Famous Failures

According to a report costing €190 from Just Food entitled Failures in Functional Foods and What They Reveal About Success, 80% of functional food product launches fail within 18 months. The report looks at 15 high-profile failures, including major players like Groupe Danone, Pepsico, Coca-Cola, Nestlé and Unilever.

Unilever is a perennial problem child, having shed numerous brands over the past few years, and in the case of brand licensing, failing in several cases to use its opportunities profitably or at all. The Anglo-Dutch multinational spent €14.4MM launching a soy fruit juice with the infelicitous name of Adez. The problem was: it should have been pronounced 'Ah-dez', but ended up being called 'Aydz' (as in AIDS) by many consumers. The company pulled the plug after earning back €10.7MM in sales a little more than a year later.

Other failures described in the report include a Nestlé prebiotic cereal, PepsiCo's plant sterol Minute Maid Heart Wise orange juice, and Coca-Cola and Nestlé’s calorie-burning drink, Enviga. Enviga started strong with over $30MM in sales, but tailed off by over 65% after consumers yawned at its lack of performance. Some rules for success can be gleaned from these failures of the big guys:

1. Successful brands are expert brands: Consumers are looking for authority from their branded purchases, and simply touting ingredients or implying performance and results aren't enough.

2. Offer a relevant benefit and be a credible brand: Functional foods offer a bewildering array of promises, often confusing consumers.

3. Aim for a benefit the consumer can feel: It may seem obvious, but shoppers want benefits that play to their everyday lives, not pie-in-the-sky promises about potential benefits. If it's weight loss, be sure you deliver. If it's health, state up-front what the product will do for the buyer.

4. Remember that an ingredient is not a point of difference: Some products like acai berry are marketed as if we all are waiting breathlessly for it. Health claims are ubiquitous now, so adding some pomegranate juice isn't going to make your product a hit.

5. A future of niches - focus on value, not volume: The Great Recession has shown consumers will still pay premium prices for products they really want, especially health and beauty aids.

6. Differentiate using packaging design: It's surprising how many ugly packages are produced. Just look at Tropicana's stumble when it spent millions to re-design its cartons, then millions more to go back to the old look.

7. Open new categories and segments – don’t be a me-too: One problem with really big companies is they need really big product launches. That means researching and even over-researching concepts, launch plans, marketing, etc. So that by the time the "new" product comes out, it's really an old, "me,too" one.

Licensing can help avoid some of these pitfalls, because brands can secure a beach head in a new product category without making the enormously costly and time-consuming stretch to make and market that new product themselves. If you want to learn more about that option, call us!

Excerpted from BSLG's weekly subscription news reader service Food Business News. To subscribe or for information about licensing, contact Broad Street Licensing Group (tel. 973-655-0598)

Big Mac Index vs. the Buttered Ham Sandwich

The Economist coined the terms "burgernomics" and "Big Mac index," so a French market analysis firm is fighting back with Gallic pluck by promoting a metric for economic measurement dubbed the "buttered-ham sandwich" index. Gira Conseil uses the numbers of these peculiarly French culinary fixtures as a yardstick of the country’s buying power. First used in 1986, the "Big Mac index" gives a concrete image of purchasing-power parity (PPP) where exchange rates are pegged to the cost of a basket of goods in each country. It turns out the English magazine's "basket" really has only a Big Mac hamburger, but shows the price for 120 countries around the world. An exchange rate with the same price for a Big Mac (measured in dollars) is the measure for fair-value among these competing currencies.

Gira Conseil points out how the French bought (and presumably ate) 1.2bn buttered-ham sandwiches last year, representing about 70% of the country’s 1.8bn sandwiches. The "ham-butter" (jambon-beurre) index will not only show comparative price ranges across the economy, but the company plans to publish it annually allowing observers to track changes over time. The trusty little sandwich varies in price from €1.79 in a hypermarket €3.72 at an typical trendy sandwich boutique. And it has evolved from its origins in cafes to spread throughout the economy. Critics of France's traditional retailing sector point out the cafes have lost business to chains and discounters by failing to adapt to the changing marketplace, even losing ground to bakers who have captured 14% of the total €6.1bn sandwich category.

Excerpted from BSLG's weekly subscription news reader service Food Business News. To subscribe or for information about licensing, contact Broad Street Licensing Group (tel. 973-655-0598)

Push Back on Private Label

The rise of private label products produces an unfair competitive advantage with retailers who end up competing against manufacturers and marketers--

Or so claims a white paper by the CIAA (the trade association for agricultural and food companies in Europe). The paper is in response to the European Commission's paper denouncing high food prices (both papers were provided to BSLG clients and subscribers to our weekly food industry newsletter). With private label purchases as high as 40% in some countries of the EU, manufacturers are objecting to the pressure they're under, and claim that the existing laws on competition are inadequate. They cite other retailer abuses, including late payments, pressure to deliver product at prices set by the retailer (welcome to Bentonville, now please check your wallet and your dignity), and the move by large retail chains into non-food areas such as banking & other financial services, insurance and travel, all of which strengthen their bargaining position and make them able to drive unfair bargains.

Other forms of anti-competitive activity cited by the CIAA include cartels, purchasing agreements between competing buyers, resale price maintenance, certification schemes, tying, and single branding. Some of this anti-competitive activity is barred by law in the U.S., though recent administrations have shown no inclination in recent year to prevent or take-on monopolies or mergers that reduce competition. Grocery retailers in the U.S. have also looked at non-food retailing and services, especially in the area of health & wellness.

