BSLG-Brokered License Nominated for Best Corporate Licensee

Naturally, we're pretty excited about this....

BURGER KING®-BRANDED SNACK CHIP DEAL BROKERED BY BROAD STREET LICENSING GROUP NOMINATED FOR LIMA “BEST CORPORATE BRAND LICENSEE OF THE YEAR”

MONTCLAIR, NJ – The Broad Street Licensing Group announced today the line of snack food chips licensed from client Miami-based fast-food giant Burger King Corp. has been nominated for “Best Corporate Brand Licensee of the Year” by the licensing industry’s trade association LIMA (Licensing Industry Merchandisers’ Association). Marketed by AZ-based The Inventure Group, the license was brokered by Broad Street Licensing Group, the exclusive food licensing agent for BURGER KING Corp. “The Inventure product line is already being sold around the world in the Caribbean, Mexico, Central America, and South America, along with Asia, Europe and The Middle East,” said Broad Street President, Carole Francesca. “Estimates are the line will eventually top $50MM in sales annually.”

This is the fourth straight year a Broad Street Licensing Group client’s licensed product has been nominated for this prestigious honor. Past BSLG nominations include Creamsicle®-branded candies and The Culinary Institute of America’s “Masters Collection®” line of housewares.
About Broad Street Licensing Group

Broad Street Licensing Group (BSLG) is a leading full-service licensing agency specializing in corporate brand building. They develop long-term licensing partnerships for their clients focusing on brand extensions designed to reach across platforms and channels of distribution. In addition to Burger King, their roster of experience includes Bruegger’s Bagels, The Culinary Institute of America, BIC USA, Unilever, Fabergé, Cutty Sark, Bugatti, Good Humor-Breyers, Rich Foods, Snuggle, ReaLemon, and Popsicle.

About Burger King Corporation

The BURGER KING® system operates more than 11,700 restaurants in all 50 states and in 74 countries and U.S. territories worldwide. Approximately 90 percent of BURGER KING® restaurants are owned and operated by independent franchisees, many of them family-owned operations that have been in business for decades. In 2008, Fortune magazine ranked Burger King Corp. among America’s 1,000 largest corporations and Ad Week named it one of the top three industry-changing advertisers within the last three decades. To learn more about BURGER KING®, please visit the company's Web site by clicking here.

Tesco, China and Mickey D's

While it has often seemed that world retailing giant, UK-based Tesco, could do no wrong, the secret of the company’s success is that it fixes things when they don’t get it right.

The chief of Tesco's US operation, Fresh & Easy, has said early market research was mistaken, and that the retailer cannot rely on its store brand without getting "down and dirty" on price. Prior to the November 2007 launch of its US operation, Tim Mason, head of Tesco's US business, claimed the company had thoroughly studied the American market and saw a need for a new kind of store in the West Coast marketplace. Poking around in the kitchens and pantries of American homes was not enough, according to the company, since they failed to notice the huge freezers stocked with special promotions out in the garage. "There's less loyalty in the American market," says Mason. "A Brit has to hear it a few times before you accept that people make up their mind where to go each week when they check out the special offers round the kitchen table. One man in a focus group said he stopped shopping at Fresh & Easy because they no longer sent him a flier promoting the latest special offers."

The recession has slowed Tesco’s expansion plans. There are currently 113 Fresh & Easy outlets, and plans to grow that number of 200 have been scaled back "at least six months."

Outside the U.S., Tesco is making strides with its muscle and information. It, Wal-Mart and Carrefour, the three behemoths of the global retail industry, are going head-to-head in many markets, but especially in China, perhaps the largest potential market for the future. Despite the recent economic downturn, Chinese disposable incomes have increased by 118% since 2000 and will double again in the next five years. Indeed, recent consumer surveys there found a majority of people didn't even think there WAS a recession! China will likely overtake Japan as the world’s second-largest economy (after the U.S.) by 2015. Some of the innovations Tesco has brought to its China operations include:

• Minibuses to bring in shoppers (only 2 people in 100 have cars)

• Products aimed at the local palate, including "donuts" covered in shredded dried pork, live fish and edible turtles and pig's faces

• "Wet" market products like freshly-slaughtered pork (Chinese shoppers feel a warm piece of meat signals freshness, as do live fish over prepared ones)

• Employees who hawk their wares in a cacophony of sounds

• Allowing shoppers to tear off packaging, which Chinese consumers feel hide stale produce and increase their cost

Tesco finds Chinese shoppers among the world's most demanding, but given the rash of food scandals recently (including melamine-tainted milk and fake eggs made from gelatin "yolks" covered by calcium carbonate "shells"), it's not surprising. Politics can play a hand in operations. French-owned Carrefour found this out after France's government appeared to support Tibetan independence prior to the Olympics: Chinese consumers boycotted the stores. Tesco's sales are robust (close to $1bn), partly from its aggressively promoting Membercard, the equivalent of the Clubcard familiar to U.K. shoppers. With 4.5MM members (out of 6.5MM total Tesco shoppers), the company can collect information, which it follows at its own data management firm.

Tesco is renting out the information in a database called "The Shop in China," and is increasing profitability in its 62 stores further by renting out retail space there. But Tesco’s global solution is to shape its destiny through expansion, and in China that means constructing its own shopping malls. Through a wholly-owned property subsidiary, five large Tesco malls are already under construction and an additional 15 have been green-lighted. Given the land limitations in China's urban landscape, the malls are heading upwards, with restaurants and even movie theaters planned on upper floors. Tesco plans to build houses, office complexes and even perhaps hotels alongside its new stores. It denies the projects will require large amounts of capital, insisting "for the price of a hypermarket in the U.K., we'll be able to build a shopping centre in China."

Still, some observers question the scope of Tesco's China ambitions, where Foreign Direct Investment (FDI) fell by 32.6% in January, the fourth monthly decline in a row (after increasing 110% the same time last year). Analysts also are concerned about retail saturation, with Shanghai already exceeding France on a per household basis. The French retailer, Metro, has reduced the size of its China HQ, and at least one American company is rumored to have put further expansion plans on hold.

