The Indian cricket team captain Virat Kohli is a shining star not only on the field but the brand world as well. The 28-year old cricketer has just struck a Rs 110 crore endorsement deal with German multinational company, Puma.
Reportedly, with Kohli on board, Puma intends to launch a signature line of sports lifestyle products with a special logo and brand identity. Bulk of the endorsement deal, estimated between Rs 12 to 14 crore annually, is locked up in fixed payout.
This deal makes Kohli the first Indian sportsperson to sign a Rs 100 crore deal with one single brand. He is now brand endorser of a brand that is endorsed globally by the likes of Jamaican sprinters Usain Bolt and Asafa Powell, and footballers Thierry Henry and Oliver Giroud.
It may be recalled that Kohli had signed a three year-old endorsement deal with Adidas in 2013 which ended in December 2016 when the two decided not to renew the contract. Kohli, who owns and endorses fashion label Wrogn also has been the face of brands including Pepsi, Boost, Vicks, Tissot and MRF.
When compared to brand endorsers from diverse professions, Kohli is only second in the ranking to Shah Rukh Khan. As per an October 2016 report by global valuation and corporate finance advisory firm Duff & Phelps, with brand SRK amounting to $131 million, he is the only celebrity whose brand valuation is more than a $100 million.
Meanwhile, Kohli has the brand valuation of $92 million. The report revealed that he had successfully managed to leverage his brand by approximately 25 % as compared to the year 2015.
Experts believe that it is an unusual deal as it spans for eight years – till 2025 – when the actor will turn 37. They say that the brand is taking a gamble because one cannot predict the shelf life of any celebrity. But, it is a calculated risk taken basis his current performance, fitness, age, and consistency.
While many believe that it is a win-win for both Puma and Kohli, there are a few who said one of the two gains more through this partnership.
Experts speak:
Samit Sinha, Founder & Managing Partner, Alchemist Brand Consulting, while analyzing the pattern of Puma’s choice of brand endorsers, says, “If you see their international campaign, they were using Usain Bolt. It suggests that when they are looking for a brand ambassador, they are looking for someone who is completely at the top of their game, at the pinnacle of achievement. This seems to be in line with their global thinking of getting an endorser from the world of sports and someone who is at the top.”
Sinha said that the very reason why Puma is not as salient as a Nike, Adidas or Reebok in India is a good reason to tie up with a celebrity who can get the salience. “If you look at the amount here – Rs 110 crore which comes to around Rs 12.5 crore per year – in context of their overall media spends, it does look that much. I would imagine at least 5 to 10 times a media budget. For Virat, the gain will primarily be financial and to a lesser extent it’s a validation of the fact that he is India’s No.1 sportperson. Overall, I think it’s a win-win for both Puma and Virat.”
Saurabh Uboweja, Founder, CEO and Chief Brand Strategist at Brands of Desire is of the opinion that the timing of the deal is perfect as Kohli is at the peak of his career. “For a sports star who has peaked once in his career, he may peak one or two more times in his career and most likely he will have a slowdown/smaller peaks in his career. From that point of view, I think the time of the deal is a little mismatched. It is more beneficial to Kohli. That means, in an ideal scenario with the way cricket is going all over the world, Kohli may retire by 33-34, which is 5-6 more years. What after that in this 8 year-long deal? Even if you’re playing IPL, the deal is not worth then from Puma’s point of view.”
Uboweja’s second thoughts are that probably Kohli or his team might have asked for a certain amount and Puma negotiated that they will give that amount for a longer period of time – 8 years here. “I am sure there will be some caveats in the deal. Puma has smartly spread it for 8 years. Kohli, I am sure would have wanted the same amount in probably four years. So, I don’t think it’s a perfect win-win for them. He is at his peak today and would have wanted at least Rs 20 crore”
Ram Gudipati, MD, Brand Harvest said, “While Rs 100 crore deal is fantastic for Virat as it makes him almost equal to global stars, I am a little skeptical about the tenure because in sports 8 years is probably half your career or more than half of your career. I don’t know how Puma will evaluate this deal for 8 years.”
Puma, a premium brand has maintained a niche in the category unlike competitors like Adidas, Nike, Reebok. Gudipati said that the focus of the brand could be to capture the largest growing market in the world, even for sports accessories. Sports in all forms is picking up in India.
“That could be a long term- investment where sports is important and India is a significantly large market for the brand. Puma is an aggressive brand. If Puma ends up doing a good job of establishing product superiority, coupled with the kind of imagery they expect to be delivered through Virat Kohli, I think they should be looking at more positive numbers.”
Raghu Vishwanath, MD, Vertebrand Management Consulting said, “In a market like India where sportswear is currently nascent in terms of understanding the difference between various brands, I think it is the fact that Puma has not been visible, does not necessarily put it in the “niche” bracket that one would traditionally think it to be in. So, therefore, I would like to believe that this is a quick way for brand to gain some recognition and reputation for itself.”
“An association with Virat Kohli will enhance Puma’s imagery. But that said, that alone is not enough for the brand to get salience. This will get Puma recognition but might not translate into reputation. For a brand to get salience, design, product features which make the brand stand out should have been communicated. The brand should have taken extra efforts to explain this to the average consumer. Unlike in evolved economy, these expensive sportswears are not necessarily worn by sports people. People need to know what Puma products have that its competitors don’t. If I were to look at India market, Virat Kohli is far bigger than Puma. I think it’s just one more positive dent in his bank balance. The deal is more advantageous for Puma than it is for Kohli,” Vishwanath added.