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Worldwide

Global Sales of Licensed Goods Reach $163.1 Billion in 2015; Highest Growth in Nearly a Decade

Update: 08/15/2016

Note: The figures for worldwide retail sales by property type and product cateogry have been restated for 2015 and 2014. While total retail sales have not changed, the breakdowns for the art and other property types as well as the food/beverage and other product categories has changed.

Statistically, 2015 was a banner year for licensing with worldwide retail sales topping $163.1 billion, 2.7% better than the previous year’s $158.8 billion, according to The Licensing Letter’s Annual Licensing Business Survey. But the numbers are a bit deceiving. Growth was uneven; and a sluggish fourth quarter reinforced concerns about its long-term sustainability.

In 2015, the rich got richer. Four of the world’s seven richest markets for licensed goods accounted for most of the prosperity by posting growth above the global 2.4% GDP rate, including the U.S. at 3.9%, the U.K. at 3.2%, China at 6.0%, and Germany at 3.6%. Elsewhere around the world, sales were largely flat or down in 2015.The growth that did occur was also concentrated in a couple of sectors, especially entertainment/character which increased a staggering 6.3% rate worldwide. But the good times in entertainment were attributable to the continued dominance of star properties, most of which came from the Disney stable. Meanwhile, only one other property type exceeded the industry-wide 2.7% growth rate: fashion at 3.5%.

Retail Sales of Licensed Merchandise, Worldwide, by Territory, 2014–2015
Note: Numbers may not add up exactly due to rounding.
(Figures in Millions)
Territory Retail Sales, 2015 Retail Sales, 2014 Change, 2014–2015 Market Share, 2015
U.S. and Canada $103,276 $99,873 3.4% 63.3%
Western Europe $31,739 $31,270 1.5% 19.5%
Central and Eastern Europe $552 $598 -7.7% 0.3%
Asia $19,846 $19,412 2.2% 12.2%
Australia and New Zealand $2,308 $2,323 -0.6% 1.4%
Latin America $4,084 $4,120 -0.9% 2.5%
Middle East and Africa $930 $899 3.4% 0.6%
Other $387 $393 -1.5% 0.2%
TOTAL $163,121 $158,888 2.7% 100.0%

U.S./Canada

Licensed sales in the U.S./Canada grew in 2015 for the fifth year in a row to $103.3 billion, up 3.4% from $99.8 billion in 2014. But while the aggregate figures are impressive, the success was confined to one side of the border.

Macro-economic conditions in the U.S. were ideal for retail and the consumption of licensed goods. Cheap gas and falling unemployment increased discretionary income; consumer confidence grew and low interest rates discouraged saving. While the sluggish fourth quarter took some air out of the balloon, the overall result for the year was a $3.6 billion jump in sales from $90.2 billion to $93.8 billion. Mirroring global patterns, the 3.9% increase in U.S. licensed sales was fueled by abnormally high growth in entertainment.

But up north things went south. The same low oil prices that put extra money in the pockets of U.S. consumers cost many Canadians their jobs, especially in the key energy producing regions of Alberta, Ontario and Quebec. After the previous year’s lackluster 0.75% growth, licensed sales in Canada actually declined 1.4% in 2015. Canadians became bargain hunters, spending most of whatever money they had for licensed goods at value chains like Walmart, warehouse clubs like Costco, and fixed-price retailers like Dollarama.

Western Europe

Although growth was only 1.5% ($31.7 billion in total sales), 2015 was Western Europe’s strongest year since 2010. The “recovery,” such as it was, began in 2014 when conditions reversed after three down years in a row by posting modest 0.1% ($20 million) growth. But like last year, two powerhouse markets enjoyed most of the growth in 2015.