Mickey D's is looking to speak more Chinese, too. McDonald's plans 500 new outlets there over the next three years. In 2008, the company opened 146 restaurants in China, one of its fastest growing markets, increasing the number of outlets to 2,012 by the year's end (out of more than 30,000 worldwide). In the interim, the QSR giant posted a better-than-expected 7.1% rise in global sales for January at restaurants open at least 13 months, supported by strength in nearly all its markets. Fast-food restaurants benefited as the global downturn sent diners to lower-priced fare. McDonald's will open 175 new stores in China in 2009 and add 10,000 staff to its payroll, up from 60,000 presently, the company said earlier this month. Part of their success strategy includes conventional marketing (increased use value meals) as well as some fairly unconventional ones, including 24-hour delivery in a country where low labor costs and a huge population dovetail.

The Enemy of My Enemy Is My Friend?

All is not great, though, for the Golden Arches: PETA (People for the Ethical Treatment of Animals) is back and McDonald's is once again in their crosshairs. Nearly 10 years after declaring a truce, the animal rights group is planning a campaign around the way the QSR chain slaughters its chickens. Warning: the squeamish should read no further. The debate is over whether it's more humane to knock the birds out with an electrical shock or to cut their throats, the usual means of slaughtering in the U.S. (in Europe chickens are often gassed). KFC is also on the list of targets by the group known for its guerrilla theater (some would say just plain guerrilla tactics). PETA has been after KFC since 2003 with its "Kentucky Fried Cruelty" campaign, urging consumers to boycott the chicken giant (apparently to little commercial effect), picketing KFC restaurants and even tossing fake blood on company execs (Dexter would be horrified). KFC claims sales actually go up during PETA protests, though their Canadian branch has agreed to begin buying gas-slaughtered birds.

Their new "McCruelty" campaign will feature rock legend Chrissie Hynde. PETA says McDonald's and KFC have the muscle to pressure U.S. slaughterhouses into adopting the gas-killing method, though the technology is not in-place at any large commercial slaughterhouse here. And animal welfare groups don't even agree on which method is better. The American Humane Society says either electro-shock or gas is acceptable. It is perhaps typical of PETA that it has no criticism with the often un-hygienic way the carcasses are handled after slaughter. what critics call the production line's "fecal bath" used to "wash" off the blood and offal. The soup usually ends up spreading e. Coli and salmonella contamination. But then, PETA only cares about the chickens, not the humans eating them.

For information about licensing, contact Broad Street Licensing Group (tel. 973-655-0598)

Marketing & Information Junkies

If it's one thing corporations can't get enough of, it's data.

As if having reams and reams of stats will help them succeed in selling mediocre products, many companies pore over surveys designed to help them predict consumer behavior. There certainly is a lot of information out there, including a survey by DemandTec, Inc., a leading provider of on-demand optimization solutions for retailers and consumer products manufacturers. Working with Precima, Inc., an advanced analytics firm that translates retail customer data into critical insights, the two companies have published a survey measuring how retailers and consumer products manufacturers use consumer-centric data and analysis to drive their businesses.

Entitled "Being Consumer-Centric: A Retailer and Manufacturer Update," the survey looks at the way companies can use shopper data to drive decision-making. Among the key findings are:

• Most retailers (75%) and consumer products manufacturers (58%) rank consumer centricity as a top 3 success factor

• 80% of retailers and 67% of manufacturers expect an increased focus on consumer centricity in 2009

• Manufacturers need to work on leveraging consumer insights across the organization with only 43% indicating their ability is better than satisfactory, compared to 64% of retailers

• The limited availability of team resources is the largest impediment to consumer-centric success for both retailers (37%) and manufacturers (43%)

• Lack of support and executive sponsorship is no longer a significant barrier for retailers (16%) with more than 75% retailers appointing a senior consumer-centricity role

Additional key insights for Retailers and Manufacturers:

• Manufacturer high performers clearly use consumer insights more frequently for demand planning/forecasting (80%) compared to the norm (49%)

• Retailer high performers use consumer insights more frequently in sales/merchandising (80%) compared to the norm (60%)

• High performer retailers are motivated to share data to strengthen trading partner relationships (53%) compared to the norm (24%)

Survey Methodology:

The sample consisted of 120 respondents, including 55 retailers and 65 consumer products manufacturers. Respondent roles were director level and above. The survey was conducted through online and telephone interviews. Top performers in each group were defined as those having annual same store sales growth of at least 7% (for retailers) and those within the top ten in the survey based on percent annual revenue growth (for consumer products and pharmaceuticals). Outliers were discarded to maintain data integrity. Data is accurate within 90% confidence level and 10% confidence interval.

For information about licensing, contact Broad Street Licensing Group (tel. 973-655-0598)

I Feel Full: the New Fiber Craze

Surprised at how even yogurt, cottage cheese, milk and even juices are boasting about their "high fiber" count these days?

The reason is inulin, a fine, white powdery substance extracted from chicory root or created synthetically. Food makers use inulin to replace fats, flours and sugars, slashing calories and carbohydrates in the process. And because our body doesn't produce enzymes to break it down, inulin is classified as dietary fiber, quickly boosting the fiber count to many otherwise non-fibered products. The problem for consumers is inulin doesn't fill you up or lower blood sugar levels and cholesterol like traditional fiber, though it is a "prebiotic" that nourishes the good bacteria in the digestive tract. Prebiotics aid digestion and the absorption of nutrients while promoting colon health.

