Having the Munchies Now vs. 20 Years Ago

Foodservice giant Sodexo (who serves meals at over 600 US college campuses) surveyed menus from the past and came up with the “top 10” items for now and 1989:

Food Trends in 1989

1. Fruit and cottage cheese plate
2. Chicken nuggets
3. Turkey Tetrazini
4. Chicken Chop Suey
5. Egg, bacon and cheese English muffin
6. Half sandwich and cup of soup
7. Taco bar
8. Spanish beef and rice
9. Vegetarian bean chili
10. Algerian lamb stew

Today

1. Locally-grown fruits and veggies
2. Crispy garlic-ginger chicken wings
3. Mac 'n five cheeses
4. Vietnamese Pho
5. Green tea and pomegranate smoothies
6. Crab cake sliders
7. Mini samosas
8. Tilapia Veracruz
9. Goat cheese salad (with lavendar lentils)
10. Chicken Mole

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)

Ads That Skirt The Edge

The line between what's acceptable in advertising and what's not is really blurry these days.

Of course, restaurant advertising and marketing are ripe for parody, and trade on the "wink, wink" factor, both for laughs and to seem "cool" to an already jaded consumer viewing pool. Just check out this segment from "The Onion," the online satiric "magazine" who is often so dead-on, you're not sure whether their stories are real or a send-up:


Taco Bell's New Green Menu Takes No Ingredients From Nature

The "Daily Show" and other satirical programs, stand-up comics, Internet spoofs and even the self-parodies of porn itself have all led us recently to ads that skirt the edge of what's acceptable and what isn't. Of course, good taste has never been required in the ad world, and questionable double-entendres, suggestive copy and even flagrant sexism have long been a way to get noticed and even sell products. Burger King has used a series of drive-by ads created by Crispin Porter + Bogusky to smack the jaded and bored. One of their iconic spots shows a guy waking up with The King in bed.

It made even franchisees uncomfortable, but turned around a marketing slide and helped the company emerge as a player in fast food:



The strategy isn't without its detractors, and recently the company has had to back- peddle on some ads that prompted complaints abroad. The latest controversy stems from an ad running in Singapore strongly suggesting an oral sex act, and which traffics in the imagery of porn (see image at the top). Both Burger King and Crispin Porter deny the ad shop had any involvement in producing what the company calls a "local promotion." Self-appointed guardians of Right and other pundits are screaming about the ad, but it simply is in the same vein as many recent fast food commercials. Just look at this one for Carl's featuring "The Hills" star Audrina Patridge (complete with its own HD "Behind the Scenes/Making Of"):



Or what about this one with "Transformers" star Megan Fox inviting "hot chicks" to top her salacious struggle with a Carl's burger:

(photo by Heart Attack Grill)

There's even a new restaurant in Chandler, AZ called the Heart Attack Grill that features "nurses" in outfits that have more to do with porn fantasies than medicine, though eating the single, double, triple and quadruple by-pass burgers might make you wish one of these ladies had a defibrilator on-hand to go with that push-up bra.

Consider then, this ad for Quiznos:



The problem is: the ad isn't an ad at all, but a send-up from Playboy. But we can't be sure until the final frame.

It's a tougher marketing world out there. Reality TV with shows featuring wall-to-wall deleted expletives and confrontation, confessional asides running down fellow castmembers (often fueled by alcohol provided by producers looking to ignite fireworks) tend to validate confrontation. The pervasive presence of pornography has seen a return to frat boy social graces ("The Man Show," Spike TV). If advertising is simply a reflection of our age, then these ads seem perfectly in-tune with the times.

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 Failures of Organics: Part 2

The organics movement suffers from the same "true believer" mania that any "ism" does. I remember in college being served a veggie burger by a girlfriend. I took one bite of it and realized I was a born carnivore. But since then, I have come to realize that truly organic farming is not only a way to avoid chemical additives and carcinogens, but that organic food frequently tastes better.

Yet as has often been the case, the regulations promulgated by the government to bring order to a chaotic marketplace have been coopted by powerful lobbies. The Washington Post has highlighted how the USDA has succumbed to this lobbying by agri-businesses to relax standards, allow additives and substitutes, and permit farming methods that are antithetical to the concept of organic, and which trick consumers into paying up to twice the price for products they mistakenly believe are better than conventional ones.