The in-store pharmacy is nothing new, but recently chains have begun moving beyond just another department to focus them as central to their overall marketing strategy by setting up "wellness programs," lobbying prescription drug customers (e.g., courting Medicare patients), offering generic drugs at below-market prices, etc. Wal-Mart has taken the lead in this, as in other areas, especially given the current administration's push for e-scripts and electronic record-keeping. President Obama believes electronic medical records will save money and prevent accidents like drug interactions or incorrect dosages, and he's offering money to physicians to purchase the hardware and software. Wal-Mart is, no surprise, embracing this program and offering sweet deals to physicians who sign with them. The pay-offs are direct and potentially huge, with consumers herded to Wal-Mart pharmacies by their doctors.

The mega-retailer's strategy in this segment is having a ripple effect, as the retail chain Wegmans has announced a rollback in prices on 400 generic drugs. Safeway has said it will push its O Organics and Eating Right house brands even more if food marketers don't bring down prices faster now that energy and commodity prices have dropped.

But Safeway's righteous anger is diluted by the fact that they have been trying to get traction for their private label business with other retailers, so far with little success. Spartanburg, SC-based BI-LO is promoting house brands by saying they will discount them 30% since buying locally saves the company transportation costs. Back in the U.K., Tesco and ASDA are playing a game of one-upsmanship by slashing more prices in order to lure in the other's customers. Tesco began by reducing prices on 3,000 items, so ASDA has raised the ante to 5,000 of its SKUs.

Excerpted from BSLG's weekly subscription news reader service Food Business News. To subscribe or for information about licensing, contact Broad Street Licensing Group (tel. 973-655-0598)

Licensing Tip #10: Finding the Right Agent

OK, I work for one of the world's top 20 licensing agencies, so of course I'm going to recommend brands look at hiring an expert instead of trying to do it themselves. Otherwise the odds shoot up your licensing program will crash and burn (see photo above).

What should you look for in an agent?

1.) Experience: There are many licensing agents and agencies, and quite a few handle corporate brands vs. celebrities, sports or entertainment. But only a few agencies have any significant experience in food licensing, and fewer still in leveraging restaurant brands to retail. Oh, lots of them will talk about their sauce deals. Barbecue sauces and salad dressings are what we call a "soft" category: lots of companies with minimal market share, in-and-out products that are here today and gone tomorrow. Make sure your agency has specific successes in the areas you're looking to penetrate.

2.) Vision: An agent often seems like a marriage broker bringing in potential licensees and collecting a fat fee. But a really successful program requires more than just shoe leather pounding the virtual pavements looking for prospects. We guide our clients, helping them develop a licensing strategy (sometimes formulating the strategy from the ground up), teaching them about the food business and making sure their licensing deals complement, not harm their brands.

3:) Skill: Licensing is so much more than making phone calls and fielding offers. Our agency develops strategies, pours over contracts, advises on industry standards and norms, and holds both our client's hand and often the hand of the licensee. Sometimes it takes months or even years to get to "yes," and then the REAL work begins.

4.) Did I say "Experience"?

While my son's college tuition requires me to advise you to hire Broad Street Licensing Group, the above criteria also apply to hiring someone for an in-house program. By the way, my company can set that up for you, too.

Excerpted from BSLG's weekly subscription news reader service Food Business News. To subscribe or for information about licensing, contact Broad Street Licensing Group (tel. 973-655-0598)

Burger King Licenses Apple Fries to Retail

BK® FRESH APPLE FRIES BROKERED BY BROAD STREET LICENSING GROUP COMING TO GROCERY STORE SHELVES THIS FALL

Miami, FL, June 18, 2009: Montclair, NJ-based BROAD STREET LICENSING GROUP brokered an exclusive deal between Burger King Corp. and Crunch Pak, which will bring the brand’s popular BK® Kids Meal product, BK® Fresh Apple Fries, to approximately 10,000 supermarkets nationwide starting in the fall of 2009.. Bringing BK® Fresh Apple Fries – fresh-cut, skinless red apples sliced to resemble real french fries – to stores across the country is a testament to the power of Burger King Corp.’s innovation and the broad appeal of the BURGER KING® brand.

While exact serving sizes and price points are not yet confirmed, a single serving will be available for approximately $1, and a larger package with multiple servings will be available for $4 to $5. Found in the produce section of major retailers with other fresh-cut fruits and vegetables, BK® Fresh Apple Fries packaging will be clearly labeled with the brand logo to make it instantly recognizable as a BURGER KING® branded product.

“Our goal in developing BK® Fresh Apple Fries was to create a menu item that satisfied parents’ demands for nutrition and convenience and kids’ appetites for great-tasting food,” said John Schaufelberger, senior vice president, global product marketing and innovation, Burger King Corp. “With more than 29 million servings sold since its launch last year, we knew we had a winner with both parents and kids alike. The popularity of this clever product is now opening up new channels for our business and providing our customers with a menu favorite in the places they shop most.”

The licensing arrangement allows Burger King Corporation’s exclusive licensee, Crunch Pak, to bring BK® Fresh Apple Fries to the retail market. Located in Washington State and New York, Crunch Pak is the retail leader in sliced and prepared apples.

