Special Report: Food and Beverage Licensing Stays Hot

When it comes to licensing, food and beverage brands continue to appeal to consumers in various and often innovative ways. Licensing International’s 2023 Global Licensing Industry Study, reporting on Global Sales Revenue from Licensed Merchandise and Services by Product Category, found Food and Beverage grew by 5.3% in 2023. License Global reached out to several Top Brand Licensing Agents for their thoughts on food and beverage collaborations and why they’re so popular with consumers.

Some IPs seem to lend themselves almost effortlessly to food and beverage licensing, while other collabs can catch consumers off-guard. For example, Velveeta, the ubiquitous melty cheese, has seen collaborations in unusual spaces such as hair dye and jewelry.

Food and fashion collabs can be as simple as a Tony the Tiger T-shirt or as unique as a Pringles x Crocs footwear collection. But there’s little doubt the more unusual collabs can get tongues wagging if they’re executed well. It’s something Ricky Yoselevitz, senior vice president, licensing and business development, IMG, saw with the recent Puma x Cheetos collaboration. Yoselevitz says the launch generated both meaningful revenue and strong media impressions.

“It created a true global cultural moment and was organically embraced by many noteworthy athletes and influencers around the world,” he says.

Apparel and food often pair very well (except for spaghetti sauce and a white shirt!). Lots of people love to rep a beloved brand through clothing and accessories. According to Datassentials, 18% of consumers have worn a clothing item featuring a food brand. BoxLunch recently launched a new apparel collection with KFC inspired by the original fried chicken brand. Last month, Heinz and Kate Spade New York announced a new global partnership to debut a limited-edition collection for summer.

The Lumistella Company is home to some of the world’s most beloved Christmas brands, including The Elf on the Shelf, Elf Pets, Elf Mates and The Elf on the Shelf Santaverse. In addition to having a host of holiday IPs, the company has also introduced dozens of licensed food collabs in the U.S. and internationally. While some of those seem likely partnerships, such as advent calendars and cocoa with Frankford Candy, others, like ice cream pints and sandwiches with the Frozen Farmer and Brand Castle Cookie baking jars and kits, prove that less obvious choices can also resonate with consumers when it comes to F&B.

Van Leeuwen’s Kraft Mac & Cheese ice cream, Brand Central

Creating New Taste Sensations

Yoselevitz says while lifestyle extensions such as apparel and accessories have remained constant, IMG has seen significant growth in food-to-food extensions with brands now recognizing the value strategic licensing can play in driving consumer engagement and in turn, incremental revenue.

“Licensing in F&B has grown significantly in recent years, becoming a substantive tool for brands looking to expand their product offerings into other formats and areas of the store,” says Yoselevitz. “The concerns around cannibalization have subsided, opening the door for many QSR/restaurants brands at retail (notable example being Chik-fil-a sauces). While there is still trepidation around such extensions, brands are more willing than ever to consider licensing as an important path to growth, when done right. As such, the role of agents has become that much more critical, especially those agencies like ourselves (IMG) who have proven themselves as thought leaders in this space.”

License Global frequently reports on quirky F&B collaborations that pair two unexpected flavors. This past year, Mike’s Hot Honey has partnered with goat cheese, cracker and potato chip brands. Frito-Lay leans into licensing with intriguing food collaborations. In January, License Global shared a new collaboration between Jack Link’s, Frito-Lay and Flamin’ Hot. The collab brought the savory flavor of Fritos Chili Cheese and a kick of Flamin’ Hot to Jack Link’s smoky meat snacks. Last December, Frito-Lay released its Frito-Lay I.S. Snack Index, looking at 2024 snack trends. In the index, 80% of respondents agreed that combining multiple food products to create the perfect bite is an art form.

Ross Misher, chief executive officer, Brand Central, says food and beverage collaborations thrive in the consumer products space due to the ability to blend consumers’ loyalty for their favorite brands with the excitement of trying a new and unexpected mashup.

“Whether it’s Claussen Pickles teaming up with Spritz Society for alcoholic spritzers or Kraft Mac & Cheese venturing into ice cream with Van Leeuwen, the merging of these distinct and unique flavors attracts new audiences while leveraging the established fan bases of both brands,” says Misher. “A good collaboration results in increased visibility, enhanced market penetration, heightened consumer engagement and the opportunity to create cultural conversations around your brand. We also see a rise in collaborations that mix cultures, like in Tapatio Ramen blending Hispanic and Asian influences, which adds another layer of appeal.”

People interact with food and beverages daily. This familiarity pivots nicely into licensing.

Stephen Reily, co-founder and chief executive officer, IMC Licensing, explains that familiarity and frequency are the biggest drivers of licensing success. This includes how well consumers know the brand, and how often they interact with it.