One of the big problems with organic regulations is the spread of non-organic substitutes allowed in organic products. The intent under the original organics law in 2002 was to allow up to 5% of a USDA-certified organic product to be non-organic, provided it was approved by the National Organic Standards Board. The original list had 77 substances, and the goal was to reduce the list by requiring manufacturers to justify their inclusion every five years. To do so, companies had to prove there were no organic alternatives. Instead of shrinking the list, the NOSB has allowed it to swell to 245 additives. For example, grated organic cheese can contain wood starch to prevent clumping. Organic beer can be made from non-organic hops.

Other lapses in the original law include the USDA's decision to make the mandate for annual pesticide testing optional. We all know that optional regulations are ones honored mostly in their omission. Given the size of the organics market (current estimates are as large as $24bn), it's no wonder major food companies have taken control of or purchased outright most small, independent organic companies. Kraft owns Boca Foods, Kellogg owns Morningstar Farms, and Coke has 40% of Honest Tea, President Obama’s favorite organic beverage. Lobbying is a natural result of this situation. Organic infant formula labels trumpet the additives DHA and ARA, synthetic fatty acids that some studies claim help the growth of the nervous system in infants. Yet they are synthetics that don’t meet the organics standards, mostly because they are produced with a potential neurotoxin known as hexane. According to The Post article linked above, Deputy USDA administrator Barbara Robinson, who administers the organics program, overruled her staff's ban on the additives after being lobbied by William J. Friedman, a lawyer representing baby formula makers. Maryland-based Martek Biosciences, which produces the fatty acids used by formula companies, claims no hexane residue is present.

Other actions by Robinson include giving farmers permission to feed organic livestock non-organic fish meal, which may contain mercury and PCBs. The law requires animals slaughtered for organic meat be raised entirely on organic feed. You pay extra for that, but you're not getting it. Other problems with the program include the variability of testing companies. Farmers are pretty much driven to shop around among certification services, since there is so much fluctuation in what the different companies allow. Liquid fertilizer, for example, was never intended for organic farming because of it's juiced-up nitrogen levels, yet the fertilizer gives those who use it a huge advantage in turning out bigger yields. Another area of confusion is the requirement that animals be given access to pasture and not be kept strictly in feed lots. But without clear regulations specifying how MUCH access, the practical effect has been chickens raised indoors in coops that have doors to the outside, but no practical method for shooing the birds into the clean air.

Robinson and others on the board defend their actions as making the organics regulations "work in the real world." But without transparency and consistency, the potential for fraud and abuse is huge, with the result that consumers have yet to embrace "organic" and cling to the totally meaningless "natural." A worse combination of circumstances I can't imagine.

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 Failure of Organics: Part 1

In a study conducted by The Shelton Group, a research firm, the failure of the organics movement is exposed.

It seems American consumers have reversed "natural" and "organic" in value. "Natural" is perceived as the indicator of an eco-friendly product and not "organic."

The Great Recession has slowed the adoption of "green" and the high cost of organic foods has put a damper on their initial popularity. Chains like Wal-Mart who had promised to sell a broad range of organic products have quietly dropped many of them to focus instead on their Private Label business. Organic dairy farms are switching to conventional or at least no longer going through the expense, regulations and record-keeping required by the strictly-regulated organic business.

The study confirms what those of us in the food business already know: shoppers remain interested in reducing the environmental impact of their food choices, whether with reusable grocery bags, recyclable materials or less use of greenhouse gas producing vehicles, air conditioning, etc. But the study shows consumers are deeply sceptical about marketing hooey, what's call "greenwashing." The Shelton Group asked 1,006 US consumers how they know if a product is green, and the top response was:

"Don’t know/not sure" (22%)

followed by:

"Says so on the package/label" (20%)

Despite well-defined certification standards, organic products have failed to win consumers' confidence and trust: 31% said "100 percent natural" is the most desirable eco-friendly product label claim, compared to 14% picking "100 percent organic." And in spite of the strict regulations limiting what farmers, processors, and grocers can do and sell under the "organic" banner, shoppers think of the organic category as more unregulated than "natural." The deep, sad irony here is that "natural" is virtually meaningless: there are no standards or government regulations for its use on products. Anything can be labeled "natural" without any evidence or standards to back it up.

