Dinesh Sathiaraj is 15, but whenever he visits the mall near his home in Mumbai, he has to visit the Hamleys there and look for something new to buy. He is interested in radio- and remote-controlled toys and owns about three or four of them, all which cost his parents between Rs 3,000 and Rs 5,000 each. He is interested in radio-control Lego sets as well.

When R. Jeswant, Vice-President, Funskool India, began working at the company about 13 years ago, toys that cost Rs 3,000 were difficult to sell. However, a Lego set of the Taj Mahal which cost Rs 33,000 not only attracted much attention when it was being set up and built but also managed to sell a few pieces last year. “They’re lapping it up,” he says, as he talks of higher prices and changing tastes.

Airfix, a brand of scale models of military aircraft, ships, tanks and cars that have to be assembled and painted, is one toy that represents this evolution. Earlier, there was no market at all for these kind of pursuits, he explains. At that time, toy makers and sellers were also worried about losing out to cheap alternatives from China, but that threat seems to have abated in recent years as they are unable to meet quality stipulations in India.

Not only has Funskool brought in an array of such sophisticated toys, it has even been selling 3,000- and 5,000-piece jigsaw puzzles which can be finished only with the help of older enthusiasts. Its party games such as Taboo and Scattergories are meant for adults. Funskool, a joint venture between tyre major MRF and Hasbro, has tie-ups with several entities around the world which have licensed their toys and board games to it.

Scratching the surface

“In India, we’re still scratching the surface of the toy market,” says Jeswant. Worldwide, the toy market is estimated at $85 billion (Rs 450,000 crore) but in India it’s just Rs 2,200 crore. (There are no authorised industry estimates.) Worldwide, the industry is growing at a compounded annual growth rate of 1 per cent over the last five years, but at 12-15 per cent in India and will maintain that rate for the next 10 years, he says. Funskool has been growing at 23 per cent for the last five years.

India and China are important for toy market companies for these reasons, there’s plenty to look forward to, he says. This is why the future of the traditional toys industry looks pretty good. And there are plenty of reasons why toy sellers can be optimistic.

For one, there’s lots more money. People are flaunting their riches, a car, a smartphone … “that’s the first stage. Toys come in the next stage when there’s more awareness,” says Jeswant.

It helps that today’s young parents are the first generation of Indian parents who have played with some sort of branded toys, he says. Funskool came into being in 1987, Mattel’s India operations a little earlier, so toys and games such as Barbie, GI Joe and Monopoly are not unfamiliar to them and will be perpetuated in the next generation too, says Jeswant. “Seventy per cent of India is under the age of 35, which is extremely good, a lot of young parents and kids around,” he adds.

Krunal Mehta, Vice-President (Branding and Corporate Communication), Angel Broking, says parents’ demanding educational toys is another reason the toys and games market is witnessing robust growth. The emergence of modern trade has exposed people quite a bit to branded toys, he says, though he points out there are equal or more numbers when it comes to unbranded toys.

The expansion of organised retail is another reason for happiness. With exclusive toy stores such as Hamleys coming up, there is a much higher standard of merchandising. Impulse buys go up in such a situation, says Jeswant.

But are people buying in a rather gloomy economic atmosphere? Toy sales don’t really go down, says Jeswant, explaining that people defer the big-ticket purchases such as homes so that they won’t have to pay monthly instalments. The average price of a toy is Rs 500-1,000. Toy sales in department stores are affected as fewer people shop there during a downturn, but that’s not the case with toys-only stores, he says.

Traditional rules

Neither is he worried about the Internet taking over children’s play times. “There’s a long time before we have to be worried about that,” he says, adding that there is a lot of scope for traditional toys, which include board games, puzzles and Play Doh. He is not seeing any drop in sales of infant and pre-school toys, and board games, played by older children, continue to be the highest-selling category at Funskool, raking in over 30 per cent of the sales. It speaks of good parental influence and family bonding, he says.

What are the new-generation toys for new-generation kids? Jeswant says animation movies drive toy sales. Beyblades merchandise has been a favourite for the last two-and-a-half years, and more will be launched when a new series launches in October this year. The last few weeks, it’s been Iron Man III merchandise that Funskool has been selling.

Lego is another big trend – it is the fastest growing toy company in the world, and a big contrast to the stagnant global toy market. Funskool’s sales from Lego grew 70 per cent in 2012 and it expects similar growth this year. Funskool’s turnover has crossed Rs 100 crore and it spends about 5 per cent of its turnover on advertising and marketing.

Over the years, Funskool has tied up with Tomy Takara of Japan, which has helped it bring in the Beyblades, Chuggington die-cast vehicles, Tomica and Lamaze brands, Ravensburger of Germany for jigsaw puzzles, radio-controlled vehicles from New Bright and Siku of Germany. Boys’ collectibles from Funskool are a big draw, claims Jeswant. Puzzles are big, not in rupee terms, but in numbers.

And what do they have for girls? Handycrafts, all set to launch this year. It’s not going to be tie-ups all the way. Since last year, there is “a new thrust” at Funskool to develop its own brands. Last year, it launched Giggles for infants, which has doubled sales in a year. All its pre-school toys will be branded Giggles henceforth. This year, it’s Handycrafts, arts and crafts products that will include finger painting, leaf art and origami.

A few years ago, Funskool tied up with IIT Bombay’s Industrial Design Centre to develop some board games. Chakra View, Mahawar, Gotcha, Triplets and a few others were born out of an elective called Board Game Design offered at IIT.

Dinesh’s mother Nalina says that it is only of late that her sons’ interest in board games seems to have waned. “We used to buy every new board game that came on the market,” she says, “so that we could play as a family.” Definitely the Internet has cut into their toy time, though Dinesh says he wants an expensive Lego set as a wedding gift when he gets married!

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