The U.K., the world’s fourth biggest licensing market, grew 3.2% for the year (as compared to 3.0% in 2014). “It was the best retail environment in years with consumer confidence reaching a five-year high,” explains one U.K. licensee. “Even though High Street is struggling, the big retailers are relatively healthy, knock on wood.” The same segments that did well in the U.S. also thrived in the U.K., including “A”-list entertainment properties: imports like Star Wars, Frozen and Minions; and homegrown brands like Inspector Gadget, Twirlywoos, Moomins and the newly revived Teletubbies. The strong appeal of entertainment properties also propelled sales of traditional toys and games, especially action figures, plush and building sets.

No country in Western Europe had a better licensing year than Germany. After growing 2.8% in 2014, sales of licensed goods increased 3.6% to just under $5.4 billion in 2015, making Germany the seventh biggest market in the world. Health and wellness-conscious consumers made German stores fertile grounds for licensed food and beverage products. Licensed clothing, home goods, furniture and personal care goods were among the product categories that did particularly well.

Only two other countries in Western Europe grew above 2.0%: Spain, at 2.8%, and tiny Ireland at 2.8%. Everybody else was either flat or down. Of course, compared to the dismal performance of recent years, flat was actually a positive result for much of Western Europe. One prime example: France. After declining 2.9% in 2014, the continent’s second biggest licensing market (and number 5 in the world) managed positive growth of 0.5% in 2015 despite unemployment above 10%. Sadly, the Paris terror attacks in November killed the retail market’s momentum and practically wiped out the gains of spring and summer.

Other markets that fell into the “2015 wasn’t great but at least it wasn’t as bad as last year” category were Italy, which grew 0.4% in 2015 after declining 2.8% in 2014; Spain (28% v. 1.0%); Portugal (1.4% v. 0.1%); and Turkey (0.5% v. -1.5%).

And then there’s Greece. Just four years ago, Greece generated $470 million in sales of licensed goods; in 2015, sales totaled $232 million. In 2015, things went from bad to worse for the debt-strapped Greeks. After threatening to leave the Eurozone, the Greek government reluctantly accepted its creditors’ demands for economic restrictions. The combination of instability and austerity caused drastic cuts in consumer spending. Brands became a luxury few Greeks could afford—unless offered at deep discounts. By the time the year had ended, licensed merchandise sales were down a precipitous 25.6% with prospects for 2016 looking just as bleak.

Central and Eastern Europe

As in 2014, Central and Eastern Europe performed the worst of any territory, falling 7.7% from $598 million to $552 million in 2015. And as in 2014, Russia was the reason why. After 2014’s 10% decline, the Russian market fell another 18.9% to $226 million. War in the Ukraine led to EU and U.S. sanctions, oil prices fell and inflation was above 15%. Consumer confidence and the purchasing power of Russian consumers sank. “The ruble’s decline has been the rough equivalent of a 45% price increase for foreign brands,” explains a Moscow-based licensing consultant. Even the billionaires were staying away from stores. Yet, long-term prospects for licensing in Russia remain bright as foreign investment continues to flow into the retail sector and local brands sprout up. Perhaps the most successful example is Masha and the Bear, which has become a billion-dollar global entertainment property.

Russia’s struggles also hurt licensed sales in neighboring countries tied to the Russian economy, including Finland (note that TLL categorizes Finland as a Scandinavian country and thus part of Western Europe) and former republics Belarus and, of course, Ukraine.

But the licensing news from CEE was not all bad. Many of the territory’s smaller countries did well in 2015, including the Czech Republic, where low inflation, high employment and thriving trade with Germany fueled an economic recovery that transformed 2014’s 2.0% decline into 2015’s 3.1% gain. Licensed sales were also up in Hungary, Poland, Slovakia, and the Baltic states of Estonia, Latvia and Lithuania.

Asia

Concern over the slowdown in Asia was a recurring theme among this year’s Survey respondents and for good reason. The 2.2% growth rate of 2015 was a three-year low and below the global 2.7% average. Asia’s global market share remained 12.2%, the first time in several years that it did not rise.