And don't think this fact has been lost on the food industry. "Natural" has soared in popularity among marketers, and is the leading label claim on new launches according to research by Mintel. Last year globally 23% of all new products carried the "natural" claim. As if to underscore the message, Horizon, America's largest organic milk brand, is launching a "natural" (not organic) yogurt aimed at toddlers, and single-serve milk targeted to children. The products are produced conventionally, though the company is insisting they are "naturally produced without added growth hormones, artificial colors, flavors or preservatives and no high fructose corn syrup."

Yet unlike with organics, the cows can be fed with foodstuffs treated with pesticides, herbicides and other artificial additives.

Perhaps the organics movement suffered from the same bloated mentality of other bubble economies? I recall conversations with small organic brands about using licensing to leverage their market share. None of them would even consider building any other brand than their own. Now the bubble may have burst, and the run-up to mainstream organic acceptance may have lost its momentum.

Tomorrow I will look at how the organic regulations have undermined consumer trust and what we can do to change that.
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)

2008 Restaurant Category Performance

According to a new report by foodservice consultant Technomic, the 500 largest U.S. restaurant chains registered slower growth rates of 3.4% in 2008. System-wide sales for these Top 500 rose to $230.2bn, up $7.6bn over the previous year. Sales growth the previous year had been 5.0%, and the downturn can be traced to the recession and slowed expansion by chains under pressure to cut back (1.8% expansion vs. 2.6% in 2007).

The big growth areas were the limited-service Bakery Cafe, Coffee and “Other Beverage,” along with the perennial favorite, Hamburger. Panera Bread (16.2%), Starbucks (6.9%) and Burger King (6.6%) led the growth estimates. McDonald’s grew an estimated 4.4% on sales over $30bn).

Subway continued its domination of the expanding “Other Sandwich” classification with 17.1% sales growth on total sales of $9.6bn, far outstripping the 9.1% of the rest of the “Other Sandwich” chains combined, and making it the second-largest restaurant chain in the U.S. and pushing Burger King into third (followed by Starbucks and Wendy’s). Limited-service chains accounted for over 80% of all U.S. “fast food” restaurants, with the group expanding by 4.5%. The “Asian” category grew at 12% with the California-based Panda Express the leader at 14.6% growth on sales of $1.18bn. The “Fast Casual” category continued to expand, and the “Mexican” segment saw Chipotle Mexican Grill and Qdoba Mexican Grill posting robust system-wide sales growth (20.7% and 17.8% respectively). Chicken leaders were Wingstop (23.6% growth) and Zaxby's (17.9%).

Full-service chains accounted for only 39% of all U.S. restaurants, with the group growing at an anemic 0.9% rate. Only the “Asian” sub-category of this group showed robust growth of 9.3% with the leaders Arizona-based P.F. Changs China Bistro (8.7% growth on sales of $928MM). The real shocker, though, was in the “Varied Menu” category, which fell from 5.4% growth the prior year to a paltry 1.5%. Fast casual chains took much of their market share in the “lunch” day part, along with unit closures and retailers offering dinner options. Only the Italian sub-segment showed promise (3.4%). Mexican, Steak and Seafood all were below-average with sales declines of 1.8%, 0.7% and 0.4% respectively. Family-style restaurants had modest growth of 0.5%.

The Ten Fastest-Growing Chains with Sales Over $200 Million (ranked by Percentage Increase in Sales in 2008 vs. 2007):

Rank- Chain- 2008 U.S Sales ($millions)- % Sales Change- % Unit Change

1. Five Guys Burgers and Fries $302 (estimated) 59% 49%
2. Jimmy John’s Gourmet Sandwich Shop 497 29% 28%
3. Potbelly Sandwich Works 225 (estimated) 27% 18%
4. Noodles & Company 200 25% 19%
5. Wingstop 255 24% 19%
6. Peet's Coffee & Tea 230 23% 11%
7. Buffalo Wild Wings 1,229 21% 14%
8. Chipotle 1,275 21% 19%
9. Pei Wei Asian Diner 278 19% 19%
10. BJ's Restaurant & Brewery 377 18% 20%

