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Worldwide

Asia Drives Global Licensed Sales Up 2.4%

Global retail sales of licensed merchandise reached $171 billion in 2017, according to TLL’s Annual Licensing Business Survey.

Licensed sales grew 2.4% from 2016, a slightly slower rate of growth than the 2.7% observed in 2016 and 2015. Overall, growth was tempered with 59% of the top 50 countries whose licensed retail sales activity TLL measures observing slower licensed growth rates compared to GDP.


Leading the world in licensed retail sales are the U.S., Japan, Canada, the U.K., and mainland China. The top 5 ranking remains unchanged from 2016; indeed, the top 15 slots remain unchanged save for India displacing Belgium for the No. 14 slot.

The top 5 countries ranked by licensed retail sales contribute to 78.2% of those sales worldwide. But their rate of growth is slowing compared to previous years—in 2017, the top 5 countries grew 2.4% (matching the overall growth rate) compared to 3% in 2016 (2.9% overall growth) and 2.9% in 2015 (2.7% overall growth).


Retail Sales of Licensed Merchandise, Worldwide, by Territory, 2016–2017
Note: Numbers may not add up exactly due to rounding.
(Figures in Millions)
TerritoryRetail Sales, 2017Retail Sales, 2016Change, 2016–2017Market Share, 2017
U.S./Canada$109,010$106,5382.3%53.2%
Europe$33,596$32,8812.2%16.4%
Western Europe$33,033$32,3352.2%16.1%
Central & Eastern Europe$563$5463.1%0.3%
Asia$21,032$20,3353.4%10.3%
Australia/New Zealand$2,330$2,3190.4%1.1%
Latin America$4,149$4,0751.8%2.0%
Middle East & Africa$970$9581.2%0.5%
Other$391$3890.5%0.2%
TOTAL$205,074$200,3772.3%100.0%

Asia

The biggest driver of licensed growth, by territory, was Asia. The region added nearly $700 million worth of licensed retail sales since 2016, growing at a steady 3.4% clip.

Japan is the largest Asian economy for licensed retail sales with just over $10 billion; in 2017, it rebounded from years of flat or negative growth with a tepid 0.3% boost in licensed retail sales. While a positive sign, it remains to be seen if the consumer market will continue to ramp up as the economy continues to sting from inflation and low wage increases. In part because it is a particularly advanced economy for licensed goods, there is a healthy market for virtually all property types and product categories, and Japan firmly remains a favorite first destination for brands seeking to break into the Asian market.

China, on the other hand, grew 8% in 2017 after a 7% boost in 2016 and 6% growth in 2015. Although the country is struggling to crack a significant milestone in its move away from an industrial economy marked by low domestic consumption—household consumption makes up 39.1% of China’s GDP, compared to 69.1% in the U.S.—retail sales continue to grow approximately 10% every year. Certain brands have done extraordinarily well in capturing a rising middle class through mediums like digital entertainment and social commerce. Entertainment/character, fashion, and corporate/trademark brands are the most established property types on the mainland, but there is opportunity for growth for other brands like sports and art.

India saw disappointing 6.5% growth in 2017 after a 9.5% jump in 2016 and 9.2% in 2015. While there is significant demand among consumers for branded, quality goods, there is not enough infrastructure in the country to support a robust consumer market. Outside of entertainment/character-based licensing for children’s goods, there is no sustained “licensing business” in the country that you might find in the rest of the top 15 countries by licensed retail sales. Bright spots include sports, housewares, and fashion brands. India is more or less in the position that China was in three years ago: we are just waiting for it to “break out.”

U.S./Canada

The U.S./Canada has been growing for seven straight years, but this year, it was just a little slower than usual at 2.3% growth. This marks the first year in a while that the U.S./Canada under-performed worldwide average growth; in 2016, the region grew 3.2% (compared to 2.7% worldwide) and in 2015, it grew 3.4% (compared to 2.7%, again). Refer to TLL’s previous reporting on the territory’s licensed retail sales broken out by property type and product category for more information.

