With 26% of the population under the age of 15 years, it’s no surprise that Indian toy industry is accelerating. Valued at US$ 1.5 Billion in 2018, registering a CAGR of 15.9% during the year 2011-2018. According to market research firm IMARC, the market is further estimated to cross US$ 3.3 Billion by 2024, growing at a CAGR of 13.3% during 2019-2024.
The estimated Rs 2-lakh-crore global toy market is dominated by China (from a manufacturing POV, America is biggest from consumption POV), which sells close to Rs 1.4 lakh crore worth of products annually. In India, the toy market is dominated by unbranded Chinese products with 90% of the market being unorganised. These Chinese toys do not comply with channel, quality or safety norms and thus turn out to be much cheaper for the Indian consumer, whose purchase decision is heavily influenced by price.
While this is a challenge, aware and indulgent parents with higher than average disposable incomes do opt for the 10% organised retail chains that offer quality products at a higher price point. The market for branded toys is growing with key players like Hamleys standing strong with 127 stores and the US based retailer, Toys R Us growing steadily with 12 stores currently operational across the country. Both the formats have aggressive growth plans for 2020 and beyond. In smaller towns, where access to these stores is limited, online e-commerce players like Amazon and Flipkart are helping bridge the gap through door-step delivery.
From traditional toys like wooden carts, whistles, unbranded plush toys and dolls, the Indian consumer is now transitioning to a new range of toys, heavily influenced by Social media and global Pop culture. The demand for international brands is on the rise and the Internationally licensed toy market in India is expected to grow exponentially. Even YouTube trends like ASMR, Slime, DIY and more are being interestingly adapted into toys. Due to growing demand, toy manufactures are now focusing on producing licensed toys around globally popular shows like Paw Patrol, Peppa Pig, Masha and the Bear etc. Disney’s product lines from the Marvel cinematic universe and popular animated movies like Frozen drive a considerable portion of sales. It’s not uncommon to see small mom and pop stores selling Chinese replicas of the Disney/ Marvel or DC line of toys due to their ever-increasing demand.
However, making licensed, high quality international brands available in India continues to be a challenge due to tough Import norms and the recent increase in import duty. As a result, small businesses, who wish to legitimately license and sell these products suffer, while low quality, low cost Chinese toys continue to flood the market. To stem this tide, it is necessary that the government takes steps to enforce stricter laws against counterfeit toys and enforce a ban on low quality Chinese products that are a safety hazard.
How WinMagic Toys has changed the landscape of toys distribution in India!
India traditionally was a risk averse market, and most toy distributors focussed on traditional categories like dolls, vehicles and guns. WinMagic toys created the disruption in the toy industry by launching new trendy categories and global players into the market. Fisher-Price and Thomas was given a run for their money, with WinMagic distributed Spin Master – Paw Patrol, which is today the number 1 pre-school licensed toy property at retail. Paw Patrol is a TV series that runs on Nick Junior, a content co-owned by Viacom and Canada’s Spin Master Entertainment (SME). Spin Master Toys that is a top 5 toy listed company globally, and a sister concern of SME owns the global rights to Paw Patrol toys. Through its distribution partnership with Spin Master, WinMagic brought into the country many trendy toy lines, like Hatchimals for example – that became toy retailer Hamleys’ number 1 selling toy when it was launched in 2016, while the inventory lasted. Hatchimals is an egg-shaped tech toy, that has a unique hatching feature, where with a kid’s love & care an electronic pet hatches itself out of an egg and there are various play possibilities at pre-hatching, during-hatching and post-hatching stages. Hatchimals has since then developed into a veritable array of collectible and tech toys that have become one of the best-selling toy ranges in the girls’ isle. Through its partnership with Spin Master, WinMagic is set to launch toy lines like Bakugan, a massive hit from a decade ago that is being relaunched by Spin Master globally, Batman & DC action figure lines based on the popular entertainment franchises and Monster Jam Monster vehicles lines based on World’s Number 1 Monster Tuck racing show.
WinMagic dominates the pre-school retail aisle with Paw Patrol, PJ Masks and Peppa Pig toy lines that are the top 3 licensed content and toy properties globally as well as in India. Similarly the fastest growing toy company of India has also transformed the girls aisle of a toy store with brands like L.O.L Surprise! Dolls that was brought into India by WinMagic toys. L.O.L has become the world’s number 1 girls toy brand and is the number 1 collectible girls doll brand in India till WinMagic last distributed in 2019! WinMagic has created the category of girls collectibles in India literally from scratch, Shopkins, from Moose Toys of Australia, was its entry into the girls collectibles aisle which took the industry by pleasant surprise in 2015 and kickstarted the trend of girls collectibles in India, like in global markets a few years ago. Along with Hatchimals, L.O.L, Hairdorables from Just Play, Bananas and Twisty Petz apart from others, WinMagic created & leads in the girl’s collectibles category in the Indian toy industry.
In under 3 years, WinMagic has grown its portfolio to 40 plus brands, and plays in 84% of addressable toys & games categories at retail. Year 2020 for WinMagic is the year of boys, with the likes of Batman, DC, Monster Jam and Bakugan from Spin Master slated to launch in the first half, and brands like Infinity Nado, that was recently acquired & re-launched, and Treasure X the boys collectible brand launched in first half of 2019, going steady at retail. WinMagic toys today is India’s largest independent distributor in the toy speciality channel, competing with a few of the legacy players, like Mattel, Hasbro and Funskool who have had their presence in India since more than 30 years. In 2019 WinMagic will end up selling more than 100 crore worth of toys from retail, which marks the fastest growth by any player in the industry over the years!
Mukesh Jagwani, CEO and Managing Director WinMagic said, this is just the start of the game and WinMagic has already made the next move in its growth story to create & market its owned portfolio of brands, not just in India but globally! Although there is no end to the game, WinMagic sees its final play to be a company with two separate and equally thriving divisions, third party distribution and owned portfolio marketed globally, with a host of owned brands being made in India!
Views on recent moves by government of India
Government of India recently announced a stricter quality testing for imported toys as well as is considering imposing further curbs, making toys a part of the restricted list, as well as looking to increasing the import duty further by 60%, over the 100% that was already increased in the 2018 budget.
While we welcome the move on stricter quality control as it would only mean that the unbranded cheaper toys would find it difficult to make its way into the market and branded safer toys will have a larger play. This move could put India at part with the larger toy consuming markets like US, UK, Canada and Australia along with other top European countries, where most of the toys are branded and safe.
However, with import duty increase, a measure that the government of India expects to help in local manufacturing of toys, appears like a move coming from a lack of understanding of the industry dynamics. To promote local manufacturing, incentivising manufacturing would be a much bigger invitation for international toy manufactures to set up shop in India and export to worldwide markets, rather than making it difficult to import. Simply because, most of the brands and entertainment properties that the toys are based on, are owned outside of India, and at least a speciality toy store in the organised sector like Hamleys or Toys “R” Us will continue to be merchandised over 90% with toys into the country, as India is one of the smallest consumption markets for branded toys globally and it would only make commercial sense for big global toy companies to set up a manufacturing facility for export rather than for domestic consumption. Increasing import duties could only make branded safe toys more expensive and turning consumers to cheaper Indian made toys which aren’t of as high quality as international branded toys as of today. This measure means that the small Indian toy traders and retailers, apart from Indian corporates like Reliance who have significant play in toys will be severely impacted. A move that would not go down well with the traders’ associations that form a large voting base for the government. In any case with the current 20% duty, freight and tax rates, the branded toys are priced at least 2X, if not more, as compared to locally made toys for the same box size. So, by no means a threat to local manufacturing.