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TLL Survey: Corporate Licensing Up 3% in 2015 Fueled by Food/Beverage & Automotive

By Karina Masolova

At $27.6 billion, corporate trademarks and brands accounted for 27% of all retail licensed sales in the U.S. and Canada in 2015, the most of any segment (followed by fashion at 20% and sports at 14%), according to The Licensing Letter’s Annual Licensing Business Survey. But while it may be big, the corporate segment was also devoid of drama growing at a slow and steady 3.0% clip. Although 2015 growth was higher than the 2.0% by which the segment grew in 2014, it was below the overall U.S./Canada growth rate of 3.4% for all licensed sales. But in spite of modest and uneven growth, no category declined in retail sales.

Steady Growth of “Foodie” Segments

For the sixth straight year in a row, food/beverage outperformed all other corporate trademark and brand segments with 4.5% growth in 2015. Overall, the eating and drinking-related segments continue to represent the growth area in corporate licensing, although the growth of the restaurants segment evened out to a flat 1.5% in 2015 after 3.0% growth in 2014. Combined, the foodie segments make up 11.9% of retail activity for corporate trademark-licensed merchandise (food/beverage leads with 7.4% of the market). For many food/beverage brands, licensing is presenting greater profits than the main business.

Survey respondents list several factors that contribute to the demand of licensed food and beverages:

  • Formal mealtimes are declining in popularity in favor of grazing and snacking. Consumers are favoring 5 or 6 quick meals per day. This in turn creates more opportunity for licensed products to target a wider range of consumers at different times of day.
  • Alongside increased interest in home cooking, driven by driven by cooking shows and social media, is the need for convenience. Healthy and cost-effective meals are “assembled” rather than pre-packaged or cooked entirely from scratch. And the stigma against frozen foods has lessened thanks to marketing and product extensions from well-established brands.
  • The taste for exotic flavors, spices and textures, especially among millennials (including moms) and Gen Z. According to market research publisher Packaged Facts, over 25% of parents learn about new food products from their children.
  • The stealth health and real food movements are growing to promote healthy eating as a lifestyle choice—including gluten-, wheat- and dairy-free, organic and unprocessed foods. Innova Market Insights identifies ‘clear’ packaging, rather than info dumps, as the key trend emerging from 2015 as consumers demand more simplicity and transparency when making food choices. Branding is a large part of this equation, even as off-label products have become more accepted.

On the supply side, the fact that the bulk of activity is licensing into related brand extensions works on several layers. The most obvious factor is the consumable nature of the product—even though royalty rates are lower in this segment than, for example, apparel, high turn over and consumer brand loyalty ensures solid sales. And while shelf space is shrinking for other product categories for brick and mortar stores, food and beverages are enjoying a boom. Warehouse stores like Costco, mass retailers like Wal-Mart—even pharmacies, convenience stores and even gas stations are stepping up their game to ensure they have more space for grocery. And “once brands are on the shelf, they don’t leave,” according to one agent.

Performance of Other Property Types

Sales of automotive properties continued to grow at the same 3.0% clip experienced in 2014, matching the segment-wide growth average. Growth in auto sales following the 2008 financial crash, as well as the popularity of do-it-yourself auto repair and car auction shows, have fueled the growth of automotive licensing on both the property and product side. The category is especially strong in auto accessories, video games/software, toys and apparel.

Corporate property types that were also up in 2015:

  • Hardware/appliance/tools grew 3.6%. This is one of the few sectors where there’s still room for branding, and the opportunities are especially poignant as the home improvement industry improves.
  • Electronics/technology grew 3.5%, fueled in part by the extension of leading electronics brands into wearable products like apparel, accessories and sporting goods.
  • Home-related brands enjoyed 2.4% growth, up from 1.0% in 2014.
  • Electronic media grew 2.0% after declining 1.5% in 2014. While most activity for these brands is in co-branding and marketing deals, 2015 saw healthy merchandising activity extending from old partnerships.

All other property types were either flat or down, including sporting goods (0.5%), although sporting goods was up more on the product side.

Retail Sales of Corporate Trademark-Licensed Merchandise, by Sector, 2014–2015
Note: Numbers may not add up exactly due to rounding.
(Figures in Millions)
Sector Retail Sales, 2014 Retail Sales, 2013 Change, 2013-2014 Share of Market, 2014
Automotive/Motor Vehicle $4,139 $4,018 3.0% 4.0%
Food/Beverage $7,595 $7,268 4.5% 7.4%
Restaurants $4,625 $4,557 1.5% 4.5%
Sporting Goods $1,324 $1,317 0.5% 1.3%
Hardware, Appliance and Tool $2,820 $2,722 3.6% 2.7%
Home-related $387 $378 2.4% 0.4%
Electronics/Technology $3,234 $3,125 3.5% 3.1%
Electronic Media $221 $216 2.0% 0.2%
Other $3,301 $3,249 1.6% 3.2%
TOTAL $27,645 $26,850 3.0% 26.8%

Performance by Product Categories

The growth in licensing of food properties is matched by growth on the products side. Sales of food/beverage licensed products increased 5.1% in 2015, the largest increase of any product category. At $9.2 billion, food/beverage constitutes over a third of the market for corporate licensed products in the U.S. and Canada, with most sales coming from the frozen and packaged food aisles. In addition to product extensions from food/beverage-based brands, fitness brands are also finding success as consumer interest in health and fitness grows.

