Lance Goes Crackers, Looney Tunes in China
In China, Bugs Bunny's name is pronounced something like "Tu Ba Goor," and his New York dialect has given way to something a bit more understandable in Shanghai. Likewise, a line of flavored milks, snack crackers and other products will increasingly carry the cartoon characters faces to China.
Having hammered-out a licensing deal with Warner Bros., China Premium Food Corp., picked Lance, Inc. as the maker of the first snack crackers to don the Looney Tunes cartoon characters on its snack cracker labels in China. The snack crackers will be sold in Shanghai supermarkets starting in July.
The Lance product will be the first foods China Premium will import through its new food distribution subsidiary in Shanghai, which is located in the Wai Gao Free Trade Zone. China Premium has an exclusive supply contract with Lance for the export of crackers and snack foods to China.
Based in North Palm Beach, FL, China Premium-- formerly China Peregrine Food Corp.—said it conducted taste tests in China and found that Lance products were gauged to be "clearly superior" by participating consumers. Three snacks manufactured by Lance will be introduced to the Shanghai market as single-serve packages:
• Peanut Butter on Toastchee (crispy, cheesy cracker), with Daffy Duck packaging
• Peanut Butter with Honey on Captain's Wafers (light, buttery crackers) with Bugs Bunny packaging
• Cheddar Cheese on Captain's Wafers with Tweety Bird packaging.
Roy Warren, president and CEO of China Premium, said, "We feel like we are inventing a new type of branding idea in this market, and through our research in China, we know that the Chinese are excited about Looney Tunes branded products."
Paul Stroup III, chairman, president and CEO, of Lance, said the deal "provides an attractive opportunity to introduce our products to a high potential market. China Premium has established a successful and growing distribution system in China, and we are looking forward to working with them."
Mark Matheny, executive vice president of international licensing for Warner Bros. Consumer Products, cited the "worldwide appeal" of the Looney Tunes characters in helping position a consumer product for success.
China Premium reported net sales of US$5,664,661 for the year ended December 31, 1999, a 16 percent increase over the prior year, according to investment banking firm Donner Corp. International, based in Santa Ana, CA.
Banker Says ‘Buy'
On Thursday, a day after the Lance announcement, Donner reiterated a "speculative buy" recommendation on China Premium (OTC Bulletin Board: CHPF).
Donner pointed to highlights of China Premium's business, including the Looney Tunes snack crackers, as well as the company's ongoing dairy processing and marketing business in China. Additionally, China Premium recently formed Bravo! Foods Inc. branded products in the U.S.
The securities firm added that Chinese consumers are spending increasing amounts of their growing incomes on food and China Premium Food is in a unique position to capitalize on this. "We are pleased that China Premium is developing new products and has implemented an aggressive business strategy of building distribution channels, rather than capital-intensive production processes," the company said Wednesday.
Copies of a Donner report on China Premium Food are available at 1-800-324-6050.
Diversified from Dairy
China Premium has grown from its roots in China as a dairy manufacturer and distributor to become a marketer of retail branded items that also include a similarly branded line of Looney Tunes flavored milks and juices in addition to snack crackers.
China Premium holds a 52% interest in the Hangzhou Meilijian Dairy in Hangzhou, the largest dairy in this urban area of about 6 million people. The company is in negotiations to structure licensing arrangements with principal dairies in China's top ten cities to produce its proprietary and well-received Looney Tunes flavored milks and drinkable yogurt products.
The company also has an agreement in principle to acquire Mandarin Fine Foods Co. of Beijing and Shanghai, the dominant distributor of premium food products to four- and five-star hotels throughout China. China Premium intends to introduce more snack foods and other "high-demand gourmet products," and to expand production and distribution relationships for the Looney Tunes dairy beverages.
For more information on the dairy side of this business, see our sister site, Dairy Network.com.
Edited by Bob Sperber