Asia’s biggest market and the world’s second largest consumer of licensed goods, Japan, remained flat, following 2014’s 0.5% growth with a 0.3% decline in 2015. “‘Abenomics’ [Prime Minister Abe’s stimulus policies designed to improve consumer confidence and boost spending] appear to be working,” notes one local licensing agent. “However, the economy is still just hiccupping along with no signs of a robust recovery.” Another agent claims, “the Japanese licensing market will continue to struggle and shrink in the next couple of years. When the economy goes down, licensing goes down more; when the economy recovers, licensing recovers a bit less.”

2015 was also a troublesome year for some of the region’s other licensing powerhouses, starting with Mainland China, where the growing middle class has eagerly consumed branded products in recent years. But the momentum has slowed. The 6.0% increase of 2015, although double the global average, was a significant falloff from the 9.2% and 8.0% gains of 2014 and 2013, respectively. After so many years of sustained growth, the economic slowdown hit consumers hard, especially in the second half of the year. Government “anti-corruption” policies and devaluation of the yuan slowed luxury sales. The Chinese people saved more of their household income. Other challenges include competition from local brands, unreliable trademark protection and a massive market for counterfeits.

Although some western companies such as Louis Vuitton, Gucci, Burberry, Hugo Boss and Zegna closed (or contemplated closing) shops in China during the year, losses were more than offset by the significant expansions into China by companies like Disney, Playboy, Li & Fung, Luxottica and Paul Frank (owned by Saban Brands).

Several Survey respondents suggest that India is the Asian country to watch in the years ahead. The 2015 results seem to bear this out. Already the region’s third richest licensing market, India’s growth of 9.2% was the highest in not only Asia, but the entire world (at least among the top 50 markets). And that estimate is conservative. “Retail in India is growing 10% to 15% year-over-year, thanks to online,” according to a local agent.

Although e-commerce is growing rapidly all across Asia, it is particularly crucial to development of retail in India. Consumer demand for branded products in India is huge; but so are the obstacles of meeting it, including lack of modern industrial infrastructure, poor roads and extremely high taxes, rental, and labor costs. These conditions squeeze the profit margins of traditional chain stores and make e-commerce an attractive option. “Close to 80% of Indian retail is unorganized,” mom-and-pop operations that can’t afford to run a brick-and-mortar store, the agent explains. “India is basically skipping mass merchants and moving directly to e-commerce and mobile commerce.”

In many other Asian countries, the pattern was largely the same: modest growth but at rates below recent years:

Growth in Retail Sales of Licensed Merchandise, Smaller Asian Markets, 2012–2015
Market Size Rank, Asia Country 2015 Growth 2014 Growth 2013 Growth 2012 Growth
4 Taiwan 2.2% 3.0% 2.1% 1.5%
5 South Korea 2.3% 2.8% 3.1% 5.1%
6 Hong Kong 1.6% 3.5% 2.0% 1.2%
7 Singapore 0.6% 1.0% -0.1% 1.9%
8 Philippines 4.1% 4.5% 5.1% 0.8%
9 Malaysia 0.3% 2.8% 2.9% 5.1%
10 Indonesia 0.5% 3.0% 4.0% 8.1%
11 Thailand 2.5% 3.5% 4.8% 7.8%

One outlier is Vietnam, where 2015’s growth of 7.5% outpaced growth of the last three years; 7.0% (2014), 0.0% (2013) and 2.1% (2012).

Middle East & Africa

Although it hurt licensed sales everywhere outside the U.S., the high value of the dollar was particularly hard on developing countries, including in Africa. Low oil prices also reduced consumer spending in the Middle East. Even so, at 3.4% the Middle East and Africa tied the U.S./Canada for most growth of any territory (albeit on significantly smaller base of only $930 million in sales, or 0.6% of the world market). The bad news is that 2015 growth was a full percentage point below the previous year’s 4.4%.

South Africa, the territory’s largest market for licensed goods, was up 3.4%—below the 5.0% growth of 2014 but still impressive for a nation wracked by political instability, inflation and drought. The other bright spot is the continued development of countries in the sub-Saharan region of central Africa, including Nigeria, which is vying to become the continent’s fashion capital; Kenya, which has the region’s fastest growing apparel industry; and Ethiopia, whose rich resources and over 90 million population are luring retail investment despite the country’s primitive industrial infrastructure. Although GDP is growing rapidly in all of these countries, consumption of licensed goods still remains too small to make a big impact on the totals.