It's not surprising that the strong got stronger, with the top 10 fastest-growing chains’ sales accounting for $4.9bn (24% more than 2007) and with unit counts up 22%. Four chains with sales above $2bn had double-digit growth, including Subway (17.1%), Panera Bread (16.2%), Chick-fil-A (12.2%) and Olive Garden (10.2%). Of the four, only Olive Garden is a full-service chain. The scale of performance also was enormously varied, with Buffalo Wings & Rings showing an 89% growth, while Bennigan's Grill and Tavern suffered a 33% sales decline following its bankruptcy and closure of many outlets. Only 56% of the Top 500 restaurant chains had at least nominal sales increases, while 213 suffered sales declines (vs. 129 the year before). International growth outstripped US levels significantly, up 13.4% overall vs. 3.4% domestically. International unit growth outpaced domestic growth 9.9% to 1.8%.

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)

Loyal Fans

According to market research firm Brand Keys, here are the rankings for customer loyalty in the restaurant channel:

Casual Dining

Olive Garden
Chili’s
Outback
Applebee’s/Hooters (tie)
IHOP/Red Lobster/TGI Friday's (tie)
Ruby Tuesday's
Arby’s

Coffee

Dunkin' Donuts
McDonald's
Starbucks
Krispy Kreme

Pizza

Domino's
Pizza Hut
Papa John's
Godfather's/Little Caesars/Round Table (tie)
Chuck E. Cheese

QSR

McDonald's
Subway
Quiznos
Burger King
KFC /Wendy's (tie)
Hardee's
Jack in the Box/Taco Bell (tie)

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 Our Wire Services: Gen Y

Fortune magazine has published a fascinating look at the challenges in managing Gen Y employees.

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

"Tasty Tidbits #2"

• In a move counter to the falling sales of carbonated drinks in general and colas in particular, Red Bull has launched its own cola that it touts as free of artificial flavors, preservatives, HFCS (high-fructose corn syrup) & phosphoric acid. The product contains "slightly more caffeine" than regular cola, and was first distributed in Europe and Russia last year. Its American debut was in (where else?) Las Vegas last June.

• Discount club store Costco opened its first store in Australia in June.

• The business of in-store retail health clinics has grown 130% since 2003, though much of that growth comes from the creation of a category that did not previously exist in any widespread distribution.

• Kraft sticks to its knitting as CEO Irene Rosenfeld plans to offer variations of tried & true products rather than new concepts as its strategy for dealing with the current economic challenges. General Mills, on the other hand, is launching Wanchai Ferry-brand Chinese frozen entrees. Suzie Wong, where are you?

• Having trouble sacking an employee? Seems there is a web site for just about anything, so it’s no surprise howtofiresomeone.com is offering business owners advice on terminating employees. The consensus is: be considerate of feelings and be truthful with employees as well as clients.

• Wal-Mart, McDonald's and Nestlé were among the top-50 most admired companies by the readers of Fortune magazine.

• Old-fashioned "brown" liquor, especially bourbon and other whiskies, is making a comeback of sorts. Consumers see them as "classic" and even "artisanal" because of the complex craft of distilling and aging them, though sweetened versions are gaining popularity with younger drinkers.

• Chocolate giant Lindt is looking at using cocoa shells to generate electricity, though it still will mean burning something.

• If the "Carrying Coals to Newcastle" or "Selling Snow to Eskimos" doesn’t cover the topic, then perhaps the new phrase for overkill in a market will be "Opening a Coffeeshop in Seattle." Despite a killer economy, entrepreneurs there are opening new coffeeshops, with a typical start-up running $150,000-$500,000. But profits are 10-18% of sales, and— bad news for Starbucks— the city's quirky residents seem to favor indie establishments over chains.

• Green Mountain Coffee is trying for the C-store market with its new Revv coffee with up to 27% more caffeine.

• Tesco US division Fresh & Easy is using ultraviolet-light to sanitize plastic trays and display packaging. The process allows materials to be reused and helps the company reduce its carbon footprint.

