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Food and Beverages

Royalty Profile for Licensed Food/Beverages

 

Sector value, U.S. & Canada, 2017: $12.12 billion

Proportion of retail sales of licensed merchandise, U.S. & Canada, 2017: 11.1%

Average royalty, U.S. & Canada, 2018: 6.01%

Royalty range, U.S. & Canada, 2018: 1%–12%

Average royalty, U.S. & Canada, (10 years) 2009–2018: 6.20%

Analysis

Supermarket margins are miniscule compared to virtually all other areas of retail, and low royalty rates predominate—offset by the expectation that the manufacturer and licensor will earn sufficient dollars through high sales volume. After some fluctuation earlier in the decade, royalty rates for licensed food and beverage products have settled around 5.9% to 6.0% since 2011.

Brand licensing deals in this area are sometimes combined with agreements for the licensor to supply a key ingredient (i.e., Sun-Maid raisins in a muffin mix), and the financial aspects of both deals are often intertwined.

Even when dealing with entertainment properties, margins are lower here than for other categories, though they can be higher than for brand deals.

This is a growth area for corporate trademarks, publishing, and others who market as lifestyle or health brands.


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