Strong performances in the Middle East’s three richest markets, Saudi Arabia (3.3%), UAE (3.3%) and Qatar (3.0%), offset flat or declining sales in the region’s other countries. While entertainment and fashion grew the most, the sports and corporate/trademark sectors also posted gains.

Australia & New Zealand

After two straight years of 2.0% growth, Australia and New Zealand lost roughly $15 million in 2015, a decline of 0.6% to $2.3 billion. The region’s tepid economy, decline of the Australian dollar and a fixed grey/counterfeit market contributed to a 1.0% decline in the world’s 10th leading market for licensed goods.

New Zealand fared better, posting positive growth of 2.2%. While New Zealanders are constantly urged to “buy local,” exemption from sales tax on products under NZ $400 and offers of free shipping have made foreign brands more attractive. The country’s economic recovery enabled New Zealanders to yield to both temptations in 2015.

Latin America

Latin America declined 0.9% in 2015. In a territory where foreign entertainment and fashion properties generate most of the licensed sales, the strong U.S. dollar was a significant drag on growth. Brazil, the territory’s biggest market, lost 3.8% in 2015. Continuing recession, high inflation, and a mid-year sales tax hike made for a retail blood bath with over 500 stores shuttering country-wide by year’s end. The luxury and fashion sectors were particularly hard hit; but their losses were to some extent the value channel’s gains.

Unstable economic and political conditions also continued in Argentina, which has suffered an aggregate 5.4% decline over the past two years (-1.7% in 2015). Once a bright spot, Chile continued to slow, growing only 1.5% in 2015 (v. 3.0% in 2014, 3.7% in 2013 and 5.2% in 2012). Smaller Latin America countries were also either flat or down including markets that had been on the upswing such as Colombia, Costa Rica, Ecuador and Uruguay.

One positive market was Mexico (the second largest market in Latin America), which grew 3.6% despite low worldwide oil prices. “Inflation is still high but coming down,” notes one local licensee. Value chains proved a fertile source of licensed sales, including Wal-Mart de México, the country’s largest retailer, which posted big profits despite a major bribery scandal.

Property Type Trends

Sales of goods based on entertainment properties grew 6.3% in 2015, by far the highest of any property type. By gaining $1.7 billion, entertainment increased its worldwide share from 17.0% to 17.6% in a single year. The narrative is best described by a single phrase Survey respondents uttered over and over again: “Disney dominance.” The 2015 roster of dominant Disney properties included a potent combination of perennials including Marvel, Mickey & Friends and Princesses in addition to blockbuster films like Star Wars: The Force Awakens, Frozen, and Avengers: Age of Ultron.

But there were also plenty of non-Disney properties in the 2015 success mix, including Minions, Ninja Turtles, Paw Patrol and SpongeBob. A growing number of non-U.S. entertainment properties are also challenging Disney’s worldwide dominion, including Hello Kitty (Japan), Peppa Pig (U.K.), Masha the Bear (Russia) and Purple Turtle (India). One of the big stories of 2015 was the expanded licensing of Japanese anime properties, most notably Pokémon and newcomer Yo-Kai Watch. Another source of growth is adult products based on U.S. TV show properties like “Game of Thrones,” “Walking Dead,” “Breaking Bad,” and gameshows (particularly from the U.K.).

The concern with entertainment licensing is that it has become top-heavy. “Retailers are increasingly risk-averse and willing to invest only in established brands,” laments an Italian licensee. “These are good times for licensors and licensees of ‘A’ properties,” adds a U.K. consultant, “but if you’re trying to license an emerging property, especially one tied to a movie, good luck.”

