Food & Beverage Licensing: Learnings from Industry Thought-Leaders
Food & Beverage licensing was the theme for the 2018 edition of Brand Licensing Europe. Including seminars from Chupa Chups, Beanstalk, Point 1888 and Pink Key Licensing who discussed how to build a successful food licensing partnership, how to keep innovating in the food & beverage space and more. Find all the key learnings in this free report.
- Earning the right to approach food licenses
- How to build a successful food & beverage licensing programme
- How to keep innovating in food & beverage licensing
Earning the Right to Approach Food Licenses
Successful food licensing is the most difficult and provides the toughest negotiations. The investment from big licensees in food is huge, but entertainment properties are notoriously risky for big food companies. You have to earn the right to approach the big boys and through LOL, Team.1888 demonstrated how to break this down.
Beyond their fame for L.O.L. Surprise’s licensing success, The Point.1888 have a reputation for being the next generation of brand licensing. They do things differently, pride themselves on work/life balance and donate 11% of their profits to charity.
Taking centre stage at Brand Licensing Europe’s Brands and Lifestyle Theatre this year, Managing Director Will Stewart and Retail and Brand Director Bethan Garton explained how to earn the right to approach food licenses.
- Understanding Food Licensing
Kickstarting the session, Bethan noted the importance of understanding food licensing first. Global retail sales of licensed merchandise is worth $262.9 billion and the industry grew at 4.4% in 2017. Food and Beverage is less than 5% of the total market but is expected to be one of the fastest growth areas in the next 5 years.
And while its custom to see food brand’s moving into alternative food categories, like the triple partnership of Cathedral City, Branston Pickle and Jacobs crackers, non-food brands can also move into food categories like celebrity chef licensing, popstars, bands, music licensing and entertainment – the way Candy Crush is going into ice cream.
To have success, each food and beverage extension should bring a unique offering to its category as well as have the brand’s DNA at its core. Take for example, the limited-edition Minions Tic Tacs – the success of which dried out all banana syrup – where the iconic Minion shape partners perfectly with the shape of Tic Tacs. Similar examples include the Star Wars lightsaber Calippo, Mickie Mouse Oreo cookies, the M&S Thomas the Tank Engine moulded chocolate tray, Heinz and Peppa Pig and Kellogg’s and Frozen.
Food brands can be licensed in, licensed out, co-branded, licensed promotionally and become corporate partnerships. Food licensing is complex, varied and unique from other categories.
Only the very best entertainment properties can earn the right to even think about food let alone approach the big players. They carry high risk for food producers who have high investment in essentially a trend-led brand.
- The Journey to Food Licensing
Forming part of the global pop culture phenomenon, L.O.L. Surprise launched in December 2016 with only digital marketing, L.O.L. Surprise has quickly become one of the best-selling toys year to date worldwide. In 2017, it won Toy of the Year, Craze of the Year and Creative Toy of the Year, as well securing 4.5 million views for the London launch event and unpaid influencer videos with a 9.2 million reach. In 2018, it was the Licensing Awards 2018 Winner.
According to Bethan, you need exposure in core category retailers. For L.O.L. Surprise, this was the Entertainer, where they got their core product on shelf and in range. After securing a meaningful cross category space, they took on a secondary retailer space – WHSmith.
It is only after this astronomical success that L.O.L. Surprise had earned the right to move into food and beverage. Starting with the master toy, L.O.L. Surprise moved into publishing, hardlines, softlines and eventually earned the right to enter the Food and Beverage space.
L.O.L. Surprise is moving into flavoured water, fruit squash with a surprise, cake mixes, pink wafers and fashion donuts – these products are core to its DNA – it’s about the surprise, the sparkle and the pink.
Bethan’s advice is to share your success and news with licensees and retail buyers. Drop monthly emails detailing your wins, keep NPD data snippets from the press, do retail road shows, and and see the busy buyers, invest in good bag sampling and visit trade shows. They might not be someone who knows a 6-year-old, so do their job for them. Show them how great your product is for your target market.
