Germany, a market with potential for growth

At the well attended Licensing Forum 2009 in Paris, experts from 5 European key-markets presented and discussed licensing trends on the European markets of France, Spain, Italy, Germany and the UK. BRANDORA managing director Christophe Macht introduced the German market to the international audience.

The elaborate property descriptions on brand-licensing.com und lizenzbranche.de provide B2B visitors with detailed information on legal situation, licensed products and much more. So the number of total hits per basic description tells a lot about the popularity of a certain property. Remarkable is, that quite a few regional licenses take top ranks.

Both Princess Lillifee and Felix the Rabbit are characters designed by Coppenrath Publishing. Felix has long become a classic property and there is hardly any girl aged three and up that does not know Princess Lillifee. Coppenrath offers a large range of products to their characters and brands. For years, the company has been a perfect example of successful licensing in Germany, distributing licensed lamps, beddings, apparel, school bags and much more.

Die wilden Kerle is a German feature film series, based upon the children books Die Wilden Fußballkerle. Interesting enough, although Die wilden Kerle actually are a street football team, the property appeals to both boys AND girls. And every child in Germany knows their slogan: “Everything’s fine as long as you’re wild!”.

Benjamin Blümchen and Bibi Blocksberg are famous audio play heroes created by Elfie Donnelly. Both are children’s and family classics released and successfully marketed by KIDDINX. Since 1977 Benjamin Blümchen tells about his adventures in and around the zoo of Neustadt. In addition to more than 100 individual audio plays, the animated TV show, books, games, a regular magazine, a theme park and his famous Trumpet-Tart enjoy wild popularity. Bibi Blocksberg is a little witch girls also living in Neustadt. Since 1980 she has been flying her broom “Mashed Potatoes” around the town. Generations of children experience Bibi’s witcheries in more than 90 audio plays, an animated TV series, two successful feature films with German premium cast, a musical, magazines, books, games and much more.

An introduction of the German licensing market can’t go without the popular children’s programme “The Show with the Mouse“. Since 1971 the show airs each Sunday morning on German TV. The show provides children with a perfect mixture of entertainment and knowledge. Key target group are preschool and primary school children aged between 3 and 9, but also grown-ups love to see the mouse. During the last 38 years more than 1800 licensed products have been released to accompany the elephant, the duck, the mouse and their friends. Recently, the show even caused a real hype in Japan.

Thanks to the NPD Group’s industry analysts and LIMA Germany, BRANDORA is able to provide official figures on licensing business in Germany. Unfortunately, information is limited to the German toy market.

It is rather difficult to anticipate the future development of a market for the current year – a fact that not only applies to the German market, but to all other European markets as well. According to the LIMA, German retail sales of licensed products generated 2.7 billion euros in 2008. But unfortunately, there is no reliable data for the last few years. The most recent in-depth study dates back to 2006 and reports a market volume of 2.5 billion euros. It is believed, that the licensing market ever since increased by 5% each year. According to the NPD Group, licensed toys even saw a growth of 8% in 2008. That’s quite amazing, given the fact that the German toy market showed an overall growth of only 1%.

Unsurprisingly, Star Wars did well among the boys brands, but also Indiana Jones showed strong performance. Sad to say, that their success in Germany is mainly based upon the products of a famous brick manufacturer from Denmark. Speaking of boys brands I should also mention the Power Rangers (slightly declining) and car brands like Ferrari, Mercedes and Porsche. What is new: We finally see German pro football on top! Due to strategic marketing during the European Championship in Austria and Switzerland and a new agency football brands performed remarkably well. Cars and Yu-Gi-Oh have also done quite good, but they do only partly belong to the group of gender-specific properties.

Girls brands became overwhelmingly successful within the last few years. When Barbie and Disney Princess dominated the market for years, girls now discovered new idols like Hannah Montana and the heroes of High School Musical. Also the “old” newcomer “Hello Kitty” and the always strong Princess Lillifee performed quite well. Remarkably, there has been a shift in target groups. Girls brands originally appealed to girls between 2 and 7, but now target the age group 6 plus. What is more, girls love the Die wilden Kerle just as much as boys do.

Among the unisex brands the long-sellers Winnie Pooh and Disney Classics took top ranks. Thomas the Steam Engine, Diddl and Bob the Builder followed hard on their heels.