And not only does this new source of fiber have none of the health benefits of traditional fiber, it als has the potential to make unhealthy foods more "virtuous." Add the term "fiber" to an otherwise "bad" food product, and inulin transform that sugar-saturated granola bar into a health food. Fiber One bars are as sweet as candy because they contain chocolate chips! The inulin makes up most of the bar's 9 grams of fiber, and the 140 calories in each bar include 4 grams of fat (½ cup of Fiber One cereal contains 14 grams of fiber). The U.S. Department of Agriculture guidelines recommend 25-35 grams of daily fiber intake, though some nutrition experts say it should be closer to 75 grams.

As with many breakthroughs in food processing, this one has multiple consequences and meanings. I recall when one bread maker in the 70s upped the fiber content of its products by adding wood pulp. Think about that the next time you're reading the paper or surfing your Blackberry on the toilet.

For information about licensing, contact Broad Street Licensing Group (tel. 973-655-0598)

Around the Food Industry

Frito-Lay to Target Women

Snacking has long been seen as guy turf, but PepsiCo's Frito-Lay division is looking to introduce Smartfood popcorn clusters, its first snack targeted specifically at women. The snacks will be a combination of sweet & salty, and are being touted as a source of fiber and calcium. In addition, the snacks will contain no artificial colors, flavors or preservatives, and will be packed in 120-calorie individual bags. PepsiCo's CEO, John Compton, anticipates $650MM in sales to women. Additionally F-L will be concentrating on more "healthier for you" offerings.

New British "Dating Service" For Waste

The London Waste and Recycling Board was launched last July to broker waste producers (food manufactures & retailers) with recyclers and energy users to help encourage innovation in waste disposal. The goal is to help generate energy through anaerobic digestion and improve recycling of waste materials. Estimates boast supplying up to £504MM 10% of London’s gas and electricity costs. The move comes as the British Retail Consortium (BRC) has appealed to government to encourage recycling rather piling on new costs to retailers as is the usual solution. A new report from the Local Government Association (LGA) is lobbying for supermarkets to pay for recycling services to reduce the £1.8bn spent on waste removal and landfill through 2011. Reports show up to 40% of food packaging in the U.K. could be recycled. Retailers counter that consumers often have no way to recycle the packaging materials at the local level. In the U.S., recycled materials have piled up without adequate end users for the material, resulting in localities now accepting only limited amounts of recyclable plastics.

Nestlé Income Waaaay Up

In a further sign of food companies weathering the current economic storm, net profit for Nestlé climbed 69% for 2008 to 18bn Swiss francs ($15bn), up from 11MM Swiss francs in 2008. Sales for the year were 109,909MM Swiss francs ($93.596MM), up 2% from 107,552MM Swiss francs during the previous year. "Zone Americas" was the company’s engine for growth, with sales of 33,134MM Swiss francs ($28,209MM), a 10.3% growth rate with 2.7% real internal growth. Nestlé committed to 5% growth during the coming year, based largely on its prediction of leveraging its innovation and strong core brands.

Unilever Focusing – Again – on Volume

Buffeted by bad publicity surrounding a Belgian grocery chain's decision to pull its products for "excessive profits," Anglo-Dutch giant Unilever has announced its intention of focusing on volume in 2009 according to CFO Jim Lawrence. Volume actually fell in the 4th quarter of 2008, and investors generally like to see top-line sales always inching upwards. But as usual wholly lacking in fresh ideas, the company says it will consider bringing down prices by putting out smaller packages. No surprise for a company who many critics argue ruined the Ben & Jerry's brand after it purchased the property, then (despite promises to leave well enough alone) tried to run it like any other brand in their portfolio. Unilever also once turned down a snack licensing opportunity our company brought them that could have generated 7-figure royalties in favor of co-packing the product at a net loss. In true conglomerate fashion, the company eventually did nothing with the opportunity.

For information about licensing, contact Broad Street Licensing Group (tel. 973-655-0598)

Today Is Memorial Day

Businesses are closed in the U.S. for the Memorial Day holiday and Food Business News will resume posting tomorrow. Please enjoy the day, but remember those who have fallen, as well as those who served in defending the United States.

This Ain't Your Grandma's Couponing....

The Great Recession has driven retailers of all stripes to seek new ways to lure in customers, and sometimes "what's old is new." With the rise of Social Media marketing, savvy companies are looking at Facebook, Twitter, email and cell phone texting to alert customers (and potential customers) to bargains and specials. That's because the receipt of permission-based emails make shoppers more likely to do business with a retailer than some random SPAM. In addition, customers who sign up to receive communications from a retailer have a more favorable opinion of the company and a stronger sense of loyalty to the retailer’s brand, at least according to the latest research by Epsilon, ranked #1 for market research and direct marketing by Ad Age). A mid-October 2008 survey of 1517 consumers found:

• 56% of recipients of permission-based email from retail companies said they are more likely to make purchases from the sending retailers;

• 52% said they have a more favorable opinion of the retail companies that send them email because of the communications they receive;

• 48% feel more loyal toward the retailers and their products as a result of receiving permission-based emails.

• 87% of respondents who receive permission-based email from retail companies said email is a great way to learn about new products

• 63% of those who receive such emails want personalized content based on their website activity and past purchases

• 88% download/print a coupon;

• 79% click a link in an email to learn more;

• 75% purchase a product online;

• 69% research retail locations that carry a product;

• 67% purchase a product offline;

• 60% try a new product for the first time;

• 55% share a coupon or forward the email;

• 33% type/copy the URL into their browser.

Email marketing programs have become standard in the retail industry, but measuring the impact of email communications on offline sales and the branding "halo" effect of email marketing is not yet widespread.

For information about licensing, contact Broad Street Licensing Group (tel. 973-655-0598)

Health News

Maryland could become the first US state to ban several artificial food colorings which have been linked to hyperactivity and behavioral problems in children. Two bills being considered, including one that would require food manufacturers to add a warning label prior to an outright ban in 2012, and another that would prohibit the use of the colors in school foods. If the legislation is approved, food products containing these food colorings would be required to carry the label: “Warning: The color additives in this food may cause hyperactivity and behavior problems in some children” effective from January 1, 2010, and be phased out by December 31, 2011. The colors are Red 40, Yellow 5, Yellow 6, Blue 1, Blue 2, Green 3, Orange B, and Red 3.

