Licensing the Foodcentric India

Being a developing country, India needs to get on the food licensing bandwagon and learn to capitalise on the exoticism of India’s flavours. Here’s what we know – India has the second largest population in the world at 1.2 billion (and growing); the 4th largest economy by purchasing power parity (PPP); and the 13th largest consumer market, which is expected to rise to the 5th largest by the year 2030.

Recognising India’s potential

Many foreign restaurant food brands have recognised the potential and have successfully expanded by adapting to India’s market. Take for instance, McDonald’s - known for their beef hamburgers, had adjusted their menu and created vegetarian burgers and focused on the non-beef / pork products, such as Chicken Nuggets and the Fillet-O-Fish burgers. Also, the concept of value at McDonald’s is still a predominant trait with the Happy Price menu (much like the Dollar Menu in the U.S.) starting at 20 rupees (around $0.50). The average check at McDonald’s in India is just over $2.00. The Yum family of brands (KFC, Pizza Hut and Taco Bell), have also experienced positive results from opening franchises in India, again making sure to accommodate regional food cultures.

What about expanding from India into the United States? Look at the Philippines. We have seen in California franchises of successful Filipino food restaurant brands locating in areas with populations of people longing for tastes of their homeland. The best are Jollibee, known for fried chicken and rice, and Goldilocks Bakeries, which hosts lines of customers buying dozens of pan de sal (bread rolls).

Success check points

In order to be successful in food and beverage brand licensing, licensors must recognise that they must start with a highly focused and disciplined approach to licensing, which should be viewed as a long-term strategy to increase awareness and reach new channels. To get successful results from such a programme, seven key steps should be followed:

Set mission and objectives

Does the licensor plan to focus on increasing awareness, generating revenue, gaining presence in new distribution channels, or all of the above? Other key objectives may be to combat infringement, to gain availability in new geographic territories, or to prevent depreciation of the value of the brand through under-utilisation in a single product category.

Consider the equity

The licensor and agent must consider all equity components attached to the brand name. The components of brand equity include: brand loyalty, brand awareness, perceived quality, brand associations/image and other proprietary brand assets.

Assess strengths, weaknesses, opportunities, threats

A thorough review of the brand’s inherent attributes must be analysed before approval of probable licensed categories. A brand may have many strengths that make it ideal as a strong, market-driven licensing property. However, weaknesses and threats should be addressed as well. Opportunities, including the use of websites, social media, and other new channels of distribution, should be considered.

Evaluate licensed categories

Once the components of brand equity are developed for the brand, knowing how to leverage or extend the brand into new areas is the next step. Brand loyalty and imagery in the minds of consumers drive the extension to new products. The stronger the emotional ties consumers hold with a brand, the greater the field the brand has to play within.

Adaptability

What sells in Delhi doesn’t sell in Mumbai. Find ways to adapt to the food culture of your market. Also, make use of locally grown products that not only bring added freshness, but promote the sustainability movement.

Setting licensing positioning

This includes positioning of the licensed products, for target customers, targeted channels of distribution, and packaging concepts for the proposed products on the approved categories. It is imperative to understand the size of the category, the key players currently in that category, and their market share and typical margins.

Striving to meet regional differences

Hand-in-hand with adapting to your market, know regional differences. Certain areas may be accustomed to use of certain spices, or types of cooking.

Perform competitive analysis

A careful examination of the brand’s competition and the types of brand extensions and licensing with which these competitors are engaged is imperative to success.

Set the licensing parameters

The owner of the brand must clearly develop boundaries in regard to negotiations, marketing minimums, and licensee qualifications. This important component is often overlooked and, as a result, many licensors sign deals with unqualified or non-committed licenses.

Strive for marketing efficiencies in spite of regional differences

Brands can still maintain the efficiencies inherent in large corporations, while keeping their regional flavour. Market the food products you’re selling as if being sold from kiranas and you will win over the consumer.

To conclude

There can only be positive growth in the area of food and beverage licensing in India, and companies should not limit themselves within their geographic boundaries. Take for instance the success of “Columbian Coffee” and their hard working Juan Valdez campaign, which helped them expand into the global specialty coffee segment. As their attorney, Camila Santamaria, noted, “The launching of Juan Valdez cafés around the world bearing this trademark is yet another use of intellectual property by Colombia’s coffee growers. After all, they possess the only coffee brand that truly belongs to coffee growers and this is something that no other brand can replicate.” India, as a brand in itself, can be manipulated by the food and beverage industry resulting in a very a lucrative market.

No matter how Indian food and beverage brands license themselves, through Food to Food, Food to Non-Food, or Non-Food to Food categories; find the right partners and stay true to the flavour of your brand.

Weston Anson is Chairman at CONSOR Intellectual Asset Management and Jemma Samala is Research Analyst/Technical Writer at CONSOR Intellectual Asset Management.