BK® Fresh Apple Fries became available in BURGER KING® restaurants nationwide starting on June 30, 2008 and is one of the hallmarks of the nutrition initiative under the BK Positive StepsSM program, which demonstrates Burger King Corp.’s commitment to providing innovative and nutritionally balanced menu options that parents and kids agree on.

About Burger King Corporation

The BURGER KING® system operates more than 11,800 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 Corp., please visit the company's Web site at www.bk.com.

Excerpted from BSLG's weekly subscription news reader service Food Business News. To subscribe or for information about licensing, contact Broad Street Licensing Group (tel. 973-655-0598)

Licensing tip #9: Understanding the U.S. Licensing Industry - Facts, Figures and Future Trends

In an effort to continue to build on your growing understanding of our complex licensing industry, we've extrapolated some interesting and valuable information from The Licensing Letter's 32nd Annual Licensing Business Survey (EPM Communications, Inc).

As I'm sure you already know licensing is a multi-billion dollar business that continues to provide marketers with enormous opportunities worldwide. Unfortunately, given the general economic trends (i.e. the recession), retail sales of licensed merchandise in the U.S. & Canada was down 14% to $59.1 billion in 2008 from $68.7 billion in 2007. Many retailers of licensed goods saw sales decline substantially in the last quarter of the year (not a huge surprise for most since U.S. retail sales overall were down 1.8% that quarter).

Some property types were able to outperform the licensing sector as a whole. Below is some information on who they were and corresponding industry statistics:

Trademarks/brands

• $14.7 billion, down 12%
• Made up 24.9% of total retail sales of licensed merchandise in 2008

Sports

• $11.92 billion, down 13%
• Made up 20.2% of total retail sales of licensed merchandise in 2008

Fashion

• $8.46 billion, down 8%
• Made up 14.3% of total retail sales of licensed merchandise in 2008

Music

• $1.92 billion, down 4%
• Made up 3.2% of total retail sales of licensed merchandise in 2008

Property types which greatly underperformed in 2008 included:

Entertainment/character

• $9.88 billion, down 19%
• Made up 16.7% of total retail sales of licensed merchandise in 2008

Toys and games

• $1.95 billion, down 22%
• Made up 3.3% of total retail sales of licensed merchandise in 2008

Publishing

• $1.42 billion, down 19%
• Made up 2.4% of total retail sales of licensed merchandise in 2008

Nonprofit licensing

• $710 million, down 21%
• Made up 1.2% of total retail sales of licensed merchandise in 2008

The general consensus seemed to be that it was the last half of the year, particularly the last quarter, which pulled results down tremendously; three main reasons cited were:

• saturated marketplace containing licensed products;
• lower-than-expected retail price points for licensed goods caused by discounting;
• licensed products being distributed to discounters, dollar stores and price clubs.

In terms of licensed products by product type/category, coupled with percentage of share of total sales, Food/beverages came out on top with share of total at 12% and only a 10% decrease from 2007. The close followers were Apparel/Accessories with combined averages of 11% share of total and 13.5% decrease. Licensed product categories whose competition was from digital alternatives, such as music/video, stationery/paper and toys/games performed the weakest.

So what's in store for 2009? More than 60% of respondents expect retail sales of licensed merchandise to decrease an average 13.7%, almost equal to 2008. Another 25% expect the business to be flat and the rest predict increases for the business. While many reasons for the negative expectations were cited (retail compression, credit issues, discounting, inventory cautiousness, etc...) the common denominator was simply the poor state of the economy. That said, we believe the trend of licensed food/beverages will continue to grow in the marketplace with continued success at all levels providing brands/restaurants execute their licensing programs cautiously and correctly.

Excerpted from BSLG's weekly subscription news reader service Food Business News. To subscribe or for information about licensing, contact Broad Street Licensing Group (tel. 973-655-0598)

Food Licensing Tip #8: Identifying the "Right" Partner (part 2)

(Photo courtesy of The Daily Mail Online)

Yesterday I wrote about how it's imperative in food licensing that licensors (the companies licensing out their brands) find the "right" partner. What are the characteristics you should be looking for?

1.) Solid distribution: Our yardstick at Broad Street Licensing in evaluating a potential licensee for a client is "it's not just what you make, it's what you can sell." That is, while there are numerous food manufacturers who are able to make quality food products, it is imperative that the potential licensee have a solid track record of established retailer relationships. Even big food marketers such as Sara Lee and General Mills often use co-packers to manufacture foods on their behalf, and whether a manufacturer will go forward licensing your brand may depend on how far out a potential product line will extend from their close-in competency. But simply packaging an innovative product is virtually meaningless unless you can get that product on the shelves of retailers. Some companies simply lack the resources (financial & personnel) to get innovative foods sold-in to retailers, while others have established relationships with retailers that allow them to get penetration quickly and over large portions of the retail environment. Ask them, for example, how many DCs (Distribution Centers) for Walmart they service. Simply packaging a product is virtually meaningless unless you can get that product on the shelves of retailers. Some companies simply lack the resources (financial & personnel) to get innovative foods sold-in to retailers.

2.) Innovative product ideas: Companies who want to license your brand can't just make things-- or even sell them (see #1 above). They also need to have products consumers want. Licensing by its very nature means the product will have a higher price point than generic versions, so if the only differentiation between your product and the other guy's is a name-brand logo, then your chances of enticing the consumer to purchase more than once are limited. NASCAR licensed bulk produce a few years ago and consumers didn't "bite."