Last time it was trans fats, now it's salt. The pressure is building to lower blood pressure by reducing sodium in foods. Switzerland is looking at governmental regulation to reduce salt intake. Average daily intakes of salt are 10.6 grams for men and 8.1 grams for women, according to a study of over 12,000 people in Geneva entitled “Twelve-year trends and correlates of dietary salt intakes for the general adult population of Geneva, Switzerland,” and published in the European Journal of Clinical Nutrition (2009, Volume 63, Pp 155-164).

Both are over the daily intakes of 5 grams/day recommended by the WHO/FAO to control blood pressure levels and reduce hypertension risks. Researchers from Geneva University Hospitals cite breads, cheeses, meat and meat products, soups, and prepared meals as the main food sources of high salt. Switzerland’s Federal Office of Public Health is considering a “salt strategy” similar to initiatives undertaken in the UK, including raising public awareness and reducing the salt content in foods in collaboration with the food industry. Both governments hope to persuade commercial food marketers to reduce salt content, but regulatory steps are being hinted at broadly if persuasion doesn’t produce results.

The UK’s Food Standards Agency (FSA) recommendation of six grams of salt per day for the general population is understood to be more a realistic target than the ideal healthy limit recommended by WHO/FAO. Most scientists and physicians consider dietary salt intake levels are too high (10-12g/day). Other countries in the EU looking to reduce sodium intake include France’s “moderate population-wide” initiative (6-8g/day target), Germany and Austria. In a related matter, the UK’s Secretary for Health has urged snack makers to cut portion sizes as a means of fighting childhood obesity.

In other science and food news, Tesco’s chief has said his firm is open to GM foods (genetically modified), but over 70 companies have vowed not to use or sell genetically modified beet sugar by signing a registry set up by the Center for Food Safety (CFS) a food safety, environmental and corporate watchdog organization. While Monsanto’s Roundup Ready sugar beets will not come on-line until this Fall, signatories of the Non-Genetically Modified (GM) Beet Sugar Registry have said they are worried about a lack of knowledge about the long-term health and environmental impacts of GM beet sugar. Jeffrey Smith, director of the Institute for Responsible Technology – one of a dozen sponsors of the registry – said: “We need to avoid the all-too-common situation of finding out a product is harmful after it has been approved and widely distributed.

Requiring that GM foods be labeled is the only protection consumers have if they want to avoid eating GM foods.” CFS asserts that the US Environmental Protection Agency increased allowable levels of herbicide residue on GM sugar beet roots “at the request of Monsanto.” The Roundup Ready sugar beets are modified to be resistant to the company’s Roundup-brand herbicide, allowing farmers to kill weeds without damaging their crop. CFS has also said that the recent alleged mercury contamination of high fructose corn syrup has made companies particularly nervous about the introduction of unlabeled GM beet sugar to the US food supply. Further there is concern GM sugar beets will cross-pollinate with related crops such as chard and table beets, meaning that the issue could affect other foods and food ingredients. The registry has been signed by 73 grocery chains and food producers so far. The complete list of these companies can be found here.

A study published in the Journal of the American Medical Association (JAMA) by a group of scientists at Ohio’s MetroHealth Medical Center and Case Western Reserve University School of Medicine reports that additional phosphorous, such as sodium phosphate or pyrophosphate, may put people with kidney problems at risk. The additives are used to enhance the flavor and shelf life, particularly in meats, cheeses, baked goods, and beverages. Foods such as meats, dairy products, whole grains, and nuts, naturally contain high levels of phosphorous, and patients with advanced kidney disease are recommended to avoid them. Increased levels of phosphorus in the blood are linked to heart and bone diseases. The researchers said the results have implications for manufacturers and policy makers. The wholesale reduction of trans fats in processed foods was cited as proof food marketers can and should respond to health concerns. The study is published in Volume 301, Issue 6, Pages 629-635, and entitled “Effect of Food Additives on Hyperphosphatemia Among Patients With End-stage Renal Disease: A Randomized Controlled Trial.”

For information about licensing, contact Broad Street Licensing Group (tel. 973-655-0598)

Companies Headed for the Boneyard?

With household names like Circuit City and Linens ‘n Things already gone, chances are they will be joined this year by up to 15 other major names, including Chrysler and Dollar Rent-A-Car . Even Donald Trump’s casino & resort group is on the skids. Among the food companies facing the headsman’s ax are:

• Rite Aid (about 100,000 employees; 1-year stock-price decline: 92%). The debt load from acquiring Eckerd in 2007 makes it the most-leveraged drugstore chain in the U.S. With Wal-Mart selling prescription drugs, the prospects aren’t good.

• Sbarro (Privately owned; about 5,500 employees). Many of this chain’s 1,100 storefronts are in malls, where traffic is way down, and mall hours prevent Sbarro from adding a breakfast or late-night menus. Competitors Domino’s and Pizza Hut have less debt and stronger cash flow.

• Krispy Kreme (about 4,000 employees; stock down 50%). The chain over-expanded during the donut heyday of the 1990s, taking on a lot of debt, and requires high volumes to meet expenses and interest payments. Despite slashing costs and closing stores, the company has not earned an operating profit in 3 years.

• Landry’s Restaurants (about 17,000 employees; stock down 66%). This restaurant chain, which operates Chart House, Rainforest Café, and other eateries, needs $400 million in new financing to finalize a buyout deal dating to last June. At least two banks have already balked, leading to downgrades of the company's debt and the prospect of a cash-flow crunch. Landry's has managed to sell $295.5 million in senior secured notes in February 5, but this may only be a reprieve for their death sentence.

For information about licensing, contact Broad Street Licensing Group (tel. 973-655-0598)

Brand Licensing vs. Franchise Licensing

It's often said that American and the United Kingdom are "two countries separated by a common language." We sometimes just can't sort out what they say without a translator.

