Growth Strategies: Food takes license as sales slump cure

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As food marketers, including General Mills and Kellogg Co., face tough battles in their own categories, they are increasingly turning to licensed products to build brand loyalty and create revenue streams.

With sales of its cereal brands down 1.9% for the 52 weeks ended Feb. 24, General Mills is expanding its Big G licensing ventures beyond the core Cheerios program for infants and toddlers to encompass older-skewing brands such as Lucky Charms and Trix. Boxers, t-shirts and pants that feature characters such as the Trix rabbit and Cocoa Puffs' Sonny the Cuckoo bird will be featured exclusively at Target Stores beginning this month-alongside packages of the cereals themselves-to appeal to college students and younger kids. At the same time, General Mills is also partnering with licensees to create ceramic cereal bowls and "Wacky Wobbler" bobblehead toys featuring the icons to likewise target a new demographic.

Licensing for food products certainly isn't new, but it seems to be gaining steam as business gets tougher. "We're in growth mode," said Leigh Ann Schwarzkopf, manager of trademark licensing at General Mills. The reason is that licensing interweaves brand building with the ability to reach new consumers and, of course, gain revenue by way of royalties.

"There are definitely more food companies trying to get on the licensing bandwagon," Ms. Schwarzkopf said, citing as reasoning the current "time of confusion" that has sent consumers scurrying back to comfort brands that connect them to their childhood.

Charles Riotto, president of the International Licensing Industry Merchandising Association, said the 3% growth seen in licensed products from food companies last year was "pretty impressive" compared to the flatness of the overall licensing industry. According to a number of food companies, this is just the beginning.

"Our [licensing] program in general is just in its infant stages," said Elisa Webb, director of worldwide licensing at Kellogg, who was brought on in mid-2000 from Coca-Cola Co. to create a first-time licensing program in-house. The program last year was focused on extending its kids' cereal brands and icons including Froot Loops' Toucan Sam. This year there will be a variety of licensed deals to support Kellogg's adult-targeted Special K cereal, reach teens with Pop-Tarts merchandise and promote the Eggo and Keebler brands.

Masterfoods USA will be a first-time exhibitor at the upcoming Licensing 2002 International show, a move that reflects the breadth of the now five-year-old licensing program, built primarily around its M&M's brand, said Michele Brown, VP-licensing for the confectioner. One of Masterfoods' key focuses is licensing M&M's as a food ingredient, a strategy evidenced in a new partnership with Aurora Foods to feature the chocolate candies in Duncan Hines Brownie mixes.

A Target spokesman said the General Mills line will be in stores for a few weeks and then disappear. "Logo wear can have an appeal across various ages and demographics if the logo meets other trending requirements," he said, such as an "interest in retro vintage apparel."

"We view it as fun," he added, adding that if it catches on in a big way, Target will consider doing more.

contributing: alice z. cuneo

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