3.) They need you as much or more than you need them: Companies stating out in licensing often think they should partner with the category leader. After all, if you're a BIG BRAND, shouldn't your licensee be the #1 company in that category? No. If I'm already the category leader, why would I want to license another brand?

4.) Financial commitment: Manufacturers approach us all the time trying to "test" a product with one of our clients' logos on it. The fallacy of their thinking is that, if the product fails, the consumers and retailers will think it was because our client's brand couldn't get "traction" at retail. Plenty of big brand names have failed at retail because of poor product fit, faulty execution or just bad luck. Everyone has to have some "skin in the game."

5.) A long-term strategy: This is the continuation of #4. If your licensee doesn't see your branded products as part of their long-term strategy for growth, then you're talking to the wrong company. While many licensing deals for promotional or entertainment products last a year or two, the really important food deals mean a committment from your licensee to invest in the products and look at the deal as a way of leveraging their business. Without that, you're playing with fire.

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

Food Licensing Tip #7: Finding the "Right" Partner (part 1)

(scary cat courtesy of Icanhascheezburger)


Licensing your brand means letting go.

It's one reason brand managers shy away from licensing. It's just too scary.

We all know how corporate life works: you take a successful risk and your boss claims the whole thing was her idea. Take a failing risk and you're logging onto Monster.com every 15 minutes.

Licensing means allowing your brand to be used on products made by someone else, yet with the explicit intention of making consumers think it was produced by you. In the case of food brand licensing, this often means "bringing the restaurant experience home." It's one big reason why consumers have embraced the grocery products branded with Burger King, TGI Friday’s, California Pizza Kitchen and others: they believe you made those products in your "factory" and are selling them to the grocery store.

Food brand licensing means contracting with another company to develop, produce and MARKET products bearing your name and logo. Simply finding a company who can make a product isn't enough.

It's not what you make, it's what you can sell that matters.

The licensee (the company making the product with your brand on it) has to sell-in that line to a grocery chain. There are various ways this gets done (brokers, Direct Store Delivery or DSD, selling agents), but this is the licensee's job. Your job as the licensor is to make sure you're working with the right partner.

One of the most-important considerations in choosing the "right" licensing partner is: will your brand become an important part of their long-term strategy for growth, or just a quick hit-and-run product that will be gone from supermarkets within a few months? Movie studios are adept at this sort of promotional licensing that's usually tied in to the release of a blockbuster movie. Burger King, for example, is currenly licensing the "Star Trek" concept as part of its "Kingons" satirical commercials.



and



(to find more Kingon commercials, click here)

But for companies who "license in" other brands to put on their products, the goal is to create a long-term strategy for growth that benefits both companies. Traditionally the big licensors like the studios and Disney did NOTHING to help their food licensees. But for restaurant chains, the crowded food marketplace means they have to go the extra mile to convince sometimes skeptical manufacturers their brand will "hunt" at retail.

Tomorrow: How to identify a "right" partner

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

Food Licensing Tip #6: Licensor Support

One of the most-important things a licensor or brand can do is drive the business of their licensees. Couponing, either cents-off, BOGO (buy one, get one) or Get One Free, has been a major part of grocery marketing for generations. Since the onset of the Great Recession last year, coupon usage has shot up as consumers look for ways to gain value for their money. But many food licensors worry that couponing will drive sales AWAY from their restaurants. Franchised restaurants are particularly sensitive to licensing food products. I recall several years ago speaking with Stone Cold Creamery about licensing their brand. The fellow I spoke with told me their franchisees would never accept licensing.

In actuality, grocery sales enhance restaurant sales instead of cannibalizing them:

1.) the restaurant experience is totally different & consumers use meals at home differently than going out to eat

2.) the demographics are often different-- Burger King's primary consumer is young males, while moms are the "gatekeepers" at the grocery store.

Restaurant brands are uniquely positioned to support their licensees because they already have a consumer base pre-disposed to their brand. Coupons are a superior way to get their customers to try the grocery versions of their products, yet few licensors are willing to make that move. Whether because they've taken a pounding lately or because they "get it," Starbucks has initiated a remarkable cross-channel marketing blitz designed to promote its grocery items (licensed by PepsiCo) through coupon books given out in its cafes.


The books contain discounts of $1 off Starbucks Ice Cream, $2 off Bottled Frappuccino beverages (4-pack), $2 off Starbucks Doubleshot espresso drink (4-pack) and $1 off Packaged Coffee sold in the grocery channel (10-ounce and 12-ounce).

Interestingly enough, Starbucks' idea for the promotion came from consumer suggestions submitted to Starbucks via www.starbucksidea.com.

For a look at an excellent "case study" on Starbucks, click here.

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

Anti-DUI Technology & the Restaurant Biz

This article in Chain Leader got me to thinking.

The restaurant and bar business is worried that automakers will soon install ignition block devices in cars that prevent drivers with excessive blood alcohol levels from starting the engine. The technology already exists and is often installed on the vehicles of chronic drunk drivers. Simply taking away their licenses doesn't really work, especially if the offender needs his or her car to get to work. And since drunks often can't (or won't) self-regulate their drinking, we rely instead on technology.

But the alcohol industry and some in the food business worry such devices will curb what they euphemistically call "responsable drinking." Americans don't like someone telling them what to do. It's an "innocent until proven guilty" philosophy that's consistent with our traditions of jurisprudence, but can hurt many innocent people who are hit or even killed by drunk drivers. It's the same as with gun control: I have a right to own a gun until I use it in a crime.