The market launch of new brands is quite expensive and in Germany the importance of brands as such is rather declining. So most companies rely on the growth potential of existing brands and new licensed properties. Thus the German market for brand licensing is booming. While brand licensing has been popular for years in countries like the USA, the market is still growing in Germany. In addition to famous toy brands like Playmobil, Barbie and Baby Born we see a remarkable growth in areas like fashion (Calvin Klein, Tommy Hilfiger, Puma, Adidas, Esprit …) and gastronomy (Feinkost Käfer).

If we look at all branded and licensed products in 2008, we find Playmobil leading the toy market followed by Barbie and LEGO City. The next ranks take LEGO Duplo, Star Wars, LEGO Technic and Baby Born regaining strength.

The most inexpensive way of licensing is merchandising, of course. Manufacturers do not have to develop new products in compliance with brand identity. Instead, they distribute well-established products under a new label. In this area traditional licensing nations, especially in the field of sport licensing, have a lead over the sport nation Germany. Now last year’s positive developments raise high expectations for the future licensing of professional football in Germany.

Licensed toys have gained a considerable increase in market share! From 15.9 percent of the toy market in 2007 to 17 percent in 2008. This is still quite a small proportion in comparison to other western nations, where licensed toys take 30 to 40 percent of the toy market. However, the focus on traditional toys in Germany is crumbling slowly. The German product range is centred around classic toys like dolls, plush, wooden toys, board games and model railways. The German market can hardly be compared to other European markets or even the USA. Licensing hardly fits into the classical and conservative range of products.

What we definitely can say about Germany is that the key target group is aging and the market is focussed on character licensing. But we also see a strong trend towards lifestyle brands. About 82 million people live in Germany, but only 13.8 percent are younger than 14 years and almost 20% older than 65.

By looking at the distribution of licensing per category, only estimated figures based upon the 2005 LIMA report and market research by the NPD Group can be used. Apparel, toys and publishing take the largest piece of the cake. Categories like sporting goods, infant products and health & beauty still have a great need to catch up.

The most successful rights owners on the German market are headed by Disney again, not only with their classic properties but also with new highlights like Hannah Montana, High School Musical and Wall-E. Lucas Licensing almost exclusively benefits from LEGO. Themed construction kits are remarkably strong in sales figures. HIT Entertainment and Nick suffered from decline. Sadly, in Germany Dora the Explorer had never been able to tie in with the success she had in France.

Each year, LIMA Germany brings all German licensing professionals together for two major industry events.

More than 600 participants have just visited the sixth “Day of Licenses” in Cologne. Each year, just before the beginning of spring, all major licensing professionals reveal their best brands, outstanding characters and most promising properties from entertainment, TV, movie and sports. In only 15 – 25 minutes the audience learns everything about each speakers latest licensing opportunities.

And in November LIMA Germany invites business professionals to join for the annual “Licensing Market” in the splendid hotel Bayerischer Hof in Munich. All key players from Germany and many visitors from abroad come to Munich to make new contacts and cultivate existing relationships. In addition to the show, LIMA Germany provides an interesting seminar programme and the glamorous LIMA gala in the evening with the presentation of the coveted LIMA Germany Awards.

The German licensing market is far from as mature as the UK or France – Germany still has a huge potential for growth! We see a recent trend towards classic brands. It is quite difficult in times economic crisis – just to mention the buzz word of the year once more – to build up new properties. Costs are incredibly high and risks almost unforeseeable. So licensees and agencies tend to rely on long-established brands and properties.

Germany – just like the international market – has not experienced a real hype for years. Yet on a local basis, it is to point to „Die wilden Kerle“ and the Coppenrath characters. Those strong brands with a large product portfolio are firmly established on the market. Felix, Princess Lillifee, Capt’n Sharky, The Moonbear and The Friendly Seven are always a save bet for licensees. Coppenrath is continuously adding new characters to their portfolio (most recently Joe-Mo, the little mechanic) and pushing international sales. Kiddinx licenses and “The Show with the Mouse” are local classics that should not be underestimated. In Germany they are on equal terms with international classics like Winnie Pooh, Disney, Star Wars, and Bob the Builder – to mention just a few. In general, German business experts this year pin their hopes for international properties on Bakugan. Just in time for Easter the trading card game is launched to the German market and seems to have large licensing potential!

Download: Slides and Statistics

Kazachok Forum: Licensing Market Germany (*.pdf 552 KB)