From Battle Creek To The Big Apple, Businesses Find Bonanza In Licensing
DETROIT (AP) _ From cereal makers to newspaper giants, American companies are working their corporate logos overtime, putting the trade names on consumer items to make extra money.
Marketing corporate identities - selling the right to use well-known signatures on items ranging from jewelry to greeting cards - will generate sales of $10 billion this year, estimates Gerald J. Alpert, a pioneer in corporate licensing.
″It’s another form of advertising,″ said Alpert, 42, founder and president of New York City-based Licensed Ventures International.
Alpert said his agency is the largest devoted to assisting corporations that want to make the most of their familiar logos, trademarks and copyrights.
″It’s a big moneymaker as far as dollars and cents, but to a large multibillion-dollar corporation it’s almost like petty cash,″ said Alpert, whose clients include Kellogg Co., New York Times Co., Campbell Soup Co., American Tourister Inc. and Nabisco Brands Inc.
By 1990, corporate licensing will be a $25 billion-a-year industry, Alpert estimated. Add to that the licensing of movie, cartoon, sports, comics and other properties, and the estimate burgeons to $100 billion for the industry as a whole, he said.
″This’ll be the first big Christmas and next year will be the blockbuster,″ he said. ″Kellogg will be the first blockbuster.″
The Battle Creek, Mich.-based Kellogg in 1983 began licensing products featuring characters used to sell its cereals for more than a generation: Tony the Tiger and his son, Tony Jr.; Snap, Crackle, Pop; and Toucan Sam.
Next year is the Chinese year of the tiger, and Kellogg will mark it with a marketing push featuring the 32-year-old Tony character, said Tom Faley, Kellogg corporate licensing manager.
Tony, his son and daughter, Antoinette, will grace towels, plush toys, coloring books, watches, board games, pillows, hats, scarves, mugs, pot- holders, refrigerator magnets and more.
Faley said about half the merchandise is geared toward adults, including balloons that inflate to show Tony’s cheerful, striped face and the slogan: ″You’re The Grrreatest.″
Kellogg and Hershey Foods Corp. sought new exposure for old brand names and legal protection for trademarks when they began licensing programs, company officials said.
Hershey began licensing in 1979, said Richard Rocchi, manager of special businesses for the Hershey, Pa.-based company. ″It grew slowly until 1982,″ he said. ″Now we have approximately 25 national licenses.″
Royalties range between 6 percent and 10 percent, Rocchi said. Among the images generating revenue ″in the six-figure category,″ are the company’s silver-wrapped candy kiss and the block-lettered Hershey logo - unchanged since 1903, he said.
Compare that with Walt Disney Productions, which has been selling licenses for products depicting its characters since 1929, when Disney sold for $300 the right to put Mickey Mouse on a pencil tablet.
″Today we have some 1,600 licenses covering some 8,000 items,″ said Disney spokesman Erwin Okun. ″We figured out that we do over a billion dollars retail.″
The company has 29 offices worldwide devoted to product licensing and their work generates annual revenue ″in the area of $100 million,″ Okun said.
Kellogg is aware of Disney’s success and has sold 12-16 licenses in hopes of following the path Disney blazed, said Faley. Alpert said he would recommend a cap at 25 licenses to prevent a glut of merchandise and maintain quality.
″Tony’s been around for 32 years,″ Faley said. ″We hope to have him around another 32 years. We’d hate to have our character burn out in one or two years’ time.″
Licensed merchandise comes in all prices. Mr. Goodbar and Reeses Pieces- shaped costume jewelry sell for $1.99 to $3.99; Kellogg-branded toys go for $5 to $8; and, a solid, 18-karat gold, diamond-inlaid Hershey kiss retails for $3,000.
Campbells-license figurine dolls cost $6,500 apiece, and Alpert said the company expects to sell 500 a year.
Licensed merchandise comes in all shapes. Hershey, Disney and Kellogg have licensed coordinated children’s clothing featuring their characters.
The candy maker also has licensed characters for children’s valentine cards, tote bags and beach towels, and a telephone shaped like a container of chocolate milk. It is negotiating for a line of footwear, Rocchi said.
Other licensed products include greeting cards, dinner bells, luggage and fine china for Campbells; toys, jewelery and other personal wear for American Tourister; and, a crossword puzzle game, sleepwear, shower curtains and recipe cards for The New York Times, Alpert said.
Conspicuously absent from the corporate licensing sweepstakes are the Big Three carmakers, General Motors Corp., Ford Motor Co. and Chrysler Corp.
″We haven’t been trying to turn it into a business and probably won’t,″ said GM spokesman Donald Postma.
GM’s car divisions - Chevrolet, Cadillac, Pontiac, Buick and Oldsmobile - for years have issued licenses on a case-by-case basis ″because it’s good promotion,″ he said. ″It’s entirely a question of the quality of the products involved what they want to do with it.″
Coca-Cola Co. weathered a storm of ill will because of advertisements for a line of ″Coca-Cola Clothes,″ manufactured under a licensing agreement with Murjani International Ltd. The designer sportswear was marketed as ″All- American,″ but was sewn in Taiwan and Hong Kong.
″We made a mistake,″ Coke Executive Vice President Ira C. Herbert said at a news conference announcing that production of the clothes would be moved to the United States.
Public opinion backlash is a major worry of corporations considering a licensing agreement, Alpert said. ″Their names and their trademarks are worth many millions,″ the agent said. ″To have companies entrust you with their name and identity is a big deal.″