But if carmakers install ignition-lock breathalizer devices, won't it take the onus off bars & restaurants to police their customers or even get sued if they let someone obviously drunk drive away? It likely will limit alcoholic beverage consumption, at least until we figure out how much we can drink and still drive. Right now, most people who drink even moderately when driving don't really know if they're below or above the limit. And frankly, as a society, we do a poor job of self-regulating. I have friends who always insist they're "fine," but we have no way of knowing until they get caught up in a sweep or are pulled over.

The ultimate question is: what's "responsable" drinking? Without a reliable way of measuring the amount of blood alcohol, we rely on one another to "do the right thing" while waiting until someone who may think he or she is drinking responsably (but isn't) gets stopped, arrested-- or worse, hurts someone. Then we clamp down. We should also remember the alcohol lobby and some in the restaurant industry opposed bans on smoking, saying that would harm sales or even put some bars out of business. Doesn't seem to have happened from all I can tell.

The only impact looks to be the smokers huddled outside in inclement weather and the upsurge in butts ground out on the sidewalks next to the doors.

And wasn't there a hue and cry about mandatory seat belts?

Like I say, we Americans don't like someone telling us what to do, even if it's the right thing to do.

Excerpted from BSLG's weekly subscription news reader service Food Business News. To subscribe or for information about licensing, contact Broad Street Licensing Group (tel. 973-655-0598)

New Series of "Licensing Tips" Starts Monday

Look for another week in our series of "Licensing Tips" starting Monday, June 8th!

For those who can't wait until Monday, you can always call Broad Street Licensing Group directly (tel. 973-655-0598)

Broad Street in The Wall Street Journal

A new article in The Wall Street Journal says in part:

Restaurant chains are increasingly looking to attract grocery store shoppers to help offset restaurant losses. For instance, Burger King Holdings Inc. plans to sell its Apple Fries in 10,000 grocery stores nationwide this fall. California Pizza Kitchen Inc. saw supermarket sales of frozen pizza increase 19.6% to $159 million last year, reported The Wall Street Journal. "Restaurants are thinking, 'If we can't capture those consumers in our own stores, we'll get them at home and, when the economy improves, they'll return to our stores,'" stated Bill Cross, vice president of food licensing at Broad Street Licensing Group.

To subscribe to our weekly update on the food industry or for information about licensing, contact Broad Street Licensing Group (tel. 973-655-0598).

BPA Under Scrutiny

Bisphenol A (BPA), a chemical found in food packaging, is under review by the Food & Drug Administration (FDA) to determine whether it is safe. BPA is used in baby bottles and in epoxy resins for internal protective linings for canned food and metal lids. The FDA has been criticized for deeming BPA safe at current levels in consumer products because the studies used in the assessment were industry-funded reports. The scientific community has argued the FDA should have also included independent studies which have raised uncertainties regarding the potential effects of low dose exposure to BPA in humans, in particular infants.

Last autumn, Canada became the first country in the world to take regulatory action prohibiting the use of BPA in baby bottles, while bills are currently under consideration in Washington, Minnesota, Connecticut and some U.S. cities aiming to ban the use of the chemical in products for children under the age of 3. A Canadian study has concluded, however, that consumer exposure to bisphenol A (BPA) from consumption of canned soft drinks is low. The study, published in the Journal of Agricultural and Food Chemistry, evaluated the levels in canned drinks, and indicated that, while most of the drinks analysed contained BPA, the levels present were minimal.

In beverage production, BPA is used to produce bisphenol A diglycidyl ether (BADGE), the inside coating of cans. Scientists claim residual amounts of BPA can be present in BADGE as a result of incomplete reaction, and that both BPA and BADGE can migrate from the can coatings, especially at high temperatures. Studies have found that BPA is a potential endocrine disruptor that mimics the action of estrogens, while recent U.K. research found that higher concentrations of the chemical in urine were linked with heart disease, type 2 diabetes and liver enzyme abnormalities.

Look for more fire in the press on this issue.

Excerpted from BSLG's weekly subscription news reader service Food Business News. To subscribe or for information about licensing, contact Broad Street Licensing Group (tel. 973-655-0598)

The Food & Flower Marketplace

A study by Battelle Technology Partnership, the world’s largest nonprofit independent R&D organization, has measured the U.S. fruit, vegetable and mass-market floral industry for the first time, concluding it measures $275bn annually with a "ripple effect" to the economy raising that total to $554bn. The study included produce and mass market flowers, local farms, organic production, farmers markets, conventional production, all types of grocery stores and restaurants. The industry's total impact on the nation's economy is 4.23% U.S. gross domestic product (GDP), and 1/3 total U.S. animal and crop production. Impact on employment is 1.9% of the national total, translating into 2.7MM full-time positions, and nearly $72bn in wages.

The full report can be purchased from the Produce Marketing Association for $499.

Excerpted from BSLG's weekly subscription news reader service Food Business News. To subscribe or for information about licensing, contact Broad Street Licensing Group (tel. 973-655-0598)

"Tasty Tidbits #1"

• Real personal consumption expenditures for all food (including supermarkets and restaurants) decreased 14.8% in the 4th quarter of 2008 versus the prior quarter, more than doubling the 7.3% drop between the 2nd & 3rd quarters, the largest decline recorded by the Bureau of Economic Analysis, which last reported a digit decline in the final quarter of 1947.

