analysis by Sheila Eggleston When six year olds don't just know their Pikachu from their Squirtle but can identify the other 148 Pokémon, you realise the power of character licensing. The character merchandising market is booming. In the UK it was worth £4bn in 1999 according to Mintel, which says youngsters between 14 and 16, for instance, have nearly £12 pocket money to spend a week. Licensing can tap kids' considerable spending power if the character matches the product and lives up to consumer expectation. As can be seen by the huge success of Nintendo's Pokémon merchandise, the must have' effect outweighs the price. In one four week period a million cards were sold. Trendspotting is highly profitable if you pick a winner. But you have to move fast. Britvic's marketing director Andrew Marsden says: "By the time you've heard about it, it's too late. You need to find out by going to toy fairs, listening to children and the underground conversations they have." TV and films have always been the main source for transporting characters to groceries, but video games and children's books are fast catching on. This year's phenomenon has been Nintendo's Pokémon. What started as a handheld computer game has developed into collectible cards, books, toys and a film. Since its launch on April 14 the movie has banked £13.3m in the UK and Ireland, and Warner Bros is working on the sequel, due out in December 2001. A raft of licences have been snapped up for late 2000 and early next year for cereals, celebration cakes, dairy and snacks. KP Snacks claims to be the first to approach Nintendo for a licence before the UK launch in October. Its licence for Skips runs until the end of 2000. One of the hot favourites for next year is Harry Potter. Already "many millions" of licensing revenue has been grabbed by Warner Bros which has secured movie and merchandising rights. It will be shooting the movie Harry Potter and the Sorcerer's Stone in the autumn. Vice president UK licensing Paul Flett says: "Harry Potter has the makings of a long-term character property. Merchandising is under way and the emphasis will be on magic, creativity and surprise. But we are being careful about who licenses it and how we license it. We're already talking to Hasbro and Mattel. Products will be coming in 2001." Warner believes Harry Potter has the potential to be its number one property overtaking its current top performers, Looney Tunes and Scooby Doo. The company has more than 300 character brands and more than 3,700 licensees including 10 of the major fmcg players covering a range of properties from classic Flintstones to new kids on the block such as the Powerpuff Girls. The latter is its new girls' property ­ a cartoon about three female toddler superheroes with "kick arse and attitude", a staple of cable channel the Cartoon Network which will also be aired on C5 this summer. "There aren't many girl properties other than Barbie. It's taken off well in the US and trends there usually translate well here," says Flett. WB's key promotion last year was its Mil-Looney-Um with Walkers for collecting the square shaped plastic discs, Qubix. It sells concepts rather than licences to retailers and exclusivity comes in the form of different colour palates or exclusive character art. Britvic has been in partnership with Disney since 1998 with Mulan, followed by A Bugs Life and Tarzan in 1999 and this year with Toy Story 2. Britvic's Marsden says: "Some of the trade poohpoohed the partnership but if you look at Mulan and A Bug's Life, our volume share for Robinsons went up from 33.6% to 39% during the promotional periods." Toy Story 2 has made in excess of £43m in the UK ­ almost double what the original movie grossed. "That translates into good licensing sales," says David Berry, category manager for food at Disney Consumer Products, "provided you've done your homework and added value to sales. Disney avoids label slapping on to products." Disney has three movies in the offing. Its latest, the animation Dinosaurs, has rocked the US knocking Gladiator off its top spot, and it's coming here on October 11. Licensing partners are gearing up for launches of cakes and dairy products. There are no plans for food and drink merchandising on Fantasia 2000 but 102 Dalmatians, due for release in November 2000, is a different proposition. The live action 101 Dalmatians in 1996 was the Christmas movie that year and generated a huge merchandising spin off. Disney has similar plans for this one. "Here there's a great opportunity for turning food aisles black and white next year," says Berry. New signings for Disney includes Mr Lucky Bags' new Winnie the Pooh bags. The Simpsons rank as the top attraction for five to 15 year olds [Mintel] and there's a growing band of manufacturers getting in on the act. The Simpsons celebrates its 10th birthday this year and among those capitalising is St Ivel which has put Homer et al on its chilled dessert range. "Character branding fuels much of the growth in the £180m kids pots sector, and most of these are aimed at pre school children," says Dave Hall, marketing director, St Ivel yogurts and desserts. Hall & Woodhouse has used the family for the transition of its 250ml mini can into a 330ml PET and the launch of four flavoured waters ­ Apple Waterfall, Peach Water H20, Wild Berries Water Works, and Citrus Water Torture. Another product benefiting is Ferrero's Nutella currently being promoted. Those jumping on the Teletubbies and Tweenies bandwagon are St Ivel, McVitie's, Kinnerton, British Bakeries, Heinz and Marks & Spencer. BBC Worldwide which looks after all the BBC's commercial activities pocketed £446m in 1998-99. It has around 100 food licensees. Richard Hollis, deputy head of licensing, says: "Pre school licensing has been our specialist area and Teletubbies has been by far the biggest licence we have had." Teletubbies has earned more than £58m for BBC Worldwide in the last two years. Hollis says the company is careful with its licensing because it aims at a young age group. "We haven't shied away from cakes and chocolate, but wouldn't go to the extent of doing it just as a marketing gimmick or to make a point. "We would like to do more with retailers. It's the licensees that have the product contained and we feel we need to be more involved." Classic characters are a safer bet for retailers with little or no risk attached. These have staying power and instant recognition from kids and retailers alike. Considering he's over 50, Noddy is as lively as ever on the grocery scene. The Toyland range consists of more than 450 products from more than 80 licensees ­ many to be launched this year. The Enid Blyton Company's fmcg licensees include Heinz, Princes Soft Drinks, Highgrove Foods, Kerry Foods which make Green's cake mixes, Bon Bon Buddies' confectionery, and Mr Lucky Bags. The Enid Blyton Company works closely with its licensing partners. Jon Keeble, head of sales and licensing, comments: "Consumer and retail feedback has been positive. Noddy is more popular than ever. The breadth of the Toyland brand allows licensees to develop innovative products appealing to girls and boys." Parents have to feel comfortable with a character on a product. If it's what they recognise from their own childhood, there's an even greater degree of comfort. Another classic from the '50s is Bill and Ben which is coming back next year with fresher animation and brighter colours. BBC Worldwide claim it's not being launched as a nostalgia brand to adults but its appeal to the older generation will help. Manufacturers that stick with their own creations tend to do this because the approach is cheaper, less risky, and they have total control. Yoplait Dairy Crest has created a whole zoo of characters for its fromage frais. Six years on and the Wildlife range is worth £21.4m and takes an 11.4% share of chilled yogurt and desserts [Information Resources 52 w/e March 26 2000]. Haribo has its Hariboy, Trebor Bassett its Bertie, and Leaf its zany Chewitsaurus. And of course there's Tony the Tiger on Frosties. Haribo's md Helmut Mager believes it's better to develop your own character rather than go the character licence route. "A lot of manufacturers want their brands to be associated with the latest trend, but those trends always have a limited lifespan. "They are also rarely exclusive licensing agreements so there is no real ownership. This makes character licensing a short-term investment, usually at high cost." Exposure, however, for your own character has to be total and many have their own road tours and, with the internet becoming increasingly more important, their own website. Mintel maybe predicting a decline in our child population ­ just 11 million little monsters by 2002 ­ but that's still 11 million targets to aim for. {{FOCUS SPECIALS }}