The Flavor | Unique Insight on the Industry

Will Investing in a Licensing Program Deliver a Positive Return?

Research Shows Packaged Food and Beverage Manufacturers May Benefit from Investment in Licensing Programs

A recent article published in Journal of Food Products Marketing suggests that packaged food and beverage companies with higher investments in advertisements and intangibles assets other than goodwill have higher investor returns.

These other intangible assets include the net value of intangibles such as licenses, trademarks, design costs, patents, distribution rights and agreements, and copyrights.

Between the years 2008 and 2012, firms whose investments in intangible assets other than goodwill was higher than 1% of their total assets had higher investor returns than firms whose investments in this other category of intangible assets was less than 1% of their total assets. Furthermore, regression analysis revealed that higher investment in advertising as a proportion of sales positively impacted investor returns.

Based on the findings of the study, authors Heiens, Leach, and Newsom suggest that packaged food and beverage manufacturers look for competitive advantages via brand-building efforts instead of trying to increase investor returns by way of company acquisitions and mergers. The results strongly indicate that “investments in patents, trademarks, copyrights, and licenses held by consumer packed food and beverage manufacturing firms offer much in the way of differentiation and competitive advantage, and high levels of these sorts of investments are perceived as valuable resources that are viewed positively by investors.”

In other words, investing in advertising and intangibles other than goodwill, such as licenses and design costs, can seriously help a company stay afloat—and even thrive—in the packaged food and beverage industry.



Richard A. Heiens, Robert T. Leach & Paul D. Newsom (2016): Overcoming the Trend Toward Healthier Foods: The Impact of Advertising and Intangibles on Investor Returns in the Packaged Food Industry, Journal of Food Products Marketing, DOI: 10.1080/10454446.2015.1121427

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