The same can be said about brand licensing and franchising.

Franchising involves the licensing of the franchisor's brand to the franchisee. For example, if I open a Burger King restaurant, I'm allowed to use the brand and products under license from Burger King Corporation for the operation of my restaurant. I can't sell Burger King buns in the local supermarket, can't print up t-shirts with cute designs on them to sell on the corner or at the local flea market. All I can do is sell Whoppers, Original Chicken Sandwiches, Croissan'Wiches, Apple Friesm drinks and other items stipulated by the franchisor (BKC).

Brand licensing is when a food manufacturer "rents" the brand to use on products for sale in a specific channel of distribution. The Burger King-licensed snack chips pictured above, for example, are part of a deal Broad Street Licensing Group brokered for client Burger King. The chips (in Ketchup & Fries, Flame-Broiled and Onion Ring flavors among others) are manufactured by a company in Arizona called The Inventure Group. They pay a royalty to Burger King for the use of the brand name, advice on packaging, etc. It's actually more complex than all that, but I'll simplify here so I don't have to charge you a consulting fee....

One problem is that restaurant chains often confuse these two forms of licensing, thinking when they get calls from agencies looking to help them leverage their brands to retail "hey, we already do licensing." Or they assign someone in franchising to look into it, thinking there's some connection.

Not at all.

Licensing is a specialized skill set that requires a professional. Either hire me or hire someone like me, but as the car ads say in their fine print: "Professional Driver, Don't Try This On Your Own!"
For information about licensing, contact Broad Street Licensing Group (tel. 973-655-0598)

Are We Humans or Are We Dancers?

Several major retailers and CPG houses are using software developed by MA-based Affinova to evaluate packaging and other aspects of products usually handled by brand teams and focus groups. Affinnova's premise is that consumer markets evolve like the natural world: the strong products survive while weaker ones die out. Using a "genetic algorithm" called IDDEA, they recreate this evolution in a series of generations covering possible products or packaging until the strongest design emerges. While not really machine-designed (human managers oversee the testing and choose options from every consecutive generation), the software speeds up and streamlines the process over what is able to process and analyze these preferences in a way no focus group can accomplish Because Affinnova's surveys include consumer profiles that contain basic demographic information, customer beliefs, consumer habits, with such data splicing especially useful in brand redesign.

Affinova is behind the launch of Dannon’s Activia, a probiotic yogurt that generated more than $1bn in sales in Europe. Parent company Groupe Danone of France had two prior unsuccessful attempts at importing a successful European products into the US market. Affinnova's research identified imagery and messaging that appealed to Americans, including expressions such as "body in balance" or "running smoothly" over descriptions of bacteria or cultures. The icon chosen by the software was a sexy photograph of a woman’s abdomen instead of an illustration. Activia sold more than $130MM in 2006 (its 1st year on the market), and $300MM the following year.

In another potentially game-changing use of technology, fragrance-dispensing kiosks in France are relying on face-recognition technology to decide whether the spritzes they deliver should be for men or women. Facial recognition specialist Quividi, which developed the kiosks in partnership with fragrance diffusion device maker Presensia, developed software that first determines the nearby life form is human, then estimates the corresponding gender of the prospective customer, choosing an "appropriate fragrance" to be puffed into the air. The kiosks then "can diffuse up to four different scents up to a 5-meter distance." Similar technology, recently displayed in Japan delivers ads based on the ages and genders of people passing by. NEC’s advertising kiosks “see” people as they approach, check out their facial characteristics and deliver ads based on what they believe to be their relative age and gender. For retailers, the goal is targeting advertising to those consumers most likely to be engaged. But the effort is running headlong into some sticky ethical questions involving personal privacy.

What if face-recognition-powered digital signs and kiosks can identify shoppers by name merely by scanning their faces and matching those images against known images? Such techniques are already being used in airports, with federal agencies comparing file images of suspected terrorists against those that video cameras pick up at the airport. Many applications today—such as Xobni—already scour the Web trying to match images of people with those who are apparently sending E-mail to the application’s user. But with the E-mail effort, the trick is looking for an E-mail address match and then trying to find a photo. Starting with a photo is a much more challenging task. Of course, there’s the question of how reliable such a system would be, especially in the early stages. Face recognition age-verification systems have had more than their share of embarrassingly inaccurate moments, including Japanese teens fooling a cigarette dispensing machine with photos ripped from magazines.

For information about licensing, contact Broad Street Licensing Group (tel. 973-655-0598)

Food Licensing Tip #5: In-House vs. A Licensing Agent

Food Licensing 101: Should I Use an Agent (you know my answer!)

There’s an old saying: "you can pay me now or pay me later."

Many companies contemplate licensing, but not all of them know how to launch a successful program. One of the biggest pitfalls they run into is when they try to do it themselves.

Companies who try to license their brand(s) themselves usually end up either giving up, or hiring someone from the licensing industry to work in-house.

"Pay me now, or pay me later."

Simply dumping licensing in the lap of an executive isn't going to lead to profitable partnerships because:

1.) that person already has a full-time job
2.) he or she doesn't know licensing & and will have to learn on-the-job
3.) licensing isn't just finding a licensee and signing a deal
4.) the bigger the company, the more likely they'll fail

Licensing has been described as an arcane, specialized business. Ad agencies and PR firms have tried-- literally for decades-- to find a way of getting in on the licensing action, usually with poor results. Of all the major licensing agencies, not one is part of an advertising or PR firm, nor have any advertising houses had a successful licensing program (other than promotionally like Burger King’s "Flame" cologne for men we discussed in yesterday's post). Part of the reason is that each licensing deal is unique in its own way, and requires marshaling specific skill sets, experience and contract guidelines. This is especially true about food brand licensing. Some of the reasons for this include:

1.) The complexity of the food business (just consider for a minute the various channels: grocery, convenience stores, club stores, vending, foodservice, etc.)
2.) The specialized skills required (e.g., what is a fair deduction from net sales for "slotting fees"?)
3.) The regulatory thicket (if it goes into your body, it has to be safe)

With few exceptions, companies who develop and deploy licensing programs from in-house have hired an experienced licensing professional. The majority of firms who have enjoyed great licensing success rely on agencies like Broad Street Licensing Group, either to deploy and then manage their licensing day-to-day, or help them set up and hire the right staff for in-house operations.