The American market for licensed goods grew just 2.2% in 2017, an even match with GDP. Meanwhile, Canadian licensed retail sales grew a whopping 3.9% in 2017 after tepid 0.6% growth in 2016 and a -1.4% drop in 2015. Statistics Canada reported a stunning 6.7% boost in overall retail sales, a solid comeback for the economy following the 2008 recession.

Europe

European countries as a whole saw 2.2% growth in licensed retail sales in 2017, just below overall EU retail trade growth of 2.4% (excluding motor vehicles, motorcycles, and fuel).

Thanks in part to Brexit, the U.K. business for licensed goods was sluggish at 1.9% growth in 2017. The second- and third-largest countries by licensed sales, France (3.5%) and Germany (2.7%), saw an increase in growth compared to flatter levels last year.

Most of the rest of Western Europe recorded surprisingly strong growth with 37% of countries tracked outperforming both the worldwide and European average growth rate. As a whole, the region fared particularly well compared to years prior—after three years of dropping sales, Western Europe “recovered” with 0.5% growth in 2014, 1.5% growth in 2015, and 1.9% growth in 2016.

Portugal (4%), Ireland/Eire (3.8%), France (3.5%), and the Netherlands (also 3.5%) recorded the highest growth rates in Western Europe. After years of little to no growth, the economies of Turkey (2.6%), Italy (1%), and Greece (0.2%) are showing hints of bouncing back with buoyed licensed sales.

The tiny CEE region slightly outperformed the combined growth rate of the Western European countries (3.1% compared to 2.2% growth) in 2017, following years of falling licensed retail sales. Russian retail sales rebounded with moderate 1.4% growth in 2o17 followed by a -5.6% dip in 2016 and -18.9% plunge in 2015. The business lost over 20% in value since 2014, but is coming back thanks in part to a strong domestic market.

Other CEE countries, which make up 62% of sales in the region, saw observed strong growth. These include Poland (3.6%), the Czech Republic (4.5%), and Hungary (4.1%).

Latin America

The licensing picture in Latin America was a mixed, and sometimes troubled, troubled bag. Countries like Mexico (2.2%) and Chile (2.6%) saw moderately healthy growth, while others like Argentina dipped -1% compared to 2016.

There was, however, some good news for the largest LATAM economy for licensed sales. After falling -3.1% in 2016 and -3.8% in 2015, Brazil came back with a 1.9% increase in licensed sales to reach $2.1 billion. Overall retail sales in the country were estimates to grow over 5% in 2017.

Most licensed spend in the region is associated with foreign entertainment and fashion brands, although domestic properties in entertainment and sports tend to do well.

Middle East & Africa

Licensed retail sales in the Middle/East Africa grew 1.8% in 2017 after dipping -0.2% in 2016 and -0.9% in 2015.

Saudi Arabia is the largest Middle Eastern country we track based on licensed sales, and despite a decline in the oil sector, spending power remained up thanks to government expenditures. Spending based on entertainment-based brands is expected to increase after Saudi Arabia opened its first movie theater in 35 years in 2018.

The UAE, Qatar, and Egypt all outperformed the worldwide growth rate of 2.4% in 2017.

So why the drop overall? South Africa, which dipped -0.3% after strong growth of 3.2% in 2016 and 3.4% in 2015. While investors continue to remain optimistic about the country’s economic prospects, there are no clear signs of significant rebounds in growth.

Australia/New Zealand

Australia/New Zealand licensed retail sales grew just 4.3% in five years, one of the slowest growth rates for the territories we track and behind only Latin America (4% growth from 2012-2017) and Central & Eastern Europe (-7.1%).

For the second year in a row, Australia observed 0.3% growth in licensed sales after a -1.0% decline in 2015. The country’s greatest bottleneck to growth is its stable economy, low unemployment, and slowing inflation. Overall retail sales grew just 2.1% in 2017.

Island neighbor New Zealand continued to fare well (1.5% growth in 2017 versus 1.9% in 2016) but is beginning to contract as inflation and stagnating wages are beginning to dampen consumer spending.

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