While Spain is considered by many to be part of the old world, its licensing industry is anything but. In fact, the region is a relative newcomer to the global scene, with three of its more established agencies – BRB Internacional, Biplano and CPLG – only having set up shop in the early to mid-’90s.
These days, heavy hitters including Disney and Warner Bros. have their own offices in Spain, and more than 25 agencies representing 150-odd properties have joined them there. According to the fourth edition of EPM Communications’ International Licensing: A Status Report, out this month, retail sales of licensed goods in Spain and Portugal are sitting at US$1.48 billion, and Spain accounts for 80% of this figure. The two countries make up roughly 6% of the US$25.4-billion European licensing market, and this sector of Spain’s economy should grow by at least 10% annually over the next few years.
2004 was a particularly good year for the region’s strongest kids category – toys. According to Frederique Tutt, toy director for the U.K. and Spain at industry research firm NPD, licensed toy sales increased by 32% to make up more than a quarter of Spain’s US$1.3-billion toy market. And NPD EuroToy data shows that licensed plush sales spiked by a jaw-dropping 187%, accounting for 41% of the category’s overall sales. Licensed vehicles weren’t far behind, with sales increasing by 136% to make up 33% of the total category take. In fact, Tutt says every toy category except games & puzzles saw a double-digit increase in ’04.
Tutt credits Los Lunnis (a 13-minute preschool show produced and licensed by Spanish terrestrial broadcaster TVE) and the Renault Formula One license (kids are looking at Spanish F1 driver Fernando Alonso with stars in their eyes and trying to emulate him by playing with the toy vehicles) for heating things up. And she adds that Winnie the Pooh and Spider-Man both had strong showings in toys last year.
Clearly, when a license catches fire in Spain, parents don’t hold back in spending. But local agents say the Los Lunnis phenomenon, for one, may be something of an anomaly. Begona Diaz-Aguado, licensing manager for Biplano, which represents Star Wars and Nickelodeon’s portfolio in Spain, says TV exposure is hard to come by, with only three terrestrial broadcasters (TVE, Antena 3 and Telecinco) and cable household penetration sitting at 2%. Moreover, adds Elsa Gomes, managing director for CPLG Spain and Portugal, ‘there’s not a lot of coordination between licensing, video releases and TV series.’ If a show does land a slot, she says, the broadcaster will often air it without consulting the licensor and/or agent, and ‘that makes it very difficult to organize a [licensing] program.’
BRB licensing manager Jesus Diaz also acknowledges the problem, especially the low cable TV viewership. He says wryly, ‘People will only pay to watch football here.’ And for BRB’s Bernard, a beautiful CGI show starring a polar bear, Diaz isn’t waiting for a TV buy-in to launch a merch program. He’s currently working on a plan to introduce Spanish kids to Bernard via the internet and wireless this upcoming Christmas season, and the initiative will include wallpaper, ringtones and games for the property’s eight to 11 target demo.
Mobile phones have caught on like wildfire with kids in Spain; Diaz says it’s estimated that 55% of Spanish kids between the ages of eight and 14 have their own phones. He adds they’ve become a very popular gift choice, along with video game consoles, for a child’s first communion. (96% of Spain’s population is Catholic, and first communion is widely celebrated and acknowledged with gifts from both parents and grandparents.)
Other categories of note for Spanish kids include publishing, stationery, back-to-school items and apparel. Royalty rates are comparable to North America’s, with these categories commanding 12% to 14% and toys hitting a bit lower at 10% to 12%.
Interestingly, while CPLG has struck a direct-to-retail deal with Spain’s premier fashion chain Zara for Bratz and classic Marvel characters, Gomes says apparel is a tougher sell in the market. Spain’s consumers are very brand-conscious and prefer to clothe their kids in the likes of Ralph Lauren and Tommy Hilfiger. But Warner Bros. Consumer Products GM for Spain and Portugal Alfredo Lopez says apparel is the best category for his division, whose lines have a presence in several fashion-forward retail chains, including Zara, Bershk and Oshio.