• Information Resources reports 76% of consumers are now making purchasing decisions at home, up from 60% in the first quarter of last year. The trend will have an adverse impact on in-store marketing spend.

• Wells Dairy has been hit by the peanut salmonella outbreak and has joined the ranks of companies recalling products with peanuts or peanut butter in them.

• More good news for you Java hounds: a preliminary study says caffeine might ward of skin cancer. Forget the SPF, splash some BK JOE on my back!

• No more jug wine? Almaden Vineyards switched from its 5-liter bottles to a bag-in-the-box product.

• UK candy giant Cadbury has decided burping cows are the biggest contributor to their carbon footprint accounting for more than 60% of emissions. The cows produce 80-120 kg of methane gas each year, one of the most-potent of the various “greenhouse” gasses. The burps are the carbon equivalent of driving your car for a year. Cadbury promises to address the problem, perhaps through giving the cows clover to sweeten their digestion. Seems as though Tums might have a new product extension possibility. Cadbury is in a good position to pay for cow antacids, since worldwide chocolate sales by the company rose 6% last year.

• Target is quietly moving in Wal-Mart’s direction, offering lower-priced fare, including food, health care and personal care products so it can retain its higher-margin items.

• With a variety of chains offering BBQ ribs— or planning to— click here to listen to a podcast featuring an interview with Chicago restaurant legend Sweet Baby Ray.

• Mickey Dee’s has its sweet tea, but Jeremiah Weed launched Jeremiah Weed Southern Style Sweet Tea: 70 proof sweet tea-flavored vodka!

• Apparently others think the Golden Arches could use a little “buzz,” with police in Edgewater, MD busting an employee of the local McDonald’s for selling pot in the drive-thru window.

• While long available to retailers in the US and Europe, electronic POS systems are being introduced in Latin America in a big way. Latin American retailer Falabella is introducing the Retalix StoreLine POS system in more than 1,700 POS lanes in its supermarket division, part of an effort to include state-of-the-art technology throughout its operation. StoreLine offers self-checkout, electronic-payment services and other options.

• A new salmon “gutter” won’t keep fish from raining down on your roof, but will clean up to 24 of them per minute.

• Some 40% of US adults use a recipe once a week to make any kind of dish, and a cookbook that is owned for over two years is the top recipe source, according to The NPD Group’s Complete Kitchen Audit. The survey also found that 61% of households read or look at newspaper food sections and 17% own a sandwich maker/press.

• Is Lance going public? The NC-based snack maker won’t say, but it has filed a “universal shelf registration statement” with the Securities and Exchange for $250 million that will allow the company to sell up to $250MM of debt, common stock, preferred stock, depositary shares, warrants, stock purchase contracts or stock purchase units. The company’s president, David V. Singer, said Lance has no specific current plans to offer securities, but wanted to be able to finance opportunities as they become apparent.

• Bad news for you chocolate lovers: Cadbury has already raised chocolate prices for 2009 to reflect the higher price of cocoa and may have to increase prices for 2010 further if cocoa remains at current high levels. The average cost of cocoa for the group was 40% higher on average in 2008 compared with 2007, though cocoa prices fell 15% in recent weeks.

• Mygrocerydeals.com has seen a big jump in hits in the new economy. The site features online coupons that can be searched by ZIP code.

• A survey by retailing giant Tesco finds that college graduates entering the retailing field have some of the highest earning potential by 25, but that students who choose retail like the variety of career options.

• A study of 300 Chinese consumers shows they’re concerned about food safety following melamine scandals that sickened and killed young children. While the study ratio is approx. 1 respondent to every 3.67MM residents of the country, the immediate reaction would seem to be “duh!”

• In a related development, China’s Xinhua official news agency has said a new commission will be named to oversee Chinese food safety replacing the many overlapping agencies who clearly don’t know what they’re doing.

• Concerned Chinese consumers aren’t alone in worrying about food safety. German authorities have discovered the migration of 4-methylbenzophenone, a component of the inks used in the food packaging, in the chocolate crunch cereal of a Belgian manufacturer. Packaging inks are not covered by specific legislation on food contact levels. Rules generally state they should not transfer to food in quantities which could endanger human health (always a controversial requirement). A 2006 UK study showed 61 out of 350 samples of foods analyzed tested positive for benzophenone, though in levels below the maximum toxicological standard. Frozen foods are of particular concern, given the increased likelihood of chemical migration at low temperatures.

Excerpted from BSLG's weekly subscription news reader service Food Business News. To subscribe or for information about licensing, contact Broad Street Licensing Group (tel. 973-655-0598)

From Around the Food Industry....

• Snapple, Pepsi and Mountain Dew are all planning on using sugar instead of high fructose corn syrup (HFCS) in their products.

• Dairy drinks promoted with a health benefit account for more than 70% of global launches, with most of innovation occurring in Western Europe (28%) and Asia (24%), followed by Latin America (18%).

• The sixth-largest local and national radio advertising spending category in 2008 was grocery and convenience stores; they decreased their radio advertising by 3% compared with 2007.

• According to new consumer research from Mintel, the number of Americans who say they almost always or regularly buy green products remains unchanged since last year (36%). The number had tripled the previous year from 12% in 2007. Cost emerged as the leading consideration in making purchasing decisions over environmentally-friendly products.

• Sushi lovers rejoice! An extract from the edible mushroom Flammulina velutipes may prolong the shelf-life of tuna meat, while also stabilizing its color according to Japanese researchers.

