Martha Getting Into Food Biz
She’s done television, videos, cookbooks, magazines, housewares, paints, furniture, time in jail (we know, cheap shot), housing communities and now Martha Stewart is getting into the food business.
Susan Lyne, CEO of Martha Stewart Living Omnimedia, told attendees at the recent Reuters Media Summit in New York that the company is seriously exploring the launch of its own line of food products.
Ms. Lyne said there are discussions within the company “all the time” about getting into the food business. If Ms. Stewart put her name behind a food line, the company would be able to launch it in 18 months or less, she said.
The food line could take a number of shapes, including gifts, whole dinners or partially prepared items.
“I say partially prepared because people still like to feel like they made it, and we want to encourage that,” she said. “But we can make it easier for people, more convenient for them and upgrade the quality of the ingredients.”
Discussion Questions: Where (categories, types of foods, retail outlets) would it make most sense for Martha Stewart to start her food line? What will
the challenges be for the food line even when the brand is so easily identified as Martha Stewart?
Shoppers identified one of the reasons the Martha Stewart line of bedding was so successful at Kmart early on: it was easy to buy the whole set with accessories that went together. Consumers who were not confident about their decorating ability were able to find sheets, pillows, bed coverings, curtains, and accessories that all coordinated. It was easy for them to be successful.
If Martha Stewart adopts the same approach to food — making it easy for consumers to successfully prepare and present a good meal (either for their family or for entertaining) — then there is a good possibility of being a very profitable idea.
Newman’s Own donates its profit to charity. Somehow that doesn’t quite sound like Martha. Celebrity food products are rarely successful on a broad scale…no matter how large the ego or the cultural influence. Frank Sinatra tomato sauce anyone?
Why shouldn’t she do it, everyone else does. I’ve heard that retiring Secretary of Defense Donald Rumsfeld is about to introduce a new line of fruit pies that can be cut but won’t run.
For many years I never understood why Kmart did not launch a line of premium private label foods under the Martha Stewart brand! If you look at the apparently successful revival of her career and her enterprises, she now appears to have a great opportunity to launch a food line in one of a number of ways: the Healthy Choice approach where she licenses a variety of food companies to produce and market her brands; the President’s Choice model where she could grant exclusivity to retailers on a geographic basis; or the Newman’s Own model where she owns the brand and sells to all retailers. I’m partial to the Newman’s Own model and believe she could create a continuity program across her businesses that would rival the long-standing Betty Crocker program.
Martha Stewart, like any licensor, wants to maximize the fees. Food producer and retailer margins are low compared to department store merchandise, so Martha’s fees would have to be tempered. Newman’s Own has been careful to enter only a few categories where the margins are available. And Newman’s Own’s license fees have been modest compared to the percentages demanded outside the grocery arena. Furthermore, anything Martha licenses may create difficulties with her advertisers. She has a big ad business, and it may be hard to sell ads to competitors.
Furniture, paints, housewares – why not food? How about a dessert line by Martha Stewart where each cake or pie contains a small hacksaw blade inside as a consumer novelty prize…. But seriously folks, when does line-extending a brand like Martha through all types of categories begin to wear out the meaning and identity of the franchise? I’m skeptical that the Martha Stewart brand has the appeal and staying power to break into the highly-competitive grocery channel where the failure rate for new entries is in the 90% range. Sure, Martha would do a licensing deal with a major manufacturer who presumably has the sales/distribution network and chain relationships to get the product to shelf, but if I were a buyer, I’d be asking for slotting and promo allowances upfront.