Europe Built the World's Greatest Sports Brands. Did It Forget to Protect the Supply Chains Behind Them?
As manufacturers evolve into brands, Europe’s sporting goods industry may be confronting the most important supply-chain governance question since globalization.
When Adidas was founded in Herzogenaurach in 1949, competitive advantage was defined by innovation, craftsmanship and athletes.
Seventy-five years later, competitive advantage looks very different.
Today’s sporting goods industry is built on an intricate global network of independent manufacturers, advanced material suppliers, component specialists and logistics partners spread across Asia, Europe and the Americas.
This model has helped create one of the world’s most successful consumer industries.
Adidas generated €24.8 billion in revenue in 2025, while Europe alone contributed more than €8.1 billion in sales. The company outsources almost 100% of its production to independent manufacturing partners and says 65% of those partners have worked with Adidas for over a decade, while 37% have remained partners for more than twenty years. These figures reflect relationships built on decades of shared engineering, manufacturing excellence and operational collaboration.
That collaboration has been one of the greatest strengths of the European sporting goods industry.
It may also become one of its greatest strategic vulnerabilities. Rather, it has!
Who does not know the case of Paragon Apparels from Noida, India. A major supplier for Adidas in apparels whom Adidas itself delisted. The reason? Paragon started their own brand, Alcis, using the technology and design aspects of Adidas.
Manufacturing Is No Longer Just Manufacturing
The traditional assumption has always been straightforward. Brands innovate. Manufacturers execute. But today’s manufacturers are no longer merely assembling products.
Over decades of collaboration, they have accumulated expertise in advanced materials, construction techniques, quality systems, production engineering, sourcing networks and cost optimization. Many now possess manufacturing capabilities that rival the world’s best.
The natural business question follows: If you can manufacture world-class products, why shouldn’t you build a world-class brand? Increasingly, manufacturers are answering that question themselves.
History Suggests This Is Not a Theoretical Risk
Business history provides several examples of manufacturers evolving into formidable competitors.
One of the clearest comes from the bicycle industry.
Taiwan’s Giant Manufacturing began in the 1970s as an OEM producing bicycles for Schwinn, then America’s dominant bicycle brand. By the mid-1980s, Giant was producing more than two-thirds of Schwinn’s bicycles. Having accumulated manufacturing expertise, supplier relationships and category knowledge, Giant launched its own brand, expanded across Europe and North America, and eventually became the world’s largest bicycle manufacturer. Schwinn, meanwhile, filed for bankruptcy in 1992.
The lesson was not that Giant acted improperly. It was that manufacturers can become powerful competitors once capability, capital and market ambition converge.
The sporting goods industry would be wise to study that history.
Footwear Is More Exposed Than Electronics
Interestingly, consumer electronics largely avoided this challenge through contract architecture rather than goodwill.
OEM relationships in electronics have traditionally been governed by highly structured agreements covering product ownership, tooling, reference designs, confidential specifications and intellectual property.
Here, manufacturing rarely conferred ownership of the product itself.
Footwear is fundamentally different.
The competitive advantage often lies not in patents alone, but in accumulated process knowledge: Material handling, construction techniques, cost engineering, manufacturing discipline, quality systems, and production efficiency.
These capabilities evolve gradually over years of collaboration and are considerably harder to define, isolate or reclaim contractually than a circuit board design or software code.
That makes supplier governance in footwear uniquely complex.
Europe Is Facing a New Competitive Landscape
This discussion has become more relevant as global sporting goods companies continue expanding manufacturing across India, Vietnam, Indonesia and other high-growth markets.
Those markets are no longer merely production centres. They are rapidly becoming some of the world’s largest consumer markets for athletic footwear.
In India, cricketing legend Virat Kohli recently launched One8, a performance footwear and apparel gear brand. Eventually, Agilitas Sports acquired the One8 brand, transitioning it from a brand previously licensed through Puma into an independent label.
Virat Kohli transitioned from being just a founder/endorser to a co-owner, investor, and shareholder in Agilitas Sports. The story does not end here; Agilitas Sports was founded by former Puma India MD, Abhishek Ganguly. It has another subsidiary called Mochiko Shoes, which manufactures footwear for international giants like Adidas, Puma, Skechers, New Balance, and Crocs.