• The value of French wine and spirit exports declined 0.3% in 2008 after sales fell in the last 3 months. Exports of Champagne and wines from Burgundy fell; table wines and Bordeaux were up. France exported in total $11.7bn of wine last year.

• Food marketers and CPG houses like PepsiCo’s Frito-Lay and Kimberly-Clark are now timing their specials and coupons for the start of the month when consumers have more cash in their pockets.

• Brand managers love to convince their bosses they’re doing something by re-designing the packaging as part of a “brand makeover.” Like firing a losing team’s coach, it’s the lazy solution, and PepsiCo’s Tropicana Pure Premium orange juice brand has admitted as much by announcing it will return to the old packaging and logo of an orange with a straw in it that was replaced in January following complaints from consumers who found the new containers “ugly” and “stupid.”

• Nestlé will expand its Nespresso line of pod coffee in select U.S. cities "in line with the potential of the market," according to a spokesperson. The line grew 30% in 2008, making it the company’s fastest growing brand. The brand is distributed in 50 countries, and while strong in Europe, has not done as well in the U.S., where SaraLee, in partnership with Philips, dominates with its Senseo coffee pod system owning a 44% market share of pod sales.

• General Mills will begin phasing out rBST milk in its popular Yoplait brand due to consumer pressure to drop hormone-laced milk products. Dannon has followed suit and pledged to remove milk from bovine growth hormone-treated cows.

• A new study from the U.K. seems to indicate that peanut butter allergies can be overcome by gradual exposure to peanuts and not total avoidance as has been the practice to date, and food labeling laws in the EU require the notification of any use of the ground nut.

• And in other matters relating to children and food, probiotics have been widely embraced by parents eager to boost their offspring’s immune system, despite the lack of hard evidence showing the benefits. Yogurt manufacturers like Nestlé and Groupe-Danone’s Stonyfield Farm YoBaby line are pushing the connection in products aimed at children. One selling point is the rising number of Caesarian-section births that prevent babies from picking up healthy bacteria from the mother’s birth canal.

• And in a case of blurring the distinction between commerce and entertainment, 2 Campbell Soup executives have appeared as themselves on ABC Daytime’s "All My Children." Denise Morrison, president of the soups, sauces and beverages division, and Lisa Walker, vice president for soup innovation, will cut the ribbon on a new hospital wing donated by the company in a three-show integration story line.

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

Licensing Expo 2009

The annual Licensing Show has just concluded in Las Vegas (see clip above).

The show moved this year from NYC, and it looks as though a significant number of exhibitors and attendees failed to make the move West. Broad Street Licensing Group president Carole Francesca attended the Show on behalf of client Burger King, and she found it much smaller than in previous years. Some of that undoubtedly was due to the current recession, with companies cutting back on expenses. And since it's no longer a cab ride for a reporter and a film crew to visit the show, exposure from the national media was off.

The Show in some ways is returning to its roots as primarily an exposition for the movies and characters. Yet licensing remains a valuable tool for brand building in the food sector. Simply put, it's cheaper to "rent" an established brand than start one from scratch. Shelves are crammed already, and retailers either want "slotting fees" to carry products or steep discounts and incentives. So don't be surprised to see more brands being licensed to the grocery channel.

Excerpted from BSLG's weekly subscription news reader service Food Business News. To subscribe or for information about licensing, contact Broad Street Licensing Group (tel. 973-655-0598)

Godiva Goes Digital

Godiva Chocolatier now has its own mobile channel: Godiva Mobile for iPhone, supported by a website optimized for Internet-enabled mobile devices. The new application is intended to supplement the existing Godiva Mobile application for BlackBerry and extend Godiva to all connected cell phone users. A Godiva spokesperson said it would help them keep "closer to customers in the current economic downturn," allowing them to get a Godiva fix when the Dow plunges or that pink slip shows up in their mailbox.

The app was developed in partnership with Digby, the leading mobile commerce platform provider, and lets chocoholics install a Godiva Mobile storefront on their iPhone or iTouch, including the ability to integrate with their contact list (presumably to find out who has chocolate when they don't) and take advantage of a cell phone "wallet." The two companies have modestly declared their creation a "model for the mobile channel." The hype is a bit laughable considering how online and cellular content have not always been kind to marketers. Case in point: PepsiCo and its Tropicana division. While the beverage giant claims only a small portion of its consumers were displeased by its new packaging, comments delivered on the company's Twitter page were direct and punchy: "the new cartons stink." The Twitter whirlwind forced the firm to cave in and restore the old packaging.

The lesson appears to be that direct involvement of consumers through social networking sites like Twitter and Facebook can enable a vocal minority to dominate what marketers glowingly call a "conversation" with their consumers, one that in the right (or wrong) circumstances can degenerate into a rant or a lecture. Perhaps a better description might be a shouting match when the topic is controversial.

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

Pushing Back on Private Label

The rise of private label products produces an unfair competitive advantage with retailers who end up competing against manufacturers and marketers.

Or so claims a white paper by the CIAA (the trade association for agricultural and food companies in Europe). The paper is in response to the European Commission's paper denouncing high food prices (both papers are available to BSLG clients and subscribers). With private label purchases as high as 40% in some countries of the EU, manufacturers are objecting to the pressure they're under from stores looking to pad their bottom lines with private label products. They claim that the existing laws on competition are inadequate, and cite other retailer abuses, including late payments, pressure to deliver product at prices set by the retailer (welcome to Bentonville, now please check your wallet and your dignity), and the move by large retail chains into non-food areas such as banking & financial services, insurance and travel, all of which strengthen their bargaining position and make them able to drive unfair bargains.

