Although it has become increasingly difficult to get shelf space in toy stores for anything but the hottest entertainment brands, corporate food brands are leveraging their overwhelming visibility and kid Q to sneak onto shelves in every category, from apparel to books to games and toys.

According to a 1999 International Licensing Industry Merchandisers Association (LIMA)-sponsored study, corporate brand licensing represents a solid 16% of the current US$100-billion-plus licensing industry. Nancy Bailey, president of Miami, Florida-based Nancy Bailey & Associates, says while corporate food brand licensing within corporate brand licensing is steady, it has definitely not reached its full potential.

Bailey cites the M&M’s brand as a good example of a strategic brand extension that has been successful. Manhasset, New York-based research company Marketing Evaluations/TVQ’s Cartoon Q scores, which rate animated characters, ranked the ‘spokescandies’ as more popular than Mickey Mouse among 12 to 24-year-olds in May 1999.

‘M&M’s has done a great job with the characters. They’ve also done a great job of marrying the core product with the licensed product,’ Bailey says.

M&M/Mars has its own licensing department, headed up by director Paul Lieberman. Since the program began about five years ago, licensed M&M products appear in almost every major category except collectibles, says Lieberman. He cites toy candy dispensors as one of the most successful products because they combine toys and candy. M&M’s Halloween costumes are a hit because the candy has a built-in Halloween consumer base, and electronics like phones and radios also work well because items bring the characters to life using the voices from the M&M’s TV spots.

M&M’s are unique, says Lieberman, because the company is doing licensing programs with both the core product and the candy characters, which are really becoming entertainment properties in their own right. However, Lieberman says the key remains to maintain the values of the property: ‘colorful, chocolate fun.’

M&M’s is now poised to spread its licensed products worldwide. U.K.-based Copyrights Promotions Licensing Group was recently named European agent, and deals with Australia, South Africa and Asia are soon to follow. Paul Southern, CPLG’s director of brands, says because of high European consumer awareness of the M&M’s food brand, the program is projected to have similar success as the U.S. program. Initial categories will begin with back-to-school products, toys by summer, along with giftware and consumer electronics. M&M/Mars is also moving into new categories where they can ‘bring the characters to life by 3-D, animation or voice,’ says Lieberman.

The interactive arena will be a specific focus and M&M/Mars hopes to build a long-term presence in software, as well as to create an animated series at some point. The company recently signed a license agreement with Simon & Schuster Interactive to produce an M&M’s characters-based CD-ROM math game called The Lost Formulas for fall 2000, as well as a console title by 2001. Jeff Siegel, VP creative director for S&S Interactive, says a Skittles game is also in the works.

Lieberman says he thinks corporate brand licensing is on the rise, especially in food and beverage. ‘I notice when I go to licensing meetings more and more corporate brands have spokespeople, like the Pillsbury Dough Boy.’

Nicole Iozzi, VP of Bradford Licensing Associates in New Jersey, says that she too has noticed an increase over the last two years in food brands being used on kids items. Bradford acts as licensing agent for PEZ candy, and recent licensees for the brand include Dallas, Texas-based A&A Optical, which is producing PEZ eyewear, and California’s Bazumba, which is working on a video based on some of the 80 or so unlicensed PEZ characters.

Bailey, who has worked with many corporate food brands including Pillsbury and Hawaiian Punch, most recently signed on with Frito-Lay to develop products around the company’s current focus Cracker Jack and his dog Sailor, as well as Chester, the Chee-tos Cheetah. Frito-Lay’s strategy is to modernize the character for the next decade. New licensees include New York’s A. Aronson for storage containers, Funko of Snohomish, Washington for wobbling heads, New York’s Douglas Cuddle Toys for teddy bears, and New Yorks’ College Wear for T-shirts.

Most food brand licensing appears in both traditional kid licensing categories like apparel, publishing and toys, but Bailey says there is also a strong market for ‘play food’-for example, kid-sized versions of cake mix they can bake, or plastic versions of their favorite snacks for play kitchens.

Bailey adds that licensees are a lot more apt to take on a property if it has a wider demo. General Mills’ Cheerios products is one such brand that appeals to both moms and kids alike. Leigh Ann Schwarzkopf, manager of Minneapolis-based General Mills trademark licensing, says GM has licensed the Cheerios name to products encouraging toddler skills like manual dexterity, working with shapes and spelling. For example, Napa, California-based Oddz On is making toy cereal dispensers in the shape of a dump truck and a snacking cell phone. New Jersey’s Briar Patch has created three Cheerios games, and a third Cheerios play book by Simon & Schuster’s Little Simon should be out by fall. General Mills is now looking for licensees for products based on cereal characters like Trix Rabbit or Count Chocula. Initial character-based merch included Halloween costumes last year by Rubies of New York.

Schwarzkopf says for General Mills, food brand licensing hasn’t yet been fully maximized, adding that GM’s revenue from kid brand extensions ‘is barely on the radar screen.’ However, she adds that retailers are making more and more room for the product on their shelves if licensors can demonstrate how the product links to the core brand. In Schwarzkopf’s experience, a licensed food product sells better if the consumer is able to see how it relates back to the core brand’s value, such as the new Cheerios toy dispensors by licensee Oddz On. Schwarzkopf predicts the dispensers will be a strong seller because of their functionality (that is, moms won’t have to carry baggies full of Cheerios anymore) and the fact that they relate directly to the core food product, which is already a familiar purchase to the consumer.

However, as is the case with most food licensors, Schwarzkopf says the main reason for doing licensed kids merch isn’t to bring in huge revenue for General Mills; rather, it means a chance to get the brands out there in the positive eye of both parents and children.

Says Bailey: ‘Like all licensing, the goal is to reinforce the brand with consumers and the hope is that a young person will grow up with an affinity for the brand.’

Carole Francesca, president of New Jersey-based Broad Street Licensing Group, whose clients include Popsicle and Good Humor, says retailers are more accepting of corporate brand licensing in general and are shelving these products because they’re seeing that, in some cases, licensed food products have more staying power than entertainment properties. ‘They will often be on the shelves long after the hot property is gone,’ she claims.

M&M’s Lieberman says because the brand’s core product was already available at mass market retail, there was a solid familiarity with the product and a distribution network in place that made retailers very comfortable with the licensed merch. ‘They knew it would sell.’

A challenge licensors have to bridge with retailers is how to work cross-promotions in mass stores like Wal-Mart, using coupons or other incentives. Although it’s not a new idea, Francesca says a greater number of retailers than ever are executing cross-promotions within the same store, which can be cumbersome because they have to coordinate across buying lines.

‘But with more retailers wanting to maximize customers’ purchases once they’re in the store, putting promotions in place that will drive traffic from one aisle to the other is gaining a lot of attention.’

Francesca notes it works well with corporate brands and retail stores that do everyday business with the core products-for example, featuring coupons promoting Snuggle brand apparel in the fabric softener aisle. ‘You can affect more cross-aisle traffic,’ says Francesca.