OK, now you've had a quick course in Food Licensing 101. Are you going to pick up the phone and call us?

For information about licensing, contact Broad Street Licensing Group (tel. 973-655-0598)

Food Licensing Tip #4: Licensing vs. Promotions Part 2

Food Licensing 101: Licensing vs. Promotions-- Part 2 of 2

Burger King recently licensed its "Flame" meat-scented cologne.

The product was available only for a short time, attracted a lot of media attention, and was soon gone and is now mostly forgotten, as with most media sensations. It was exactly the kind of viral success the brand thrives on, with its quirky ads developed by advertising industry mavericks Crispin Porter + Bogusky:

This is a perfect example of promotional licensing.

Crispin Porter asked our help in licensing and placing "Flame" with retailers, but we convinced them (and the brand) they were better off using the cologne as a teaser. Retailers usually settle on their product lines months in advance, and manufacturers aren't interested in licensing a property for a quickie that gets talked about but doesn't sell month-in and month-out.

It's called a promotion because it's just that: a "stunt" that attracts attention to a property but isn't usually revenue-generating. Promotions are popular with restaurants, usually as a form of tie-in with a new movie ("buy a kid's meal and get a free Spiderman action figure for just 99 cents").

The problem is that many smart marketing execs don't understand the difference between licensing and promotions:

Promotions are paid-for by the promoting company (Burger King sourced the "Flame" cologne, mostly to give away and "sell" in selected locations).

Licensed goods usually become an important part of the licensee's manufacturing with a contract that extends over years, not months.

The final difference between promotions and licensing is how the companies get paid: a licensing deal results in income for the brand from sales of the product. Promotional agencies are hired by the brand to produce product for limited sale or giveaways.

Tomorrow: Is It Better To Handle Licensing In-House or Use an Agency?

For information about licensing, contact Broad Street Licensing Group (tel. 973-655-0598)

Food Licensing Tip #3: Licensing vs. Promotions Part 1

Food Licensing 101: Licensing vs. Promotions-- Part 1 of 2

Smart marketing executives often misunderstand licensing, confusing it with promotions. The two are very different strategically and in how they’re implemented.

Licensing means leveraging your brand into another category, channel or product. For example, Burger King asked our company to help them move from the restaurant channel into retail food products. Their goals were:

1.) Increase brand impressions
2.) Interact with a different demographic
3.) Drive traffic back to the restaurants
4.) Generate revenue

The Burger King-branded snack chips licensed by The Inventure Group we've talked about in this series (there are other products coming, but I'd have to kill each and every one of you if I told) in a deal we brokered for our client meant hundreds of thousands of new brand impressions, often in places like vending machines, colleges and even drugstores like Walgreen (see ad circular below). All of them are places where the Burger King brand isn’t.

What's more, with most grocery store buying decisions made by moms, the chips put the brand in front of a vastly different demographic than their core consumer base of young men (the "Super Fan" who can't get enough Whoppers). Favorable brand impressions and couponing drive traffic back to BK’s core business, too: consumers who aren’t regular customers now have a more-favorable impression of Burger King (especially as new frozen products come on-line), and regular fans can "Have It Your Way" anytime they want to.

Finally at $50MM in projected annual sales, the chips alone are a money-maker.

But not all licensing generates revenue, so tomorrow I’ll talk about promotional licensing.


For information about licensing, contact Broad Street Licensing Group (tel. 973-655-0598)

Food Licensing Tip #2: Is My Brand Ready For Licensing?

Food Licensing 101: How Do I Know If My Brand Is Ready for Licensing?

Yesterday we talked about the basics of food licensing. Today we'll explore the ways to find out if your brand is ready for licensing.

Determining if you're ready to launch a full-scale licensing program is not as easy as you might think.

• What do I need?
• When should I start?
• How much does it cost?

The answers depend on the strength of your brand, what we called the "licensed property" in the first part of this series. Brand strength is a function of consumer appeal, and it's crucial the brand have a good "fit" with the product. When our agency was representing a fabric softener with a cute symbol, they insisted we should look for an ice cream company because to them, the brand meant "family" and "home."

Well, to Good Humor-Breyers, one of our clients at the time, the brand meant "fabric softener," and that's a terrible association for a food product!

One of the best methods for determining the viability and potential of a licensing program for your brand is what's called a "licensing feasibility study." This is an analysis that determines whether licensing can meet key branding and revenue objectives. It includes a detailed assessment of the benefits, critical success factors, costs, and risks involved in developing a licensing program, and will inevitably reduce risk and expensive missteps. The objectives of the study include:

• Assessment of brand’s assets/intellectual property (e.g. brand, logo, tag-lines)
• Its relevance in marketplace
• Evaluation of product category opportunities at retail, including channels of distribution
• Analysis of the marketplace environment, including consumer and B2B trends meant to assess the brand's potentail acceptance in the licensing arena
• Identification of resource requirements (financial, time & labor)
• Evaluation of brand’s level of support
• Current core brand marketing strategy
• Analysis of the costs to implement and maintain a licensing program

In order to ensure the most accurate results, it is imperative that any feasibility study be conducted by a person/group with a solid licensing background and high level of licensing expertise. While ad agencies, pr firms and branding consultants often include "licensing" in their list of capabilities, you'll notice no licensing agencies claim they can design and place ads or get your products on "Oprah." Incorrect data & methodology in a feasibility study can potentially lead to disastrous results, not only for the licensing program but also for the brand as a whole.

