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)