Reebok tries to get it right this time in India

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BOMBAY -- U.S. athletic footwear marketer Reebok International will increase its holdings in New Delhi- based Reebok India Co. to 95% from the 80% it currently has in the troubled Indian subsidiary. New Delhi-based Phoenix Overseas, its local partner, will reduce its current 20% to facilitate the move that is part of a Reebok strategy to turnaround its Indian arm that misjudged the buying power of the market.

Reebok entered India in 1995 with a $5m investment. According to the joint venture agreement, Reebok India would handle marketing and distribution, while Phoenix would manufacture footwear under license. Reebok attempted to introduce the concept of performance footwear, or athletic shoes for every sport, but product prices of $56-plus a pair discouraged quick sales in a conservative but growing market.

Besides increasing its interest in the joint venture, Reebok's new strategy involves a focus on footwear priced between $28 and $42 and wider product availability.

Reebok India CEO Muktesh Pant recently said his company will break even in the next fiscal year of 1998-99. Reebok India sold 250,000 pairs in India for the fiscal year to March 31, 1997, small fry compared with the 300,000 pairs sold each day worldwide by Reebok companies.

Calcutta-based Bata India, a 51% owned subsidiary of Toronto, Canada-based Bata Shoe Organization, leads the estimated $1.8bn footwear market in India with a share of 8% to 10%.

Even Bata had to decrease its reliance on upscale footwear and return to its erstwhile strategy of low-priced footwear for high volume sales. New-entrant rivals like Nike and Adidas, which has had the longest Indian presence in athletic brands, have recognized the Indian middle class's apathy for big-ticket items and accordingly revised their strategies after recording poor sales.

Copyright October 1997, Crain Communications Inc.

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