(this article prepared with the assistance of Danielle Foley)

Tomorrow I'll be talking about Licensing vs. Promotions

For information about licensing, contact Broad Street Licensing Group (tel. 973-655-0598)

We're Fat Because We Eat Too Much

We're not "big-boned."

There isn't a "fat gene" or "fat germ."

We eat too much. Period

And it's actually the fact that we're exercising as much as we are that has prevented us from being even fatter, at least according to a new study highlighted by The New York Times.

All of this is bad news for the food industry, especially restaurants and marketers of processed foods.

Americans talk about having "small government" and "keeping government out of our private lives," but the truth is we want Big Brother to keep us from doing bad things we can't stop ourselves from doing:

Smoking
Driving drunk
Being fat
Getting diabetes

We don't want to accept that we're fat because we eat too much. It's because never in human history have we had so much plenty. Our genes developed our bodies to sustain a hunter-gatherer society on the plains of Africa where food was a sometime thing. As a result, our cells hoard energy in the form of fat during times when there are more calories available than we need for maintaining life. Our evolution wasn't prepared for the cornucopia of goodness available to us. Thanks to the benefits of fertilizer, pesticides, refrigeration and a food supply chain that can provide us with healthful, nutritious and delicious foods in- or out-of-season, there are no longer times of the year when food is scarce. So we're fat.

The answer?

For one thing, we must take responsibility for our actions. Eating less is possible, but it requires discipline. Is it a coincidence that Americans are so overweight at the same point in our history when we've overspent, over-leveraged our companies, over-borrowed?

For information about licensing, contact Broad Street Licensing Group (tel. 973-655-0598)

Food Licensing Tip #1: Definitions & Benefits

Food Licensing 101: Defining Licensing and Understanding its Benefits

(This is the first in a week-long series of five articles about food licensing)

Licensing is an important marketing tool for companies or brands looking to raise awareness, increase revenues and expand their core business through new products, product extensions and expanded distribution opportunities. It is an industry that produces over $15 million in retail sales every hour, 12 hours a day 365 days a year. Recently LIMA (the licensing industry trade association) released a study entitled Licensing Industry Survey which estimates retail sales of licensed merchandise to be $110 billion (based on royalty revenues of $5.831 billion) for North America alone. It is difficult to find another industry generating this rate of growth and sustaining it year on year.

Licensing can be defined as the practice of leasing a legally protected "property"-- a trademarked or copyrighted name, logo, character, phrase or design-- for a predetermined amount of time. For example, Burger King licensed its brand for snack chips (see photo above) to a company known as The Inventure Group. In return for allowing its "property" to be used on the chips, Burger King receives money based on a percentage of the licensed products sold(what's called the "royalty rate"). In addition to the royalty rate paid to the licensor (Burger King), a guaranteed minimum royalty, (i.e. the "guarantee"), is usually required. A percentage of this guarantee is normally paid on signing as an "advance" against future royalties. It's really a promise by the licensee to pay for the use of the property.

The licensee has to pay this guarantee even in the face of total failure of the property. That might seem unfair, but if the chips cited above had bombed at retail (instead of tracking to sell $50MM annually), the stigma would be on Burger King ("I guess the brand isn't all that strong).

All terms of any licensing venture are clearly defined via a formal contractual agreement between the owner of the property (the "licensor") and a "licensee" (a manufacturer, retailer or distributor).

Unlike advertising or promotions (which we'll deal with later this week), licensing generates revenue while enhancing the popularity and profitability of brands at the same time. Other benefits of licensing include:

• Enhancing product relevance to consumers
• Creating an additional long-term revenue source
• Increasing new retail penetration
• Bringing added-value to products
• Creating instant consumer affinity to the brand name
• Penetrating new avenues of retail distribution
• Increasing visibility and reach
• Strengthening its competitive retail position

Stay tuned for my next featured article in this series: "How Do I Know If My Brand Is Ready for Licensing?" starting tomorrow.

(this article prepared with the assistance of Danielle Foley)

If you have specific questions about licensing you’d like answered, please feel free to email me, Bill Cross, at: bill (dot) cross (at) bslg (dot) com.

Breakfast News

(photo courtesy of How Things Work)

Manufacturers offering convenience, as well as health and wellness, could see the most growth in a market that is increasingly competitive, according to a new report by Mintel entitled Breakfast Foods: The Market - US - November 2008 (The report can be purchased for $3,995 here).

According to its findings, marketers of breakfast foods are innovating with better-for-you options and convenient solutions with ease-of-use and portability. Segments with these benefits are showing the most growth in areas such as cereal bars, yogurt, yogurt drinks, and breakfast entrées. "Consumers have a wide array of breakfast food choices available within the retail environment, making switching between segments a common occurrence depending on needs and occasion." The report said the breakfast food market has suffered from the "time-crunch" that consumers feel in the morning, as well as from the growing number of foodservice breakfast options. The three health-related areas include:

1.) diet-slanted products (health by subtraction)
2.) functional health (health by addition), and
3.) and health via ethical manufacturing processes

"Time proves to be highly influential in the breakfast foods market. With most products aligning with two distinct breakfast types - quick breakfasts (easy to use, easy to prepare, portable) and leisurely traditional breakfasts." Mintel adds "While it is unlikely that consumers will forgo staples like bread and eggs due to rising prices, the implication may affect the breakfast foods market through a change in consumer shopping patterns. Consumers may seek out lower prices at mass merchants and club stores and/or trade down to private label products."

For information about licensing, contact Broad Street Licensing Group (tel. 973-655-0598)

"Organic" Shows Surprising Resiliance in Recession

The Organic Trade Association would have us believe the Great Recession hasn't stopped the growth of organic foods.

What else would you expect them to say?

At least they're trying to back up their assertions with data. On Monday they release the details from their 2009 Organic Industry Survey which purports to show U.S. sales of organic products (including non-food items) reached $24.6bn, a 17.1% rise over 2007 sales levels. Not surprisingly, the segment's overall growth rate was the slowest it's been since 2004 (14.6%). In contrast, organic food sales expanded at a 20.9% clip in 2006 and 18.5% in 2007.

