Rupa to bring Fruit of the Loom to India to grab a bigger slice of Rs 7,000 crore premium innerwear market
When it comes to premium and ultra-premium innerwear in India, it's foreign brands that sell.
While domestic innerwear brands business remains a thin-margin play open to vagaries of cotton prices, bringing in foreign brands now appears to be the only way to survive for the sector in the premium and ultra-premium segment.
"This vision of getting foreign brands to India started after a market survey from which we realised that once you enter the premium and super-premium categories, consumers, having high awareness, mostly go for foreign brands. That is why we thought of getting foreign brands to India, beginning with FCUK from French Connection last April followed by Fruit of the Loom now," said Siddhant Agarwal, vice-president, project and acquisition at Rupa & Co, country's largest innerwear maker.
Siddhant would be heading Mumbai-based Oban Fashions Pvt Ltd, the newly formed subsidiary of Kolkata-headquartered hosiery major Rupa & Co, which would manage these two foreign brands having its separate sourcing bases and marketing network.
Rupa's Ebidta margins hover around little over 13%, but foreign brands would command higher margin of 18-19% by 2020, by when revenue contribution by foreign brands like FCUK and Fruit of Loom would be around 10% of Rupa's aggregate revenue.
Page Industries, which has exclusive licence to manufacture and distribute Jockey brand of US in India, enjoyed Ebidta margin of 18.7% in the third quarter with a market share in men's segment at 21%.
While Rupa & Co, having a diversified portfolio with brands like Frontline, Euro and Bumchums, has its own premium offerings under Macroman, it's no match for Page's Jockey which rules the premium end of the market.
Out of around Rs 30,000 crore of overall hosiery industry, premium segment is valued at about Rs 6,000 crore-7,000 crore, Agarwal said.
Following the marketing pact with French Connection, Agarwal claimed demand for FCUK has been surpassing supply capabilities, encouraging Rupa to sign a similar pact on Tuesday with Berkshire Hathaway arm Fruit of the Loom having a portfolio of more than 20 iconic brands.
Apart from the flagship brand created way back in 1857, Rupa would negotiate with the US company to bring in other innerwear and sportswear brands such as Russell Athletic, Spalding, Jerzees and Vanity Fair, Agarwal said.
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Rupa's Ebidta margins hover around little over 13%, but foreign brands would command higher margin of 18-19% by 2020, by when revenue contribution by foreign brands like FCUK and Fruit of Loom would be around 10% of Rupa's aggregate revenue.
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