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Reuters | Latest Financial News / Full News Coverage - It's a brand-savvy dog's life for retail licensing

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It's a brand-savvy dog's life for retail licensing

Mon June 27, 2005 7:12 AM GMT+05:30
By Angela Moore

NEW YORK (Reuters) - Fido might seem just as happy drinking his water out of your toilet as he would a Homer Simpson water bowl.

But retailers are betting pet owners are a bit more finicky -- and fashionable -- and willing to pay for new lines of pet products from well-known brand names.

Dog owners now can indulge their inner fashion stylists by outfitting their pets in SpongeBob SquarePants dog collars or Elvis dog sweaters, for example, rather than no-name items.

At the International Licensing Show in New York last week, leading dog brands like the American Kennel Club and Milk-Bone, and entertainment companies like Fox and Nickelodeon were banking that the growing pet products industry will end up being a gold mine.

"This is a huge untapped market," said Virginia King, executive director for Fox licensing and merchandising. "Whether it's a collar or a leash or a T-shirt or a sweater, it's probably one of the biggest potential growth areas for retailers."

Part of this growing trend is the humanization of pets.

People see companion animals as extensions of themselves, which has led to an explosion in designer pet clothing, high-end accessories, swanky carriers and toys based on familiar characters.

Americans will spend more than $35.9 billion -- which includes food, vet care and services like grooming -- on pet-related products in 2005, according to the American Pet Products Manufacturers Association.

In contrast, the U.S. toy industry rang up $20 billion in sales last year.

"If we buy kids a licensed product because we think it's cute, we might do the same for pets," said Sean McGowan, an analyst with Harris Nesbitt.

"But kids are not indifferent to brands, and pets largely are," McGowan said. "If you buy the licensed product, you're really buying it for yourself. So there's a limit to how far you're going to go with it."

FROM KING KONG TO CLIFFORD

Fox is developing a line of pet accessories with licenses from both the animated television show "Family Guy" and last year's teen nerd movie "Napoleon Dynamite."

It's a natural evolution from the lucrative licensing deals associated with the Fox network's long-running animated hit TV show "The Simpsons," whose characters' likenesses -- including pot-bellied dad Homer Simpson and underachieving son Bart Simpson -- appear on everything from underwear to backpacks.

Universal Studio's consumer products group is working on pet accessories licensed under the "Curious George," "King Kong" and "Scarface" brands. And it is looking for pet product opportunities with retro movie and TV brands such as "Animal House," "American Graffiti" and "The Munsters."

Fox is a unit of publishing giant News Corp.; Universal Studios is a division of media company NBC Universal, a unit of conglomerate General Electric Co.; and Nickelodeon is part of Viacom Inc.

Scholastic Corp., best known for its children's books, is pairing its popular "Clifford the Big Red Dog" character with dog food.

"There is a tremendous market in pets. For many people, their pets are like their children," said Al Kahn, chief executive of 4Kids Entertainment, which is the licensing agent for the American Kennel Club brand.

"I don't think the growth has even started. We are just in preliminary stages. Many more pet products are going to be introduced, but like anything else, this, too, can be overdone."

YES -- DOGS WEARING BOOTS

JAKKS Pacific, which makes Cabbage Patch Kids and Care Bears for human kids, recently bought a line of pet toys and treats with licenses such as "Shrek," "SpongeBob SquarePants" and Barbie.

Even corporate brands are getting a piece of the action.

DaimlerChrysler unit Jeep makes pet crates and plans to move into pet carriers.

"Pet products have become such a popular category," said Debra Joester, chief executive of The Joester Loria Group, a licensing agency representing Jeep. "I'm seeing more and more pet owners buying toys, clothing, even boots and Halloween costumes. It's an emerging market, and we'll explore any legitimate opportunity."