• And on the marketing front, Tesco has convinced 45,000 customers to register with it to receive emails as part of "friends of fresh & easy" announcing company news (something consumers really crave) as well as exclusive offers and special deals. The pilot project apparently came about from feedback the company gathered from its Fresh & Easy Web site where consumers said they liked the idea of receiving correspondence from the company via e-mail. Tesco will support the surge with signage and handouts encouraging even more customers to sign up. Fresh & Easy also has a blog, as well as a Twitter account.

• Nestlé USA introduced a variety of new products under its Stouffer’s brand, including Corner Bistro Stromboli and Flatbread Melts in six varieties. At the same time, the Lean Cuisine group launched four new frozen entrees, including Beef Chow Fun, Sun-Dried Tomato Pesto Chicken, Pasta Romano with Bacon and Linguine Carbonara.

• Target is opening 27 new stores, including 6 supercenters selling food. The move as seen as essential in its competitive strategy to deal with Wal-Mart, the nation’s top retailer and largest food seller.

• Turkey's ice cream market is projected to grow at a 10% rate over the next five years. In an unrelated move, casual dining restaurant company Brinker International has opened its first Chili's in Turkey.

• U.K. grocery retailers & manufacturers have pledged to help cut household food waste by 155K tons or 2.5% of total waste before the end of 2010 in conjunction with the Waste Resources Action Program's "Love Food Hate Waste" campaign. The goal is to implement more effective labeling, package sizes, and storage, partly to keep food fresher for longer.

• As a sign of the flush cash position of grocery retailers, mid-West chain Price Chopper will sponsor the Price Chopper 400 NASCAR race at Kansas Speedway as part of the Sprint Cup competition.

• Ohio State University researchers have discovered what moms have known for a long time: children consume an average of two cups of fruits and vegetables a day, which lags near the bottom of the recommended total. Up to 40% of the fruit intake is in the form of juices, and French fries account for about 25% of vegetables eaten. Another study (by Columbia University) shows children drinking less milk in favor of sweetened beverages, lowering their calcium intake.

• Mars Snackfood is rushing into the social media marketing frenzy to advertise its Skittles products. In addition to hosting a user-created portion of its Skittles.com website that invites consumer-uploaded content, fans of the candy are encouraged to interact with the product through a user-maintained Wikipedia article for Skittles and postings from the social-messaging site Twitter which feature the word "Skittles."

• Mother Burger will open in New York City in April with a signature drink: milk shakes with and without alcohol. Seems almost un-American.

• Talk about the American way: Kogi, a "Korean taco" lunch truck circulating the streets of Los Angeles, has been crowned "America's first viral restaurant" by Newsweek. Its owner, Roy Choi, is a veteran of trendy bistro La Bernardin and a valedictorian of former Broad Street Licensing Group client The Culinary Institute of America. Fans can find Choi's peripatetic truck on the Twitter social networking site, and have uploaded videos on YouTube. His fare includes regulars tacos with short ribs, spicy pork, chicken or tofu, but also extends to kimchi quesadillas, pork-belly tortas and Korean blood-sausage hot dogs. Grilled tripe, sweetbreads and anchovies marinated in traditional Korean flavors are on the drawing board.

• Despite offering vegetarian fare regularly to Americans, restaurants in Thailand are only now serving vegetarian fare. Vegetarian restaurants catering to a Buddhist clientele are common in China, for example.

• Wm. Wrigley Jr. Company’s Global Innovation Center (GIC) in Chicago received LEED Gold certification by the U.S. Green Building Council (USGBC). LEED certification (Leadership in Energy and Environmental Design) is an accreditation system and nationally accepted benchmark for green buildings. Certification signifies that a building has met specific environmentally sound criteria, such as constructing on sustainable sites, improving water efficiency, using renewable materials and resources and employing innovation and design.

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)

"Grocerants" & Calcified Thinking

An article about the rise of the "grocerant" by Steven Johnson got me to thinking.

A grocerant is a grocery retailer offering ready-to-eat foods. Some are chilled and you take home to heat up (who hasn't had one of those roasted chickens loaded with salt?). Some of the upscale grocers like A&P and Wegmans have cafes and places where you can eat a meal while you shop.