Other forms of anti-competitive activity cited by the CIAA include cartels, purchasing agreements between competing buyers, resale price maintenance, certification schemes, tying, and single branding. Some of this anti-competitive activity is barred by law in the U.S., though recent administrations have shown no inclination to prevent or take on monopolies or mergers that reduce competition. Grocery retailers in the U.S. have also looked at non-food retailing and services, especially in the area of health & wellness. The in-store pharmacy is nothing new, but recently chains have begun moving beyond just another department to focus them as central to their overall marketing strategy by setting up "wellness programs," lobbying prescription drug customers (e.g., courting Medicare patients), offering generic drugs at below-market prices, etc.

The Wal-Mart strategy of courting both consumers and doctors through cheap electronic prescription systems is having a ripple effect: the retail chain Wegmans has announced a rollback in prices on 400 generic drugs. Safeway has said it will push its O Organics and Eating Right house brands if food marketers don't bring down prices faster now that energy and commodity prices have dropped. But Safeway's righteous anger is diluted by the fact that they have been trying to get traction for their O Organics private label business with other retailers, so far with little success, though some movement has been reported recently. BI-LO is promoting house brands by saying they will discount them 30% because buying locally saves transportation costs for the Spartanburg, SC chain.

Back in the U.K., Tesco and ASDA are playing a game of one-upsmanship by slashing more prices in order to lure in the other's customers. Tesco began by reducing prices on 3,000 items, so ASDA has raised the ante to 5,000 of its SKUs.

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

Breakfast the "Hot" Day Part

Wendy's is just one foodservice operator looking to cash in on breakfast.

Wendy's/Arby's Group Inc. is trading French toast sticks for breakfast wraps. Panera Corp. spent 2 years developing a new coffee blend, and Starbucks shocked everyone by starting up value meals in the AM, and handing out coupons for cents-off on its licensed retail products. Breakfast is suddenly important because sales are growing faster there than any other say part according to data mined by NPD Group, a consumer-research company. Burger King Holdings Inc. has added miniature breakfast sandwiches. Wall Street has shown mixed reaction to the news, but the strategy is for the long haul, or so the QSRs say.

Wendy's hopes to derive as much as 10% of its total revenue from the morning day part within 5 years, though they have entered and then left the breakfast wars in the 80s when its omelets flopped and they switched to late night promotions. The sortie into breakfast is good news for their bottom line: breakfast is about 25% more profitable than lunch or dinner items due to cheaper ingredient costs. Burger King already derives 15% of sales from breakfast according to media sources.

Disclaimer: our role as Burger King's licensing agency forbids us from revealing any internal information, and all matters reported here are from our agency's proprietary information sources in the food business.

Burger King and Wendy's will have stiff competition: McDonald's Corp. has long set the standard in QSR breakfast, with staples like Egg McMuffins, and their hugely-successful coffee lifting sales so much the Oakbrook, IL firm started opening some stores 1 hour earlier to cash in on the trend. The Golden Arches get 25% of sales and 40% of profit from breakfast. Overall. breakfast traffic climbed 2% last year, while traffic in the restaurant industry during other times of the day was largely unchanged. Restaurant sales account for 8.2% of all breakfast options, up from 6.2% in 1996, but far below the 75% of breakfast meals eaten at home.

One cloud on the breakfast horizon for restaurants is rising unemployment where fewer workers need a convenient start to the day or have fewer dollars to spend outside the home. Analysts also say this isn't the time consumers will switch from one chain's offering to another's new product introduction.

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

Case Studies: California Pizza Kitchen

One of the successful food licensors is California Pizza Kitchen; they recently cited slow sales in what they called "unprecedented economic times" (unprecedented except for the Joads) and heavy impairment charges while posting a $5.3MM loss in its fourth quarter of 22 cents per share, compared with a profit of $3.5MM, or 12 cents a share, in the year-earlier quarter. Expansion will be limited this year to only 5 company-owned restaurants and 10 franchised units. Excluding the impact of more than $13 million of impairment charges and other one-time items, CPK said it would have earned $3.1 million, or 13 cents a share, in the fourth quarter. Fourth-quarter revenue dipped slightly to $161.8MM, down 0.7% from a year ago. Same-store sales fell 7.2% in the fourth quarter; for the entire year CPK reported net income of $8.7 million, or 34 cents a share, compared with profit of $14.8 million, or 50 cents a share, in the year before. Annual revenue rose nearly 7% $677.1MM. Same-store sales fell 2%. For the current fiscal year, CPK predicted same-store sales would fall between 5.5-6.5%.

But in one of the bright spots for the company, it will shortly debut its first non-pizza retail offering with a line of CPK-licensed "Flatbread Melts" sandwiches. Produced and marketed under license by Kraft, CPK's new offerings extend its "core" retail product line outwards to the fast-growing category of "enrobed meals" (sandwiches, Hot Pockets, etc.). As consumers look for alternatives that are tasty and easy-to-prepare, items that traditionally would qualify as snacks are taking their place as meal solutions. It's part of the trend towards "bringing the restaurant experience home" that has all the restaurant world talking about how they, too, can leverage their brands to retail.

That's market-speak for "how can I get a piece of that action?"

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