“Consumers spend more time, more often, with food and beverage brands than with almost any others, and many of these brands have been around forever,” says Reily. “In addition, some of these brands own something you can’t trademark – a flavor – and licensing that intangible equity can protect and enhance its unique value for the brand. For these reasons, food and beverage brands can support the holy grail of licensing: ‘forever’ partnerships that extend a brand’s retail footprint, deepen consumer interaction, minimize risk and supplement net income for a lifetime.”

Adina Avery-Grossman, partner, Brandgenuity, believes food and beverage continue to be exciting categories for consumers.

“Unexpected collaborations with other food and beverage brands delight consumers, energize the category and feed the consumer frenzy of, ‘What can I try next?’,” says Avery-Grossman. “Food consumer products are driven by flavor and the flavor experience. Licensing can bring unique flavors and brands into new products with instant credentials. Each brand brings fun, trust and the power of collaborative marketing support, which broadens the audience. Our Kahlúa x Coffee mate product is a great example of bringing exciting newness – an adult flavor profile amongst sweet, indulgent collabs – to flavor-seeking consumers in the category.”

Avery-Grossman says, of the many exciting food and beverage licensing deals, one that has stood out in her mind is Grillo’s Pickles x Boulder Canyon chips.

“The collaboration taps into the ongoing demand for flavor innovation in snacking with on-trend pickle flavor, while balancing the preference for better-for-you options (Boulder Canyon chips are fried in avocado oil), bringing together two buzzy brands,” says Avery-Grossman.

The Original Donut Shop Snickers K-Cup pods

Relationships That Last

The longevity of food and beverage brands represents a potential boon for licensing deals. That’s why Reily says IMC likes deals that measure success in decades, just like the brand they represent. One such success Reily mentions is Southern Comfort Egg Nog, a licensing partnership (with HP Hood) that IMC developed over 20 years ago, which remains the best-selling premium egg nog in the country. Also on Reiley’s list of standout deals is the Heinz/TGIFriday’s partnership (which began in 2001 and just renewed on perpetual terms) and Sweet Baby Ray’s Beef Jerky from licensee, Bridgford Foods, a program IMC developed that has delivered over a billion dollars in sales, which is now in its 17th year in market.

Misher has also seen numerous licensing deals in the space that have not only grabbed consumers’ attention but have also had longevity.

“As an agency specialized in food and beverage partnerships, we are proud of the many food and beverage partnerships that have made a cultural impact,” he says. “A few include Sparkling Ice x Starburst beverages, Kraft Heinz gummy candy, Entenmann’s ice cream sandwiches, Brownie Brittle collab with M&M’S and Tapatio x Budweiser. Each of these partnerships has surprised and delighted consumers, broadened consumer appeal and generated significant incremental revenue. We are not the only agency doing great work in this space. We have been impressed with many new food and beverage programs from Brandgenuity’s Mike’s Hot Honey program to BAC’s Peeps extensions. The perception is that food and beverage partnerships are ‘in and out’ and just created to build buzz. However, Brand Central has brokered many partnerships that have lasted nearly a decade or more, from Tapatio-flavored Doritos to Krispy Kreme Jelly Belly jelly beans to Orange Crush Bomb Pops.”

Tapatio-flavored Doritos, Brand Central

Trending in the F&B Aisles

The food and beverage aisles are continuously evolving. New products and brands come to market while some fail to make the cut and leave the shelves. Like any other licensing category, the food and beverage arena also sees trends come and go.

“The food and beverage licensing landscape is always changing, driven by trends emphasizing dynamic flavors and exciting new food and beverage categories,” says Misher. “As an agency focused in food and beverage licensing, we are constantly monitoring emerging trends and flavors to see how our clients can participate in these growth areas. Several years ago, we saw consumers submerging their pickles in different flavors, so we immediately partnered with Van Holten to develop a spicy pickle with Tapatio Hot Sauce. Beyond flavors, many food and beverage brands use licensing to appeal to new demographic groups. For instance, partnerships like Goldfish and Frank’s Red Hot appeal to a Gen Z audience, which has enabled Goldfish to ‘age up’ their product beyond kids. Another example is the rise of specialty and exotic foods like truffles, which has created brands like Truff. To grow its fandom, Truff is collaborating with brands like Super Mario Brothers and Hidden Valley Ranch.”

Misher says when Brand Central began food licensing in 2005, long-term, strategic food partnerships were the only model. There’s been a noticeable shift in the last few years toward more limited-time offerings, which help maintain buzz and excitement while continually appealing to new consumer segments.

“More recently, we have seen the collab evolve into what we call ‘micro collabs,’ which last just a few weeks or even one day to create even more demand and viral moments – such as the Oscar Mayer Bologna face mask,” says Misher. “These market dynamics require licensing agents to stay agile and proactive, navigating an ever-changing market where creativity and responsiveness to evolving consumer trends and preferences are crucial for success.”

