Food & beverage licensing is everywhere, from QSRs, to supermarkets, gas stations and convenience stores. Anywhere they sell food, there will, more than likely, be licensed products. For the untrained eye it's not just those items with kids cartoon characters on, which are often the poster boys and controversy lightning rods for the category.
There is also a huge amount of cross category licensing within the food and beverage category. For example, although they make some, Modelez, the owner of Oreo, doesn’t make all Oreo branded food products, like ice cream. The Sunkist soda is made by Keurig Dr Pepper, but the brand is owned by Sunkist Growers, an agricultural cooperative owned by California and Arizona citrus growers. The Baileys alcohol brand is owned by Diageo but if you’re buying another Bailey’s branded product like chocolates or ice cream they’ve been made under license rather than by Diageo. And most restaurant brands you find in the supermarket - like TGI Friday’s, Pret-A-Manger and Starbucks - are made by other companies, like Nestle, under license.
The opportunities for licensing in the food and beverage category are massive.
Brand licensing in the food space for kids is incredibly lucrative but comes with its responsibilities and controversy. Disney pretty much exited this space (outside of its parks and attractions) some years back and only still operates in very specific sub-categories with strictly nutritional guidelines. 15 years ago you couldn’t step into a supermarket and not see Mickey Mouse ear-shaped pizzas and their characters across categories from fruit bags, cereals, chocolates and frozen foods. The Harry Potter IP also had restrictions in place around the food and beverage categories it can be used in. Even in the Wizarding World areas of Universal Studios you will not see the same food and beverages offered elsewhere within the parks.
Other brand owners still operate in this space but as obesity, especially for kids, continues to be a hot button issue, licensors in the kids space are becoming more mindful of what products they’re happy to have their brands on.
However, this still leaves huge opportunities, particularly in the adult space, for non-food brands, as we’ve seen with the recent Love is Blind iced coffee launch. It probably isn’t the first brand extension one would think of when looking to license the dating show.
But as recent examples show, such as Star Trek branded wine, The Godfather branded Heinz pasta sauces, Lady GaGa Oreos, Pop-Tart flavoured Krispy Kreme donuts and a Peaky Blinders themed bar in the UK, its been proven time and again that adults too are attracted to food and drink items that are associated with their favourite brands.
As with all licensing, to be really successful, the collaborations need to make sense, or in some cases just tap into a massive fandom that loves to buy up anything to do with their favourite brand or artist. Does the product offer anything outside of some branded packaging? What brand experience is the buyer actually getting? Or are they just paying a bit more for the buzz of seeing their favourite brand on a new product? In a world of cynical label slaps its important to think these things through if you want your licensed product to live on shelves for the long term.
Food and beverage licensing can be incredibly lucrative. Although royalty rates in this category tend to be much smaller than say apparel, the sheer volumes sold mean the overall revenue opportunities are still incredibly high. Kylie Minogue probably makes less than $1 per bottle sold of the wines bearing her name but the number of bottles sold will more than keep her happy over the coming years.
And as recently launched M&M branded handbags and fragrances show, there are plenty of opportunities for food brands to flip reverse it and license their brands out into other categories as well - but more on that in another post.
What are your thoughts on licensed products in the food and beverage category? Do they offer a real brand experience or are they cynical label-slap money spinners? What are the best and worst licensed food and beverage products you’ve seen?