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The $15.66 billion licensed food and beverage industry is growing faster than ever, is it time you considered becoming a ‘licensee’?
Food and beverage licensing – when you see Coca Cola on a tee-shirt, or Jack Daniels on a barbecue sauce bottle, for instance - is quickly gaining traction and making waves in a host of categories. Licensing allows F&B brand owners to extend its reach into other product categories, new retailers and the consciousness of new consumers. It also allows non-F&B brands to get traction in the grocery sector
With more and more brands extending their product lines into F&B, is it time that you considered becoming a licensee and working with them? A licensee is someone who ‘hires’ a brand to use on a product line that they already manufacture. So, if you already manufacture own-brand ice lollies, you could consider the possibility of manufacturing Aperol ice lollies and entering the adult market. Being a licensee can be a potentially lucrative why of increasing your output, turnover and profitability with a proportionally low impact on overheads.
The food and beverage sector is part of a larger licensing category called brands and lifestyle, which represented 21 per cent, or $54.6 billion, of global retail sales of licensed merchandise by property type in 2016*. Furthermore, food and beverage licensing represented 6 per cent, or $15.6 billion, of global retail sales of licensed merchandise by product category in 2016. In terms of product type, food and beverage licensing trailed only a handful of categories: apparel (15 per cent), toys (13 per cent), fashion accessories (11 per cent), home décor (7 per cent) and software/video games/apps (7 per cent).
“It is a healthy market to enter and can be very profitable, if done right,” said Beanstalk associate director Lauren Montemaro. “There is an openness to licensing and there is a lot of activity and partnership in the space because of this.”
Currently, we are seeing a lot of innovation with a focus on taste and health. More and more, we are seeing flavour as the most important purchase driver for many of the food and beverage players participating in licensing, especially with younger consumers who buy on impulse. We are also seeing a push toward organic and natural ingredients – health and quality are some of the more important purchase drivers today in the food and beverage space.”
One example of a successful food brand in the licensing arena is Perfetti van Melle, which owns both the Chupa Chups lollipop brand and the Airheads confectionery brand. For Chupa Chups, partnerships have included Vandemoortele for doughnuts. Meanwhile, for Airheads, Perfetti van Melle has partnered with chains like 7-Eleven and Taco Bell for Airheads ice drinks. The confectionery company has also teamed up with Jelsert for an Airheads freezer bar based on its mystery flavour concept and Bahama Bucks for a shaved ice drink, among others. Both brands have also collaborated with Unilever for water-based frozen novelties.
Moving forward, Perfetti van Melle is looking to expand both brands across frozen novelties, desserts, bakery products and drinks. In addition, one of the company’s agents, Beanstalk, is exploring additional partnerships.
“To have success and be sustainable, each food and beverage extension should bring an original proposal to the market with a clear unique selling point that adds value to the core brand,” continues Cool. “Another key issue is striving for product excellence. To do so, food and beverage licensing programme s require the full in-house support and coordination of marketing and research and development teams of both partners. It is also necessary for the brand owner to develop internal protocols that ensure the alignment of licensed products with the product policies of the core product.”
Another food brand continuing to expand its reach through licensing is The Hershey Company in the US. Known for popular confectionery brands like Hershey, Hershey Kisses, Reese’s and Jolly Rancher, the company reported $1.5 billion in licensed retail sales globally last year.
Ice cream and frozen novelties are the largest category for the company’s licensing business, both domestically and globally, according to The Hershey Company’s global licensing director Ernie Savo. These are closely followed by beverages, cereal, and “ready-to-eat” desserts. Key food deals for the classic chocolate brand include Kraft for Hershey’s pudding and International Delight for Reese’s-flavoured coffee creamer, which originally launched as a limited-edition item but will debut as an everyday product this year.
* International Licensing Industry Merchandisers’ Association (LIMA) 2017 Global Licensing Industry Survey
Food and beverage licensing represented 6 per cent, or $15.6 billion, of global retail sales of licensed merchandise in 2016.
Health and quality are now some of the more important purchase drivers today in the food and beverage space.
“To have success and be sustainable, each food and beverage extension should bring an original proposition to the market with a clear unique selling point that adds value to the core brand.” says Christine Cool, licensing area manager, Perfetti van Melle Group. “If the brand is known for its large flavour variety, this is a huge asset to take to adjacent food and beverage categories.”
This post was written by Brand Licensing Europe brand director Anna Knight. BLE takes place 9-11 October 2018 at Olympia London. It is the leading event in Europe to discover what’s new in licensing and meet future business partners. This year’s theme is F&B and visitors can register for free at www.brandlicensing.eu.