Steve's point is how restaurants are hurting (especially the fine dining and casual dining categories). Only the Quick Serve Restaurant (QSR) operators are profitable, mostly because consumers still want to eat out, but have "traded down" to fast food. Their strategies for surviving the Great Recession mostly center on deep discounting and so-called "value meals." Some of them are menu peripherals, while other operators are dropping the prices on core menu items. Cutting prices usually brings in customers, but kills your bottom line, since in many cases, those customers don't come back for full-price fare. Yet the industry seems to be fresh out of fresh ideas.

It's surprising how insular most industries are. Looking at GM now, the village idiot can claim with reason to have seen all this coming. Why did GM management fail to invest the huge profits they made from SUVs and trucks into "the next big thing" - or at least finding out what that might be? Did they really think gas would be less than $1 a gallon forever? It was only a decade ago the Japanese first put their muscle behind taking market share of the light truck segment. Did GM and Ford think they were bulletproof?

Of course, we run into myopia on a regular basis. For example, some restaurant execs we talk with can't see the difference between an in-home meal solution and eating out. For them, it's all just eating. Therefore they balk at licensing their restaurant's brands and products to retail because they think that would literally take money out of their pockets - or their franchisees' pockets, which can be more worrisome, since franchisees have lawyers and (like with Quiznos) aren't unwilling to sue the parent company.

Consumers, however, see a multitude of eating opportunities these days, without borders or boundaries. Snacking is now a meal solution, especially for the young, and no longer a bridge to the "real" meal. So it's not surprising that shoppers would warm to the notion of eating in a grocery store.

The key here, though, is whether the grocery execs can see above their own cubicles. Consumers will go right back to restaurants if their expectations aren't met and the deliverables in the equation decline or get stale. Health and safety are going to make a difference, too. If we get a snootful of salmonella or lysteria in a grocerant meal, then the whole equation could change. With a majority of fresh foods being prepared off-site, this is a real risk.

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)

Restaurants & Retail

The success of restaurants like Burger King and California Pizza Kitchen in the grocery channel has led some restaurant execs to think "wow, this is easy," and others to worry "this must be a real threat to our franchisees." In both cases, they're wrong.

The food industry is changing in so many respects. Both convenience stores and supermarkets now compete with restaurants in offering meal solutions. The term "meal solutions" sounds like marketing-speak or FrankenEnglish, but it captures the idea that we don't sit down at the table to eat as much as we once did. You can "grab & go," eat a snack, eat several snacks, get take-out at a restaurant or from a supermarket, heat something in the microwave or get a sandwich from a vending machine. In many offices, vending machines and microwaves have replaced the company cafeteria, and busy workers often don't have the time to go out to eat.

Licensing is evolving to handle these changes, crossing boundaries and solving the needs of manufacturers and retailers for products that address what consumers want. We put together a deal between a major food brand with one of the premier food manufacturers for the latter to license cutting-edge technology in baked goods. As a major brand, they need certain economies of scale to justify investing in a new technology, so until the product line reaches maturity, the baked goods technology company will make the products under a contract manufacturing/co-packing agreement. Pretty slick for both sides.

In the case of restaurants, there have been experiments with in-store kiosks and mini-restaurants to try bringing the restaurant experience to shoppers. The most notable is the one that didn't work out well: McDonald's put restaurants in Wal-Marts, but it didn't "take." Burger King has launched its small footprint "Whopper Bar" with the goal of bringing the brand to places where a full-blown restaurant won't fit. We trust they'll be smart enough to stay out of retail environments. For one reason, grocery retailers dream of being restaurants, wanting to retain the dollars consumers spend eating out by offering them "meal solutions" while they do their food shopping. Wegmans and A&P are both converting parts of their stores into mini restaurants.

The key is understanding the different meal solutions the consumer is looking for: the mom standing in front of the freezer case looking for tonight's dinner has different "metrics" in her head about what will work for her needs than the young male "Super Fan" who goes to Burger King once or twice a week for an indulgent outing. Restaurants, food manufacturers and retailers all need to understand these differences and not conflate different eating experiences into one.

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)

Encore: 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?

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)

Encore: 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)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)

Encore: 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)
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)

Encore: 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)

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)

Encore: 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.