One resource for the elasticity of organic demand is the spread of organic products across the grocery channel. Now consumers can often rely on store brands and couponing to keep eating green without shelling out too much green. The OTA, prejudiced though they may be, are not alone in supporting the notion that organic eating has taken hold in the U.S. A soon-to-be released J.D. Power and Associates survey (Private Label Industry Report) shows consumer perceptions about private label in general and store-brand organics in particular as trending in a positive direction. Safeway is even attempting to sell its O Organics line to other retailers (though not direct competitors). Aggressive marketing has also helped push the notion that store brand organic products are no longer "no name" cheap substitutes, but instead are high-value items that stand on their own.

OTA's study was conducted by Lieberman Research Group, and it studied things like organic fibers, personal care products and pet foods, too. Organic food sales grew 15.8% ($22.9bn), while organic non-foods increased 39.4% ($1.648bn). While organics are clearly here to stay, they account for less than 4% of total U.S. foods sold.

A similar result was found by Cone Inc., a Boston-based company reporting 34% of U.S. consumers say they are now more likely to buy environmentally responsible products. Of those interviewed, 44% say their "green" shopping habits have not changed as a result of the economy (only 8% say they are less likely to buy environmentally-responsible products).

For information about licensing, contact Broad Street Licensing Group (tel. 973-655-0598)

Burger King Q3 Profits Up 15%

From our wire services--

Burger King Q3 Profits up 15% though sales declined dramatically at the end of March in some market--

McDonald's loses "Mc" exclusivity but only in India--

Dr. Pepper cracks Coke dominance at the Golden Arches who will dump Powerade to make room at their fountains nationally--

QSR Magazine tells how to cut salt as pressure builds on the FDA to regulate sodium in restaurant and processed retail foods--

UK dairy company dropping "organic" from its brand but experts don't see general pull-back from the organic movement, but a realization the higher prices for organics are out-of-line with the current economy--

For information about licensing, contact Broad Street Licensing Group at 973-655-0598

Swine Flu Panic-demic?

Swine Flu is no joke, at least to those who've caught it.

The Swine Flu Panic-demic now spreading across the media is a colossal joke.

As serious as the disease is, why is it over 100,000 Americans who die each year from "regular" flu get no ink or sound bites? Why are people rushing out to purchase generally useless patent medicine remedies for a disease that has no vaccine, no generally efficacious treatment, and which appears to be less-serious a threat to health than driving to and from work?

Things are so bad that Smithfield Foods, owners of the Smithfield Ham trademark and a major pork supplier, has had to go on a public relations campaign to stem the backlash against eating pork. And Chinese restaurants in California report a 20-30% drop in sales because people erroneously assume they might catch the disease from eating pork dishes. Despite the name, Swine Flu can only be spread between humans, and can't be caught from food. By law, Chinese restaurants in California must use frozen pork anyway which kills most pathogens.

Don't expect the hysteria to recede anytime soon. Dr Margaret Chan, head of the World Health Organization (WHO) has announced that "all humanity is under threat" because the virus has crossed species in at least two countries.

If there's one "silver lining" from all the Swine Flu hysteria, it's that we're spending less time worrying about the stock market and the recession.

For information about licensing, contact Broad Street Licensing Group (tel. 973-655-0598)

The Downturn Generation

According to research giant Mintel, new product launches in the food & beverage category are off 51% from last year. New products debuted in the first quarter are generally lower than other times of the year, but this past quarter looks quite sober. Among those categories singled out for reporting were non-alcoholic beverages (down 56%), chocolate (55%), confections & chewing gum 64%), and dairy items (off 60%).

Of course, the media feeding frenzy about the recession has even sparked some clever gimmicks, including Information Resources, Inc.’s "Downturn Generation" nametag that supposedly applies to the New Shopper in the New Economy. Their report "Dissecting the Downturn Generation: Recognizing and Leveraging Permanence in Today’s Transformational Economy," makes the absurd claim that changes in shopping habits are now permanent and irreversible.

Yeah, until the next economic bubble.

Eager to justify their research budgets, IRI claims to have identified three "new" categories of shopper:

Optimists, who believe "things will get better during the next 12 months" and are cutting spending selectively and as a last resort

Maintainers, who believe "the economy won’t get worse, but it won’t get better either"

Pessimists, who are just this side of digging a shelter and stocking it with guns and canned food.

One useful stat emerging from the study is how economic storms can have lasting impact on shoppers, at least in terms of their mental state: gas prices are 50% below their height in 2008, yet 73% of surveyed shoppers feel gas prices had an impact on their financial picture during the last 6 months. Not surprisingly, 75% thought the same thing about food prices, despite a leveling off or decline in many foodstuffs since last Summer.

Guerilla Marketing vs. Guerilla Warfare Marketing

The seafood chain Captain D’s has already made waves tweaking the feelers of Red Lobster, so much so the larger chain sent a "cease & desist" letter about the upstart’s ads claiming better value and lower prices. Now Costa Mesa, CA-based chain El Pollo Loco is taking a page from the same guerilla warfare marketing manual by challenging KFC to a "Taste the Fire" competition. The upstart chain was born in Guasave, Mexico but found its first successes in Los Angeles in the 1980s before going through several corporate owners including Denny’s. It currently operates just over 300 corporate and franchised locations, while its rival has over 11,000 restaurants in 80 countries.



Talk about David vs. Goliath!

But I wouldn't count EPL out too soon. They have embraced Twitter as a marketing tool for their challenge, inviting consumers to have their say. While there is some disagreement about how valuable Twitter can be for companies who need tens of thousands of sales daily to move their needles, EPL already has 700 fans following the campaign. It boggles the mind to think of busy people wanting to know what's going on in the "lives" of their fave restaurants, but....