Food for licensing

Licensing

Article written by : Vrinda Oberai

Already having prevailed in diverse distribution channels, food licensing in general and in the FMCG space is happening everywhere.

A quick trip to the supermarket will have your eyes rolling for a variety of licensed products across the shelf including categories like cornflakes, jams, chocolates and other FMCG products (going beyond the food category as well). Food and beverage (F&B) licensing has been taken to entirely new retail locations and the same can be agreed upon by looking at the ability of the food brands to transcend their core business, developing a great connect with customers in new product categories.

Licensing and its role
Licensed merchandise has been a popular way to push products with strong brand imagery. It is over the past few years that this concept is soon gaining ground in full throttle with regards to the FMCG retail market. “Licensing of characters can get faster trials as the consumers are more open to try products of their favorite characters. As long as the right fit among the three – the product category, the brand and the characters exists, it can be constructive to cut through the clutter, generating greater acceptability,” asserts Devendra Chawla, President – FMCG and food at Future Group.

Also, licensing is being regularly used by some of the prominent brands for product and packaging innovation.  “It’s like a brand endorsement that one does; in this case it’s with the character that fits in well with the brand. Licensing helps the product to stand out and differentiate amongst competition,” avers Rahul Akkara, VP- Marketing, Parag Milk Foods Pvt Ltd.

Market reaction
Brands are getting into licensing to create differentiation and value addition, more importantly it brings excitement for the product, especially in the kids’ genre, adding to the fun factor and the emotional connect with their favourite character(s). Character merchandising is becoming a promising category due to the equity the character adds on to the brand value in the mind of the consumer. “Customers are getting better products (and they are willing to pay a higher price for such products). Every character has a story to its credit and people actually relate to it while making the purchase decision. Besides pester power, it brings about excitement and a new experience for the consumer,” asserts Chawla.

When asked about the pricing of licensed products as against the regular products on the shelf, Chawla shares that some of the leading FMCG brands and their own private branded products are using character licensing to launch value added products/packs which are sold at a premium as compared to regular SKUs. “Consumers place an extra amount of trust on such merchandise and are willing to pay Rs 1-2 for it,” opines Chawla. Also, it is understood that attractive designing and quality offering helps in increasing the consumption in this category. The product is also priced competitively to increase more trials.
Akkara interstingly points out that the demand for licensed products is far more than regular merchandise. “In case of regular merchandise, a good amount of investment needs to be made to  create excitement and education.  Kids relate themselves with characters and hence this becomes easy on recall. Since these are character associations, they come in at a premium,” asserts Akkara.

Few examples
At Future Group, in the private brand’s category they have 4-5 co-branded products with Walt Disney characters. “We have co-branded Breakfast Cereals and Jam which have been runaway success since we offer both Health & taste which satisfies the mother and the kid,” says Chawla. Going beyond the food category, in an attempt to inculcate hygiene amongst kids but yet be “fun” thay have launched Caremate with Hannah Montana, Princess and Spiderman branded Kids’ Handwash and also a range of party Tissues with similar characters. “We plan to expand to several bigger and more ‘pester power’ driven categories so that we can increase consumption and drive consumer trials. We are evaluating the business potential in most categories and will launch several more products in the months to come,” adds Chawla.

While at Parag Milk foods, they have got into a licensing agreement with Warner Bros for one of their most innovative products ‘Go cheezoos’. “The character association with Tom and Jerry perfectly suits us as there is no better character to endorse cheese than Tom and Jerry as one has always seen them chasing each other on TV for cheese,” shares Akkara.  “This association has helped us.  As we move forward we will see ways of how we can get into similar associations with characters which gel with the product proposition and the TG that we wish to address. There has to be a synergy between the Core Brand Values and the character that one identifies for the product and in the case of ‘Go cheezoos’, the synergy is perfect,” he further adds.

International perspective
Globally, according to "The Licensing Letter Food/Beverage Licensing Report", there's $8 billion on the F & B licensing table! While abroad, food licensing is far more evolved and present across segments and categories as pointed out by Akkara, in India, the same is just beginning to grow.

Licensing provides an avenue to enter into the large format stores, which otherwise is a difficult task. “Most character based merchandising products are backed by content from TV/movies /comics, etc which are more popular in the West. From the content point of view, we have also seen the growth of theme parks which further fuel the recognition of these characters as well as provide the ground for retailing the respective merchandise,” opines Chawla. He also shares as to how Modern Trade and new format stores have also contributed to the overall growth of food licensing in the Western countries. Product innovation in such countries is very frequent and licensing is used extensively for product innovation.

In India consumers are still getting acclimatised to the characters due to increased exposure and spending power. Growth of modern trade has also contributed in a big way for brands who want to innovate with characters and reach a larger base.