Fashion, the largest segment of the market with a 24.1% share and $39.3 billion in sales, was the only other property type to outgrow the general industry in 2015—3.5% v. 2.7%. All other property types were below not just the 2.7% industry rate (other than sports which matched it), but also world GDP growth of 2.4%. Sports did well in the U.S./Canada (4.8% growth) but was flat in Europe and Asia. Among the remaining property types, the massive trademark segment performed the best with 2.2% growth and $34.9 billion in sales. Art was down for the second year in a row with a loss of 6.8%. “Although the volume of art deals remains great, cycles, royalties, and margins are being compressed,” comments one licensing agent.

Retail Sales of Licensed Merchandise, Worldwide, by Property Type, 2014-2015
Note: Numbers may not add up exactly due to rounding.
(Figures in Millions)
Property Type Retail Sales, 2015 Retail Sales 2014 Change, 2014–2015 Market Share, 2015
Entertainment/Character $28,709 $27,011 6.3% 17.6%
Sports $19,901 $19,384 2.7% 12.2%
Fashion $39,312 $37,974 2.7% 24.1%
Corporate TM/Brand $34,908 $34,161 2.2% 21.4%
Art $9,123 $9,031 3.5% 5.6%
Other $31,158 $31,327 -0.5% 19.1%
TOTAL $163,121 $158,888 2.7% 100.0%

Product Category Trends

Product category performance in 2015 was influenced by two key factors: property type and retail channel. Products were likely to do best if they were: i. based on entertainment, fashion or sports properties; and ii. sold online or via value, dollar/discount and/or grocery channels. Conversely, products were most likely to struggle if they were: i. based on corporate/trademark and/or art properties; and ii. sold in specialty or department stores.

Accordingly, the year’s strongest product category was toys and games, which grew 5.8% to $18.1 billion, 11.1% of the market. Growth was fueled almost entirely by traditional toys; sales of electronic games were flat. Almost as impressive was the 3.9% growth of the massive apparel/accessories/footwear product category, which at over $66 billion represents over 40% of all licensed goods purchases worldwide. Athleisure, sportswear, pro sports-branded off-field soft goods (especially for women and children) and eyewear were among the strongest performing products in this category; cold weather wear, handbags and fine jewelry were among the weakest.

At 2.8%, food/beverage was the only other product category to grow faster than general licensing industry and world-wide GDP, with health and fitness and demand for luxury brands in the U.S., Europe, and wealthy countries of Asia and the Middle East providing much of the impetus. All other product categories were flat or down for the year, including:

  • Publishing, which managed modest 2.2% growth for the second year in a row;
  • HBA, whose 1.5% gain looks much better when you consider that the category fell 1.7% in 2014;
  • Home furnishings/housewares/domestics, which replicated last year’s 1.2% growth; and
  • Two product categories which posted declines for the fifth year in a row (albeit at lower rates than in 2014): gifts/novelties (down 0.9% v. -4.7% in 2014); and stationery/paper (-0.4% v. -3.1%);
  • Other, the second biggest category at 15.4% share, lost 0.1% after growing 3.7% in 2014, despite strong sales of sporting goods, electronics, and electronics accessories.
Retail Sales of Licensed Merchandise, Worldwide, by Property Type, 2014-2015
Note: Numbers may not add up exactly due to rounding.
(Figures in Millions)
Product Category Retail Sales, 2015 Retail Sales, 2014 Change, 2014–2015 Market Share, 2015
Apparel/Accessories/Footwear $66,064 $63,555 3.9% 40.5%
Toys/Interactive Games $18,155 $17,160 5.8% 11.1%
Home Furnishings/Housewares/Domestics $12,218 $12,076 1.2% 7.5%
Food/Beverage $12,642 $11,911 5.8% 7.8%
HBA $11,288 $11,122 1.5% 6.9%
Publishing $8,596 $8,421 2.1% 5.3%
Stationery/Paper $5,220 $5,243 -0.4% 3.2%
Gifts/Novelties $4,567 $4,608 -0.9% 2.8%
Other $24,370 $24,792 -1.7% 14.9%
TOTAL $163,121 $158,888 2.7% 100.0%

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