News

Brand licensing deals rise post-pandemic as consumers seek familiar and healthier products

Longer-term brand licensing deals between food companies have become more popular in recent times – a trend set to continue and flourish, partly thanks to the pandemic, licensing experts told Ingredients Network.

Despite playing a major role in the activities of other sectors – including pharmaceuticals and media – brand licensing deals were once largely limited to short-term buzz-creating arrangements in food. For instance, co-marketing deals for the launch of a new film would often see characters brandished on the packaging of consumer packaged goods (CPG).

Yet, in the last few years, experts have marked an uptick in the number of more involved, longer-term agreements between food companies, including deals for access to "iconic flavour profiles that will communicate the trusted flavour of the product," Jeff Lotman, CEO of worldwide brands licensing agency Global Icons told Ingredients Network.

He gave the example of his own company's client, Hostess Brands which has signed a succession of such deals, including; a January 2022 licensing agreement with Danone for Twinkies flavoured International Delight Coffee Creamers; a 2020 deal with Trilliant Food & Nutrition for Hostess product-inspired ready-to-drink iced lattes; a 2018 agreement with Post Consumer Brands for cereals based on Hostess' Donettes, HoneyBuns and Twinkies brands; and a deal with Jel Sert in for Twinkies and Ding Dong dessert kits.

For Hostess, "many more deals have been executed that will be in the market late 2022 and early 2023," Lotman revealed.

Other big name companies striking licensing deals include Mondelez and Oreo, Cinnabon with a host of flavour-profile mash-ups – including with Pillsbury and Keurig K-Cups coffee – and cereal brands including General Mills with Betty Crocker.

Pandemic-driven leap

The rise of food brand licensing has taken a significant leap since the start of the pandemic, Steven Ekstract, managing director at New York-headquartered licensing consultancy, Global Licensing Advisors, told Ingredients Network.

"During difficult times, consumers gravitate towards known, trusted, and loved brands," he said.

"As a result of two years of sheltering in place and working from home, food consumption in the home has increased exponentially and brands are selling more food and beverages through creating new products utilizing licensing."

Ekstract said that many fast-food restaurant chains have expanded into licensing in the grocery aisle, including Taco Bell, which licensed an entire product range from seasonings, to taco shells and snacks.

"The visibility it provides for the Taco Bell brand to be in the grocery aisle is like free advertising that Taco bell is getting royalties for, and it provides delight to the consumer who may have avoided going out to eat during the pandemic," he added.

Even pre-pandemic, restaurant brands were taking on more brand licensing deals, jumping from less than 10 in the space 15 years ago to more than 50 today, said Lotman, "and it continues to grow".

"Many restaurant brands are eager to meet consumers for their eating occasions," he said. "Consumers are not making a choice at the grocery store on whether they are going to eat at a restaurant or buy a frozen appetizer, pizza or entrée. They are filling their freezers.

"Eating out at a restaurant is a different eating occasion. Also, restaurants can use their licensing program as a marketing tool to drive traffic to their stores which more than likely are franchised."