “This deal boosts ABFRL’s portfolio and expands our ability to engage with consumers across a wide range of demand areas,” he added.

To drive a cohesive brand voice and vision, ABFRL will collaborate with Reebok Design Group (RDG), a newly-established global brand hub based in Boston, on all product design, development, innovation, and creative direction. The ownership of the Reebok brand will be transferred from Adidas to ABG in the first quarter of 2022.

Reebok has had a lot of ownership transfers around the world. Adidas bought the brand in 2006 to compete with Nike, but it was sold to Authentic Brands Group in August of this year due to its sluggish performance over the years.

In India, Reebok posted a 26 percent fall in net revenue for FY21 at Rs 321 crore as compared to the FY20, according to business intelligence firm Tofler. The company further reported a net profit of Rs 4.9 crore during the fiscal, a 93 percent decrease from the last financial year. The company’s total expenses for fiscal 2021 were reported as Rs 315 crore, said Tofler.

Authentic Brands Group (ABG) is a brand development, marketing, and entertainment company, which owns a portfolio of global media, entertainment, and lifestyle brands such as Nautica, Forever 21, Aeropostale, Van Heusen, Arrow etc.