Brand and Lifestyle Licensing: A Lucrative Business

Posted by Utku Tansel on October 19, 2017

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As explored in Euromonitor International’s “Global Trends Shaping Brand and Lifestyle Licensing Part 1” report, brand and lifestyle licensing is increasingly an area of focus for many companies. It is a lucrative space which presents broader business options and multiple opportunities by provoking new revenue streams. Many franchises aspire to be true lifestyle brands aiming to have a presence beyond their core business/industry with their licensed merchandise. Examples would include Coca-Cola, Harley-Davidson, Ferrari, Caterpillar, Volkswagen, Goodyear, Chupa Chups and Jack Daniel’s.

More often than not lifestyle licensing provides a vital tool to licensors for innovation and through licensing, these properties can continue to engage with their consumers. Lifestyle licensing enables fans to still be part of a property’s story by just purchasing a t-shirt, jacket or jeans even if they cannot afford the product in its core business. This is particularly true for luxury cars/motors.

The first part of this comprehensive report examines major global trends and developments whilst analysing contemporary success stories across a range of industries apparel and footwear, packaged food, beauty and personal care, and consumer health.

utku
Source: Euromonitor International

Key findings

Brand and lifestyle licensing: Main benefits
Brand and lifestyle licensing is mutually beneficial to both licensors and licensees. While the brand owner/licensor benefits from generating a new revenue stream, increasing their brand awareness, and expanding into new product categories, geographies as well as retail channels; the licensee generates a new revenue stream at the same time as having the association with the brand name, and differentiating its offerings from competitors.

P&G: World’s biggest licensor across FMCG
P&G is the world’s biggest licensor across FMCG companies in brand/trademark licensing earning a substantial USD3 billion in licensed merchandise sales in 2016. The key brands that drive licensing for P&G include Febreze, Vicks, Braun and Mr. Clean. Its well-known household brand Febreze now expands well beyond its core air fresheners category through brand licensing from air filters, carpet powders, spot and stain removers to vacuum bags and filters fans, bedding, kitchen bags and even cat litter.

Apparel: Top choice
While cutting across all demographics and regions, brand and lifestyle licensing penetrates many aspects of industries perhaps more so fashion. Its appeal as well as advantages are widely recognised. While doing so, collaborating with renowned  designers  could  potentially  give  brand  and  lifestyle  franchises  a  competitive advantage. Recent examples include MTV and Marc Jacobs, Kellogg’s and Peter Alexander, and Coca-Cola and Kit Neale partnerships. In 2017, Corona and Chupa Chups both launched licensed apparel collections inspired by the athleisure trend which has been the driver of the apparel industry alongside fast fashion.

Packaged food: Good prospects
Packaged food is a big growth area for brand and lifestyle licensing presenting good opportunities as only a fraction of products are licensed. Shelf space stability makes the industry very attractive. Diageo has been rather active expanding its Baileys and Guinness franchises, while Men’s Health, a magazine brand, extended its food lines considerably in recent years. By and large, brand and lifestyle licensing businesses are recommended to focus on the health trend, yoghurt and savoury snacks categories being particularly highlighted by industry sources with good potential to target.

Lip products: A gateway to beauty and personal care
Flavour and scent alignment make lip products an ideal target especially for licensors in soft drinks looking to expand into beauty and personal care. Past examples would include Dr Pepper, Coca-Cola, Fanta, Sprite, Pepsi and Tango. While Kellogg’s, Ferrari, Lamborghini and Tango all have launched licensed bath and shower merchandise ranges; Chupa Chups and Cheetos extended into makeup. Makeup is a category where trends are more ephemeral in nature and it is therefore in need of constant innovations and product launches to keep consumers interested. Thus, manufacturers   in this category could be more open to licensing as potential licensees.

Consumer health remains untapped
As consumers increasingly lead busy and demanding lives, many turn to extra help to get them through the day. Vitamins, therefore, could potentially be a good choice for businesses who are keen to expand such as Men’s Health has done with its extensive range. Gold’s Gym entered the industry with its protein powder line in 2017.

© Euromonitor International 2017

Utku Tansel leads Licensing at Euromonitor International. In this role, he manages the publication of market leading Licensing analysis overarching a range of related industries. After obtaining his Law Degree in Istanbul and MBA in London, Tansel joined Euromonitor 13 years ago, where he has been responsible for managing diverse research projects covering 32 countries worldwide and for the strategic development of several industry verticals.