Apparel (3.9% growth, $2.6 billion total sales) and sporting goods (3.4%, $1.2 billion) continue to show strength. The rise of athleisure means that sport and fashion are merging to become one category, with jogging suits, yoga garb and running shoes making their way into the wardrobe as everyday wear.

Other key product categories in the corporate segment to post growth above the segment-wide 2.0% average include publishing (3.4%), consumer electronics (3.2%), toys and games (2.3%), accessories (2.2%) and gifts/novelties (2.1%). On the flip side, product categories that have been in long-term decline were flat or down in 2015, including home furnishings, stationery/paper, domestics and video games/software.

Retail Sales of Corporate Trademark-Licensed Merchandise, by Product Category, 2014–2015
Note: Numbers may not add up exactly due to rounding.
(Figures in millions)
Product Category Retail Sales 2015 Retail Sales, 2014 Change, 2014-2015 Share of Market, 2015
Accessories $1,871 $1,831 2.2% 6.8%
Apparel $2,569 $2,472 3.9% 9.2%
Consumer Electronics $3,874 $3,753 3.2% 14.0%
Domestics $75 $74 1.0% 0.3%
Food/Beverages $9,158 $8,712 5.1% 32.4%
Footwear $1,671 $1,650 1.3% 6.1%
Furniture/Home Furnishings $859 $851 1.0% 3.2%
Gifts/Novelties $341 $334 2.1% 1.2%
HBA $986 $995 -0.9% 3.7%
Housewares $507 $506 0.1% 1.9%
Infant Products $219 $218 0.4% 0.8%
Publishing $840 $812 3.4% 3.0%
Sporting Goods $1,164 $1,126 3.4% 4.2%
Stationery/Paper $90 $95 -5.2% 0.4%
Toys/Games $551 $539 2.3% 2.0%
Videogames/Software $479 $510 -6.1% 1.9%
Other $2,391 $2,373 0.8% 8.8%
Hardware and Paint $165 $159 4.0% 0.6%
Gardening $110 $108 1.6% 0.4%
Pet Products $209 $206 1.7% 0.8%
Automative Accessories $361 $354 2.1% 1.3%
Boats and Vehicles $438 $489 -10.5% 1.8%
Other $1,054 $1,057 -0.3% 3.9%
TOTAL $27,645 $26,850 3.0% 100.0%

Sales by Distribution Channel

In terms of distribution, the predominance of traditional brick and mortar channels is especially pronounced in the corporate segment. As in other segments, discount is the biggest channel, accounting for 36.1% of sales. But the corporate sector also relies more heavily on the supermarket and grocery channel, accounting for 28.1% of licensed sales. This channel generated only 12.2% of overall sales of licensed products in the U.S. and Canada. Ecommerce is an area of growth for corporate, with shrinking self-space and a lower cost of entry into the digital sphere, accounting for 6.9% of sales.

While traditional retailers tend to overlook corporate brands, Survey respondents indicate that the ecommerce arms of large retailers like Target and digital natives like Amazon have been enthusiastic about welcoming their merchandise. Dealers, wholesalers and distributors like Costco are a stalwart for this category despite declining interest from specialty retailers and department stores.

Representative Properties for Corporate Trademark Brands

Automotive/Vehicle: BMW, Cadillac, Caterpillar, Chevrolet, Chrysler, Corvette, Dodge, Ferrari, Ford Motor, Harley-Davidson, Hummer, Jaguar, Jeep, John Deere, Kawasaki, Mack Truck, Mercedes Benz, Mustang, Porsche, Winnebago.

Food/Beverage: Arm & Hammer, Betty Crocker, Blue Diamond, Budweiser, Campbell’s, Cheerios, Chiquita, Coca-Cola, Coors, Corona, Del Monte, Dr Pepper/Snapple, Godiva, Green Giant, Hershey, Jack Daniel’s, Jim Beam, Kahlua, Keurig, M&Ms, Miller, Mountain Dew, Nathan’s, Nestle, Oreo, Pepsi-Cola, Pillsbury, Reese’s, Special K, Sunkist, Sun-Maid, Welch’s.

Restaurants: Baja Fresh, Baskin-Robbins, Boston Market, Burger King, California Pizza Kitchen, P.F. Chang’s, Cinnabon, Claim Jumper, Dunkin Donuts, Fazoli’s, Jamba Juice, La Tasca, McDonald’s, Red Robin, Starbucks, Subway, Taco Bell, TGI Friday’s, White Castle.

Sporting goods: Body Glove, Browning, Coleman, Dunlop, Everlast, Polaris, Rawlings, RealTree, Remington, Smith & Wesson, Spalding, Wilson, Winchester, Under Armour.

Hardware/Appliance/Tools: Black & Decker, Craftsman, DeWalt, Honeywell, Maytag, Snap-On, Stanley, Sunbeam, Westinghouse, Whirlpool.

Home-related: Croscill, Farberware, Fiesta, Mikasa, Mr. Clean, Pfaltzgraff, Rubbermaid, Waverly, Woolite.

Electronics/Technology: AT&T, Apple, Emerson, GE, IBM, Phillips, Polaroid, RCA, Timex, Verizon, Westinghouse, Xerox.

Electronic media: Animal Planet, Discovery Channel, ESPN, HGTV, Food Network.

Other: American Kennel Club, American Tourister, Armor All, Dr. Scholl’s, Eveready, Jenny Craig, Linens ‘n Things, Samsonite, Scotts MiracleGro, Sharper Image, Toys ‘R’ Us, Weight Watchers.


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