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)

Encore of "Food Licensing Tips" 1-5

Monday will be an encore of "Food Licensing Tips" Number 1-5.

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)

Just How GOOD Is Meat?

Meat gets a bad rap, even from me. My very first blog entry was about the controversy around meat and meat production. Basically, the knock on meat is:

1. It costs too much to produce, including the grains diverted from human consumption to fatten up cattle especially for that marbled, grain-fed texture and taste.

2. It costs too much to transport. Cows are heavy, and it takes a lot of fuel to move them to slaughter and then ship the meat to market. The days of the local meat market are almost gone except for specialty cuts and the like; the regional stockyard and meatpacking plants are a thing of the past.

3. It's bad for you. Studies of Asians who immigrate to the U.S. have shown a sharp increase in cancers and heart disease, usually as a result of eating more meat. Cholesterol goes up, heart attacks increase, all with a fairly direct link to meat.

But there is another school of thought (probably financed secretly by the meat industry) that says eating meat has health benefits.

That's right, eating meat might just be good for you.

Meat contains many important nutrients, including compounds like taurine, L-carnitine, creatine, conjugated linoleic acid (CLA) and endogenous antioxidants, according to Dr. Yeonhwa Park at the Institute of Food Technologists (IFT), a non-profit scientific group. Dr. Park says meat contains other important nutrients like iron and zinc that are hard to find or lacking in the average diet, as well as vitamin B-12.

The key may be adding probiotics, fiber or omega-3 fatty acids may help improve meat's functionality as a food. Breeding and changing meat types could reduce cholesterol levels, one of the drivers in the rise of grass-fed beef. The "tough" stringiness of free range beef and its much-higher price have both limited the appeal of the concept with retailers and consumers so far. Probiotics added to fermented meats like sausage could offset the health concerns about nitrosamines, though there's skepticism it could fully counter those potential ills. In addition, the probiotic strains chosen would have to be able to overcome the salts used in their preparation.

Omega-3 enriched meats could help offset the pressure on wild salmon stocks and the environmental concerns about fish farms and allegations such farms are encouraging the growth of disease and parasites in the wild varieties.

So what does all this mean for our health? Stay tuned.

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)

Salt Under Fire

Salt Shaker photo by Michael Connors

No one really needs the results of the latest survey on salt in the diet (this one from China) showing lowered blood pressure and even more supple artery walls. We know too much salt is bad.

Some estimates show Americans take in up to 80% of their sodium from processed foods, so not surprisingly, pressure is building on food marketers and restaurant chains to lower sodium, even if we consumers don't want to eat low-sodium foods. In Europe, several governments are forcing food manufacturers to cut salt levels, first by "advising" them, but threatening new laws, too. The adverse health consequences of too much salt have been thoroughly documented, including high blood pressure (hypertension), heart attack and stroke. It's not surprising The Center for Science in the Public Interest (CSPI) the American Medical Association have petitioned the Food and Drug Administration to change the rating of salt from GRAS (Generally Recognized As Safe). The FDA held a hearing in September 2007 on changing the GRAS status of salt, but no action has yet been taken.

Americans currently consume about 10 grams of salt per person per day– 2/3 above the maximum of 6 grams recommended by US government guidelines, and are using 50% more salt than 30 years ago, with a corresponding rise in high blood pressure. Doctors and scientists note that African-Americans are particularly prone to hypertension from a greater-than-average vulnerability to the negative influences of sodium. Medical groups claim that 250,000 fewer cases of heart disease (with a reduction of 200,000 deaths) could be achieved by a one-gram reduction in salt intake. A cut of 6 grams/day would net out at 1.4MM fewer cases of heart disease and 1.1MM fewer deaths.

While food manufacturers have sought ways to cut sodium, current methods rely mostly on eliminating salt, resulting in bland and unappetizing fare consumers don't want to purchase or consume. Northbrook, IL-based Bell Flavors and Fragrances now claims to have developed a new sodium-reducing flavor technology for meats, snacks, condiments and soups called ReduxSo that cuts salt up to 50% in processed foods. Available in both liquid and powder form, ReduxSo uses potassium chloride, a familiar compound, but which previously proved unusable in salt reduction strategies because of its metallic aftertaste. Bell employs flavor maskers to hide the taste, and maintains a "salty" profile that satisfies taste buds and retains the preservative benefits of salt in foods.

