I recently Tweeted to the effect that COVID-19 would reveal the best and the worst in businesses around the world. The virus has clearly produced problems for all business owners and while some have risen to the challenge to support their customers, suppliers and affiliates, some have behaved appallingly.
I’m happy to say that the licensing industry has, on the whole, responded positively to all these difficulties. As a consultant working mainly for manufacturers, I have seen first-hand the vastly different fortunes of diverse licensees as they deal with lockdown. Those companies in the grocery/food and drink sector have tended to fare best here in Europe, as the supermarkets and other food outlets have been the only ones to remain open during March, April, May and June. Almost all other retail has been closed down in Europe. Our client, Yoplait, has traded positively throughout, though I don’t underestimate the challenges they had with most of the management working from home. This is probably due to the fact that food is all people have had the chance to spend money on, and healthy treats like Peppa Pig fromage frais have been required by families even more as the kids haven’t been in school. In fact, in France, Europe’s biggest single market for dairy desserts, Yoplait even went ahead with a new product launch on 9th April: Paw Patrol fromage frais in a selection of pack sizes.
In an entirely different section of the food and drink business is another client, The Harrogate Tipple, a craft gin distiller based in rural Yorkshire. We brought this company into brand licensing for the first time last September with the launch of Downton Abbey gin and whisky. As premium brands these spirits are sold through department stores, wine merchants and the like, and a small number of ‘upmarket’ grocers, so almost all of their retail customers have been closed throughout. No sales to be made. Like the fleet-footed entrepreneur he is, though, Harrogate’s founder Steven Green contacted his MP to get a couple of local laws amended so that he could shift production to much-needed hand sanitiser. This has produced desperately needed revenue, work for his employees and an opportunity for long-term PR.
Steven certainly attracted a great deal of press attention — take a look at this YouTube video on how a gin distillery stopped production to make hand sanitiser:
Harrogate have found time during lockdown to complete the development of a new Downton Abbey Rhubarb Gin of which, as I write, the first order for Australia is currently in production, so look out for it.
While all this has been going on, we have had Virtual Licensing Week; a new platform by Informa and Licensing International to fill the huge hole in the licensing calendar caused by the inevitable and unavoidable cancellation of Licensing Expo (2020). The organisers deserve congratulations for putting this entirely new platform together in around eight weeks from scratch — no mean feat. What was evident from many of the panels, especially those featuring licensees, is that the existing financial structure of licensing deals needs urgent addressing. It can’t be tenable, when retailers are so fragile, to continue to insist that royalties are paid on uncollectable accounts. Minimum Guarantees agreed upon in the world of 2019 now look vastly inflated in the post-COVID-19 future we will return to. Advances that looked fair last year are now onerous to the extent of potentially bankrupting licensees. However, agents too are at risk if their businesses depend on some staged payments coming in. That cannot be fair, either. I do detect a willingness on the part of licensors to come to terms with this and that is very good news.
COVID-19 will, I restate, reveal the best and the worst of business practices and I very much hope that our very own licensing industry falls entirely into the first category.