Reily has seen both impediments and opportunities across the F&B category. One setback to many food licensees has been caused by the growth of self-checkout. Reily says those particularly affect the snack and candy categories because those dominate impulse purchases at traditional check-out aisles. He adds that it’s hard to tell whether retailers will respond to widespread consumer dissatisfaction with self-checkout or stick with a change that lowers staff costs while also increasing theft. Meanwhile, manufacturers in popular licensed categories like candy, toys and jerky are seeking alternate aisles and channels of distribution.

Bush’s Best Grillin’ Beans with Mike’s Hot Honey

Emerging Partnering Potentials

Health and wellness are also trends Reily sees going strong in the food and beverage category.

“There is no end in sight for consumer interest in nutraceuticals: food and beverages serving nutritional and other wellness goals,” he says. “While mainstream brands remain wary of associating themselves with health claims, this trend offers opportunities for new brands.”

Reily also expects to see more opportunities around marijuana legalization – and consumer interest in edibles.

 “It’s sure to create opportunities for licensing once we understand which consumer brands will grab national market share and which products can be easily distributed and sold at retail,” he says.

Another trend Reily sees driving the food and beverage licensing market is retailer consolidation. One offshoot of that is the growth of private-label marketing. Reily points out this is as much a threat to licensing as it is to food and beverage brands themselves.

“Consolidation also makes finding shelf space and licensing partners who can claim it for your brand harder,” he says. “The upside is that, when you do build a partnership, it has the potential to deliver better results; this is why IMC developed its fewer, bigger, better strategy to focus on long-term wins for our long-term clients and their long-lasting brands.”

Avery-Grossman says Brandgenuity has seen a trend toward limited-time offers (LTOs), which involve building a product and buzz for a short window to keep a pipeline of news and excitement to keep consumers engaged.

“It’s also a way to test whether a product has legs,” she says. “For example, we partnered Mike’s Hot Honey with Utz for a Mike’s Hot Honey potato chip that started as an LTO but quickly became part of Utz’s permanent lineup and expanded into additional items.”

Being mindful of these trends helps to develop new strategies and help brands stay relevant in the popular F&B licensing category. Whether it’s hot honey or hot ones, there’s no question that spicy and hot flavors are on the upswing.

“Bold flavors continue to drive excitement and consumer engagement,” says Avery-Grossman. “Spicy and ‘swicy’ (sweet and spicy) continue to grow across categories from salty snacks and dips to dairy and frozen apps, and beyond. Our work with Mike’s Hot Honey has similarly tapped into trends, responded to consumer behaviors and brought innovation to existing categories. The forthcoming Mike’s Hot Honey x Montchevre goat cheese taps into the ‘swicy’ trend and reflects existing consumer application of the hot honey on cheeses and charcuterie boards, bringing a new flavor to the dairy category. These flavor trends have given Mike’s Hot Honey permission to expand to many categories; recent launches also include Club Crisps with Kellanova, hot honey BBQ chicken bites with John Soules and LTO menu items at Dunkin’ Donuts. Asian flavor profiles are finding success in sauces, seasonings, confections and prepared foods. Restaurant brands, like White Castle, are helping to bring the experience home, beyond the restaurant walls, and providing consumers with additional points of brand engagement. And, indulgence continues to play a role in everyday life, as consumers are unwilling to compromise great taste and flavor, which they then balance with health and wellness. Our work with Brownie Brittle and Honey Bunches of Oats will tap into these ongoing trends in permissible indulgence and mindful approaches to eating.”

Misher says when Brand Central works with clients to explore new food and beverage categories, it is important to evaluate many factors, including brand fit, category growth, opportunity size and innovation white space.

“We also consider if the category is trending,” explains Misher. “We have entered several trending categories for our clients this year, from sports nutrition and energy to RTD alcohol and flavor mashups. We are watching many new trends to see how our clients can play a role. A few examples we are tracking include croissant mashups like the ‘crookie,’ swicy mashups (sweet and spicy), pickles, sourdough and products with enhanced gut, physical and mental benefits. There is an increase in mainstream grocery stores tapping into international flavors. We are seeing nostalgic flavors and snack combos from childhood that are hot, especially with millennials. We are tracking many trendy flavors like PB&J, cereals, birthday cake and cookie dough. This trend will continue in snacking, bakery and frozen foods. Although many of our CPG clients seek large, traditional product categories for brand extension that generate huge impact and revenue, we continue to ‘mix in’ new and emerging trending categories that can create compelling food news and surprise and delight consumers.”

This story was taken from the August 2024 issue of License Global. Read the full issue here ...