Food licensing should be a lot easier than it is, Will explained. There’s a huge amount of success and story to tell before you get the opportunity to approach the food guys. But food licensing requires a huge amount of investment from the licensees – they need to know it’s going to be a sure-fire hit – especially with entertainment. Behind the Peppa Pig and Heinz partnership was 6 years of incredibly hard work. Star Wars, too, has decades of credibility behind it. The amount of product development and testing goes into it is huge, and there are many unsuccessful attempts at food.
- Retail is Everything
The future of food licensing (and all categories) remains firmly in being able to source retail partners first. The packaging lines that you have to run in food are massive, so you need someone who is engaged. As retailers are struggling and making cuts, traditional methods might not be best suited.
The historical agency models starts with brand, then agent, then licensee and then to the retailer. But The Point.1888 model reverses this approach. It starts with the retailer, then agent, then brand, then agent and then licensee. The 3 part partnership model brings brands, retailers and manufacturers together to develop new product categories.
With retail at the starting point, it’s crucial to understand the retail channels. Retail partners are not bad people, they’re incredibly busy and incredibly stressed, and they’re getting younger and younger. But it’s vital to get their input. Get to grips with where you want to be, go out there, visit, write notes and do everything you can do understand their channel.
The tendency is to go after grocers first. If you succeed it’s phenomenal. But don’t underestimate the power of convenience stores. Currently, 2 stores a day after being opened in the convenience sector because shopping behaviours have changed. Budgets have been cut. People are buying less, more frequently. And supermarkets are engaging in them, too. Grocers are looking into the convenience sector. Don’t ignore the value channel either. Take B&M, for example, with 3 million customers a week they are absolutely investing in licensing. Online can also be a great place to launch the brand – there are no retail limitations with space.
Decide who you want to go after and be really rigid.
But ultimately, be disrupting, be create and be unique. You’ll get there.
How to Build a Successful Food Licensing Programme
What needs to be put into place to secure licensees? And what are the mechanisms for ongoing licensee and retail support? Featuring real life case studies, this Brand Licensing Europe session welcomed Christine Cool, Licensing Manager of Perfetti Van Melle and Declan Hassett, Senior Brand Licensing Manager at Diageo. The session was led by Serena Sibbald, VP of Brand Development at Beanstalk.
About Perfetti Van Melle, With Christine Cool
Perfetti Van Melle is a privately-owned manufacturer and distributor of confectionary and chewing gum. As the 4th largest confectionary company, it sells into over 150 countries and has 17.7K employees worldwide.
- Why food and beverage licensing?
It was the most natural extension, a major visibility opportunity for the brands in new aisles and channels and a clear business prospect. According to Christine, “In today’s marketplace, people are always looking for novelty and new things to try.”
- What do you bring to the table?
Unique brand flavours, established brand awareness, consumer trust in our brands, innovation capacity, synergies for cross promotions and protection and control mechanisms to align with our product standards.
- How do you work with your partners?
Manage the flavour profiles, provide research and development support, quality screening, design coordination, marketing synergies (including development, launch activation and communication), and we involve the marketing team on both sides to support the launch and prepare the right planning.
Case Study: The Steps to a Great Food Licensing Programme, With Declan Hassett
Know the brand: Baileys – a “real grown-up juice.” Based on part cake, part booze, pure pleasure. As Declan explained, “We’re not selling taste, we’re selling a real sensory experience.”
Agree the tramlines: In a complex organisation, it’s really important to sit down and agree the tramlines. Ask “what are the areas we’re going to develop?”
Find great partners who are passionate about your brand: Baileys celebrates the impulsive and imaginative treat moments of playful modern life, and it’s no surprise that Diageo wants “partners who have the same passion for the brand” that it has.
Develop great products that deliver the brand experience: As Declan said, “We could have just created a cake, but we created a FreakShake Cake.”
Don’t stand still: Constant innovation is key. “We had left the same product in the same packaging for far too long. We came up with new formats, new price points, and roughly speaking we did about 10 million in Baileys sales. Bring real innovation in and you get success.”