Getting back to the kinds of properties that work best in the region, all is not lost if you have no TV presence. Gomes points to Bratz, which has more than 400 licensed products on the market, as a good example. She adds that Spain is opening up to movie properties, and there are licensing and promo opportunities to be had for both theatrical and DVD releases. Before the first Spider-Man flick was released in 2001, it was difficult to get Spanish licensees, marketers and retailers on-board, but since it’s success, Gomes been able to license every movie CPLG Spain has landed the rights to.
Biplano’s Diaz-Aguado is managing a full slate of promotions for the last installment in the Star Wars saga, Episode III: Revenge of the Sith, including a wireless package with Spanish carrier Telephonica Moviles and a Kellogg’s promo unique to Spain, involving the distribution of 130,000 3-D Star Wars mugs.
The one area where Spanish licensing seems to be a little under-developed is also the area licensors and agents find the most challenging – retail. The majority of kids goods in Spain are sold through hypermarkets such as Carrefour, while department stores led by Spanish-owned El Corte Ingles (with 100-plus stores) run a close second. (In toy sales, Spain’s Toys ‘R’ Us comes in third). And more than 60% of goods are purchased by consumers living in and around the three major cities of Madrid (the capital), Barcelona and Valencia. ‘Competition for shelf space continues to be a challenge,’ says WBCP’s Lopez. And BRB’s Diaz adds that Spain’s mass retailers are not entirely receptive to licensed goods beyond toys. ‘In general, retailers don’t see [licenses] as sales tools.’
Gomes disagrees and says with some coaxing (which, granted, sometimes takes upwards of a year per retail promotion), you can get a property in. El Corte Ingles, for example, will buy from most categories. Gomes also points to a US$3.8-million campaign mounted last summer for Spider-Man 2 and Bratz at Carrefour’s 122 stores that involved in-store promotions and advertising on 1,000 billboards across the country as evidence that retailers are starting to embrace licenses. But Gomes does concede that there’s a lot of room for improvement in the way licensed goods are merchandised at these retailers.
It’s very difficult to land endcaps or in-store boutiques and groupings of merchandise. El Corte Ingles, for one, runs each of its departments separately, and there isn’t a lot of communication between buyers. Diaz-Aguado says Spain’s retailers are just keying into the notion that license-by-license displays have a bigger impact on the consumer, but she sees the inroads being made in terms of getting them to look at in-store promotions, boutiques and offering premiums with purchase.
One particularly bright point on the retail horizon for kids properties is the nation’s network of more than 20,000 news kiosks (75% of which are located on urban streets and the rest in malls). Diaz-Aguado’s research shows that Spanish kids spend, on average, US$1.25 at these kiosks each day, usually after school. Kiosks provide a good testing ground for new licenses because you can get a temperature read on a property’s popularity through sales of smaller POS items such as magazines, stickers and confectionery goods.
Spain’s peak purchasing periods
Christmas/Epiphany – festival of the three kings (December 25/January 5): 80% of Spain’s toy sales take place in the six weeks leading up to these holidays. Kids usually receive smaller presents at Christmas, with bigger-ticket toys and goodies being handed out for Epiphany.
End of the school year (June): BRB Internacional’s licensing director, Jesus Diaz, says that no matter what grade kids graduate from, it’s customary for parents and grandparents to give them a gift.
Back to school (September): As with North America, back to school means major consumption, with parents outfitting their kids with new clothes and school supplies as they head back to class.
First communion (year round): 96% of Spain’s population is Catholic, and the religion’s first right of passage, traditionally taken when children hit their tweens, is celebrated with some pomp and circumstance. Parents and grandparents usually mark the occasion by giving their kids a higher-end gift. Cell phones and video game consoles have been popular requests in the past few years.