Puma and Adidas both come from Herzogenaurach, they both have common origin, and now, they both face a similar challenge: overdependence on their manufacturers.
The overlap matters. There is no wrongdoing in the One8 brand story; it surely illustrates how rapidly the boundaries between manufacturer and brand can blur.
A manufacturer that has spent years learning to produce premium running shoes for international brands has also acquired deep understanding of local sourcing ecosystems, production economics and increasingly, the domestic consumer.
Nike offers another relevant perspective on the changing dynamics of global sports-footwear manufacturing.
The company relies predominantly on independent manufacturing partners, with more than 90% of its footwear and branded apparel produced by factory groups with which it has worked for more than 15 years. Its FY2025 disclosures underline the scale and concentration of this network: 15 contract manufacturers operated 97 footwear factories across 11 countries, while four manufacturers accounted for approximately 59% of Nike Brand footwear production. Such long-standing relationships inevitably extend beyond production volumes.
Over 15 or 20 years, manufacturing partners develop substantial expertise in materials, production engineering, quality management, cost structures and supply-chain coordination. In India, SSIPL states that it became Nike’s first authorised footwear manufacturer in 1996 and has since expanded its activities into retail and branded businesses.
There is no suggestion that this represents misconduct, nor does the development of an own-brand business in itself constitute a conflict. It does, however, illustrate a broader structural shift in the sporting-goods industry: the traditional distinction between manufacturer and market participant is becoming less clear.
As global brands deepen and extend their manufacturing relationships, the question is no longer only one of cost, quality and supply security. It is also one of long-term strategic alignment. Nike itself places considerable emphasis on long-term supplier relationships, trust and mutual respect. The industry may therefore need to consider whether its existing supplier frameworks adequately address the next stage of this evolution, and whether competitive neutrality should become an explicit element of supplier governance in global sports manufacturing.
As the analyst note accompanying this discussion observes, localization creates a structural paradox: the very investments brands make to strengthen local manufacturing capability may also strengthen the long-term capabilities of future local competitors.
A Trend That Europe’s Procurement Teams Cannot Ignore
Recent developments across the industry illustrate why procurement teams may need to broaden their thinking.
Manufacturers and manufacturing groups are increasingly launching, acquiring or investing in consumer-facing brands of their own. The question for multinational brands is therefore no longer hypothetical.
Should supplier governance evolve to address situations where a strategic manufacturing partner also develops significant commercial interests in the same consumer category?
Europe Has Built Strong Governance. But Has It Covered This Risk?
European companies have spent years strengthening supplier governance. Massive efforts have gone into setting up the environmental standards, human rights, traceability, and responsible sourcing.
The German Supply Chain Due Diligence Act and the EU’s broader sustainability agenda have accelerated this evolution.
Yet one area remains comparatively underdeveloped: competitive neutrality.
Should long-term manufacturing partners disclose ownership of competing consumer brands?
Should supplier contracts require governance reviews when ownership structures change?
Should procurement teams evaluate competitive alignment alongside cost, quality and sustainability?
Should there be a standard framework governing neutrality where manufacturers simultaneously operate consumer brands within the same product category?
These questions do not challenge entrepreneurship. They challenge governance.
The Next Competitive Advantage May Be Governance
The future of European sporting goods will not be determined solely by lighter foams, faster midsoles or better athlete endorsements.
It may also depend on how effectively brands manage the strategic relationships underpinning their global manufacturing ecosystems.
The world’s leading sporting goods companies have spent decades creating extraordinary manufacturing capability through long-term collaboration.
Those investments have helped build globally competitive suppliers. As those suppliers become larger, more sophisticated and increasingly consumer-facing, governance must evolve with them.
Not because manufacturers should be prevented from building brands. But because clarity benefits everyone.
Manufacturers gain transparent expectations. Brands gain confidence in long-term partnerships. And the industry gains a governance framework designed for the realities of modern global manufacturing.
The bicycle industry learned this lesson decades ago. Consumer electronics developed contractual safeguards around it. The global sporting goods industry is only beginning to ask the question.
If supplier neutrality is not part of the modern code of conduct for global manufacturing, is the industry protecting the partnerships that built its success, or unintentionally financing the rise of its next generation of competitors?
Unfortunately, the European brands are running against the time!
Image: SHOX ART – www.pexels.com