And lastly, but certainly not least, find a great licensing agency.
Taking questions from the floor, the panel was asked which licensing partnership they admire most. Christine commented on Oreo’s programme, which has a “very consistent approach”, alongside Burger King, which “has been successful in many different markets.” The real test, according to Declan, “is can you take this home to your friends and say you’re proud to produce it?”
The pair were then asked what the biggest risk in food licensing is. Christine explained, “You expose your reputation in the market when you take your brand into another category and you see it in the hands of another company. An issue with the product is one problem – like an incident with a product – you need to be able to arrange recall, they need to be financially very sound. The second one is the communication issue. Today, things go viral so fast.” You have to be so careful and have crisis management prepared.
Declan agreed, explaining, “It’s a food product, and the largest food production companies in the world have called in for recall. It’s hugely damaging. You’ve got to put in all the due diligence.”
When asked on their most successful products, Christine said the one Unilever, as they’d been able to partner with two different brands: Airheads in the US and Chupa Chups in Europe. “It also allowed us to learn from different ways of going to market.” Declan confessed it was a difficult question, because “you’re only as good as the next product you launch.” But “if you tie me down to it”, he said, “a few years ago we launched a Baileys ice cream in Australia.” Due to the activation in that market, they were able to accurately track the knock-on success.
The Power of Art: How Chupa Chups Reinvents the Colour Wheel
Dream team duo Marta Ballesteros and Christine Cool, both Licensing Managers at Perfetti Van Melle, took the Brands and Lifestyle Theatre at BLE by storm. Filling the room with the pop-art vibrancy of Chupa Chups, they danced us through 20 years of success, recent diversification and how they’re growing the model with other brands.
Kickstarting the session, Marta revealed that Salvador Dali designed the daisy crown of Chupa Chups when he was approached to do so in 1969. Though it has since been revised, this characteristic icon is an instantly recognisable logo.
With its heritage steeped in art, Chupa Chups has continued to reinvent its own colour wheel.
As old pioneers, Marta explained they had faced several challenges. After its licensing division was set up in Spain, it soon expanded into the south of Europe. But they had to make the most of a small team. “Candy brands were total newcomers in the licensing arena,” she said, “[so] we seduced our first partners by showing them our most irreverent PR campaigns.”
They soon came to learn that the brand could not work miracles on its own. It needed to be dressed for the licensing arena. “True to our artistic routes, the brand had to take a new approach. We turned to designers and artists,” who helped design the essence of the brand and the vibe of its movements. Art was the synergy between the logo, the lollipop and the colourful wrappers, and these icons have been interpreted in two styles – pop meets retro.
“Our design portfolio sets us apart.” In fact, Marta revealed that sometimes, the biggest challenge is for the design coordinator to help the licensees choose their design from their design portfolio. She explained, “We have so many designs that people say we’re trying to give them a sugar brainwash, but it’s created a sustainable design programme.”
As Christine put it, fast fashion retailers see the brand as a partner who can create something for the youth market that always wants to try something new. Likewise, Chupa Chups naturally lends itself to beauty products because of its distinct flavour profile.
How to Keep Innovating
A corporate brand needs to innovate constantly. Christine explained, “Innovation has been key to keeping our licensing programme attractive. But innovation is a big ten letter word and may have many different meanings. What is means to us is the “wow” effect – to keep surprising our partners and our consumers every day.” And they shared their mottos to achieve this.
- We’re playful
- Everything talks about the brand (including the infamous Chupa Chups business cards)
- We reinvent ourselves everyday
- Every year we come to BLE and we bring new concepts, because we like to surprise our consumers with new brand experiences every year – from vintage sweet shops to candy gardens
- We talk and walk like a fashion brand. Based on the youth craze, we create youthful fashion images
Wrapping up their sessions, they explained, “Licensing is a tool that creates a halo effect for the brands and keeps them cool.” And most importantly, “None of this would have been possible without the dedication and passion of our partners.”