September 14, 2016
By Lisa Reiner
Times are tough in the food and beverage world, especially if you are looking to get a new product on the sought after shelves of supermarkets. In July, The Grocer published an article detailing the demise of New Product Development, with Tesco taking up the lead in the form of their initiative Project Reset, removing up to 20,000 lines in the first wave of cuts. As retailers face ever increasing pressures to perform in a saturated market, the natural move is to cut the dead wood and rationalise their products on offer. Even as far back as 2011 this has been on retailers minds, with Clare Rayner from Retail Acumen stating that, “When faced with an array of products, all of which could actually meet their basic need, the consumer at best will select the cheapest (if in doubt, save money) or simply walk away as it takes them too long to figure out the differences and benefits of each option.”
The rationale behind this consolidation in product choice comes at a time when there has been a significant shift in the retail landscape. Back in the days of supermarkets ruling the roost, customers could expect to walk down the condiment aisle and make the crucial decision between twenty different (yet essentially similar) tomato ketchup bottles. But the rise of the discount channel has put an end to this choice, with Poundland retail locations on the rise and customers discovering the competitive advantages of Aldi and Lidl. Project Reset was the answer for Tesco; a radical cut down of product SKU’s. Asda has also followed suit, launching Project Renewal and confirming that the supermarket giants are essentially doing to the food world what Apple has done to the technology world in their approach of providing fewer, better products. The evolving nature of store formats supports this minimalist approach, as food stores move away from large out of town stores to smaller c-store formats with less space.
So, what does this mean for licensing?
The ramification this has upon creating new products is quite simple; if it doesn’t offer a distinct USP, it will not make it to the shelves. In an industry that depends upon new product development, operations such as Project Reset are by no means ideal for the licensing industry. Nevertheless, in recent times there have been a number of new trends appearing on the horizon that we can place a level of hope on.
Beanstalk client Diageo, a global leader in beverage alcohol, has combatted this challenge by remaining agile and true to their brands. Take Guinness Burts Chips for example; this recently award nominated licensed product has understood a gap in the market for a pairing that made sense for the Guinness brand; a pint and a packet of crisps. With the Toasted Cheddar variety joining Classic and Rich Beef Chilli in the flavour portfolio, it seems that the Project Reset trend hasn’t been able to halt this cleverly placed product.
Licensors have also discovered that no matter how stretched the consumer’s wallet may be, nothing can get in the way of the opportunities afforded by Christmas and the success of gifting products. The Hummingbird Bakery realised this with their incredibly successful range of American inspired bakeware gifts available on Amazon, whilst Spanish restaurant La Tasca tapped in to the sangria lovers with their own unique branded gift sets, proving that experiential and functional items can also create a truly wonderful food branded product.
If we look more globally at the U.S market, a trend that continues to gain momentum in the states has to be the extension of food brands into restaurants and cafés. All you needed to do in the summer of 2016 was open up a brand magazine, and you will have quickly noted that the licensing industry made a valuable discovery; if supermarkets aren’t the place for their products, perhaps it’s time to take brands to the high street. That is exactly what Kellogg’s and Chobani have done to name a few, with their branded restaurants serving the much loved core product straight to the consumer.
Licensing continues to be a strong business model that can distinguish a brand from its competitors and allow it to succeed in what continues to be a very competitive space.
Lisa Reiner is the Managing Director, Europe & Asia Pacific, of Beanstalk, a global brand extension agency.
To find out more about food and beverage licensing, please visit our website: www.beanstalk.com.
 Guinness Toasted Cheddar nominated in The Licensing Awards 2016