Besides Bell, Redpoint Bio Corporation has developed a flavor system for masking potassium chloride's bitterness, but which is being marketed as a masker, not a salt replacement measure. Other products for reducing salt are SaltTrim by Wild Flavors, Inc. and Swiss-based Jungbunzlauer's sub4salt. And flavor giant Givaudan is working on sensory studies to find flavors that mimic ones preferred by consumers, but without the sodium or salt content.

The reasons for salt's deleterious effects are unclear . The Chinese study referenced above focused on the enzyme called nitric oxide synthase (NOS) which produces nitric oxide (NO), a molecule used by the lining of blood vessels (endothelial cells) to signal surrounding muscles to relax. This improves blood flow and reduces blood pressure. In addition to its role in improving flavor and as a preservative, a new study claims to show salt also is a mood elevator. Tests on rats deprived of sodium showed them listless and avoiding pleasurable activities they normally engaged in such as watching sports on TV—

Sorry, just checking to see if you’re paying attention.

Scientists say the drop-off in activity is equivalent to depression in humans, and may be one reason why patients with hypertension cannot stay away from salt even at the risk of heart attacks, stroke and death spelled out to them by their doctors.

Over ¾ of the salt in the average American diet comes from processed foods, and CSPI claims the average sodium content of 528 packaged & restaurant foods has remained essentially the same for the past 3 years. Companies are feeling the encroaching pressure of government regulation on salt, and find its aftertaste no longer to their liking: Campbell Soup has recently declared it will reduce sodium levels in its soups. They will switch to sea salt in the flagship tomato soup (which is lower in sodium than table salt), and will effect an additional 15% reduction in 25 Healthy Request soups to 410mg sodium (1.03g salt) and 6 V8 soups.

Reducing salt in processed foods involves both challenges to flavor and safety, since salt is also an important preservative option. The trend is towards reducing sodium levels according to a science policy paper entitled Sodium and Salt: A Guide for Consumers, Policymakers and the Media published by the Grocery Manufacturers Association (GMA ) that noted more reduced-sodium products on the market. German bakers have been worried the European Government in Brussels would ban or limit sales of their bread over rising concerns on salt, but regulations passed recently were limited to food products making health claims.

At least for the time being.

This entry is reproduced from BSLG's weekly Food Business News. If you'd like to subscribe, or for information about licensing, contact Broad Street Licensing Group (tel. 973-655-0598)

Classic Commercials!!

The 80s are celebrated on VH-1 and now The Houston Press has revived 10 classic restaurant commercials. Of course, we want to highlight client Burger King (above).

But the all-time best fast food commercial is Clara Peller's foghorn voice demanding "Where's the beef?" for Wendy's.



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)

Broad Street Licensing Group in Print

This article by me, Bill Cross, is a succinct accounting of what we have done and and can for restaurant brands looking to grow their reach through the retail grocery aisle.

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)

No Posting, Happy Fourth of July!

Broad Street Licensing Group will be closed today through Monday, July 6th, for the Fourth of July celebration. Please enjoy yourselves in our absence. Regular posts will resume on Tuesday, July 6th.

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 Products from the CIA Masters Collection

Montclair, NJ (July 1, 2009) – Broad Street Licensing Group announced that The Culinary Institute of America’s Masters Cookware Collection is introducing new block knife sets, gourmet kitchen sets and revamped packaging, making it easier for retailers to customize gift sets and promotions. The CIA Masters Collection, manufactured by licensee Robinson Home Products, includes over 100 SKUs of CIA-branded cookware, gadgets, bakeware and cutlery, all sold exclusively to gourmet stores and specialty retailers.

The Masters Collection contains everything anyone who loves to cook will need in their kitchen. “What sets this collection apart from other lines of kitchen ware is that it has been designed by CIA’s master chefs for serious home cooks, stated Carole Francesca, president, Broad Street Licensing Group. “The line’s beauty and elegance is enhanced by the highest standards of construction and engineering,” Francesca added.

Sales from the CIA Masters Collection benefit the Culinary Institute of America Scholarship Fund.

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)