EXPERT COLUMN: License to Innovate

By Patrick McGuire, Focus Brands 

What comes to mind when you hear the word "Cinnabon"? It’s probably some combination of the intoxicating aroma, creamy frosting, warm dough and sweet cinnamon.

Great brands do that. They engage consumers beyond a simple transaction, creating deep emotional connections by consistently delivering on a core promise. For many of us, eating and drinking is inherently emotional. We're passionate about what we consume, where it comes from and the memories made around a table.

It's those connections -- the unique equities of top brands like Dunkin Donuts, California Pizza Kitchen (CPK) and, of course, Cinnabon -- that are driving so much of the restaurant-to-retail trend we are seeing in grocery stores. Why buy "just" coffee or "just" a pizza when you can have Dunkin or CPK?

The platform upon which most of these programs is built is licensing, a nearly $200 billion annual business, led by companies like Disney cranking out every conceivable thing you could put Minnie Mouse on (my 2-year-old says thanks). I’d estimate food and beverage accounts for a 10 percent, and growing, piece of that $200 billion pie.

Recipe for Success

The recipe for success is simple, yet quite difficult to achieve. Here's the secret that's not a secret: Everyone must win. In this case, the manufacturer, brand, retailer and consumer all stand to gain. Licensing partnerships must generate value for all parties.

Let's look at the Pillsbury and Cinnabon example. Pillsbury has been the leader in refrigerated dough for years. In 2006, an agreement was struck that allowed Pillsbury to begin using Cinnabon's proprietary cinnamon in its line of Grands! Rolls, and also add the Cinnabon logo to its packaging. This was met with strong consumer acceptance, and the program expanded to include all Pillsbury sweet cinnamon rolls in 2010 -- a portfolio of more than 20 SKUs. Pillsbury enjoyed a 15 percent year-over-year sales increase, according to Nielsen data.

Now, four years later, another major innovation is on its way this summer. The Cinnabon and Pillsbury teams spent months developing a highly premium and indulgent refrigerated bake-at-home cinnamon roll: Cinnabon Bakery Inspired Cinnamon Rolls.

We believe this is a game-changer. The package features Cinnabon coloring and imagery, and it's sold in a box so will no doubt stand out in the refrigerated dough section. The yield is four jumbo cinnamon rolls featuring premium dough, and Cinnabon's signature cream cheese frosting and cinnamon.

In short, this is why licensing -- especially restaurant brands -- works so well in grocery. Solid partnerships lead to innovation, differentiation, excitement and even new customers to a category. Consumers have strong connections with great brands, and they are willing and eager to experience them in new ways. Licensed products help make that happen.