Easter baskets get branded

By Michael Barbaro

updated 12:10 p.m. ET March 25, 2005

With SpongeBob SquarePants sprouting rabbit ears and Spider-Man caught up behind a wall of cellophane and golden ribbon, big changes are afoot in the Easter basket.

Prepackaged baskets brimming with Scooby-Doo and NASCAR toys are pushing aside bright-colored eggs, chocolate bunnies and marshmallow chicks as the commercialization of Christmas marches on to Easter.

The handful of U.S. companies that assemble prepackaged holiday baskets have begun to quietly snap up licenses for well-known brands, splash the emblems on toys and accessories and wrap them up for Easter. The trend began in 2002 and has accelerated every year since.

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One of the companies, Sherwood Brands Inc. of Rockville, is filling its baskets with Spider-Man CD cases, Spider-Man duffel bags, Spider-Man sunglasses and Spider-Man water toys. A few small packets of candy are tucked in, almost as an afterthought.

Debra Paulk, publisher of Gift Basket Review, said that just three months after Christmas, today's indulgent parent is ready to give another round of gifts for Easter.

Brett Glass, chief executive of Houston Harvest Gift Products LLC, said the toy-filled baskets offer an alternative to candy overload.

"We know kids are getting plenty of candy from Mom and the annual Easter egg hunt," he said. "We serve another need. We get the big wow factor. The kids open these baskets up and it's Christmas all over again."

Pressed for time
The companies say they are targeting time-strapped consumers who would rather buy a SpongeBob SquarePants-themed Easter basket for $15 than refill the empty wicker baskets sitting in their basements. And they are appealing to the grandparent or aunt who wants to send something, just not more candy.

At the same time, they are trying to eke out a little extra profit in a hyper-competitive business. Candy distributors had an uneven year in 2004, partly because Valentine's Day fell on a Saturday and many people spent their chocolate money going out to dinner instead. That year, Sherwood reported its sales fell 7 percent.

But shoppers consistently pay more for well-known brands, distributors say, and Easter baskets filled with licensed products can fetch an average of $5 more than their traditional counterparts.

The result has been a surge of Easter baskets using licensed toys and sports names. Sherwood's vice president of sales, Paul Splitek, estimated that 30 percent of all prepared Easter baskets sold this year will be branded, up from 15 percent two years ago.

"It's a big change in a very stagnant industry," said Glass of Houston Harvest, a privately held company in Franklin Park, Ill., that competes with Sherwood.

The growth has also triggered a fierce battle over unclaimed brands, with Sherwood, Houston Harvest and several other companies vying to fill their baskets with the same hot products.

"There is now a mad scramble to secure the best licenses," Glass said.

So far, several major players have emerged.

Sherwood, a public company, has agreements to use Spider-Man, NASCAR and Animal Planet, a unit of Discovery Communications Inc. that produces shows about animals.

And Megatoys, a private company in Los Angeles, has a license to use the M&M name; Peeps, the marshmallow treats; and two children's games, Pokemon and Yu-Gi-Oh, according to Charles Woo, the company's chief executive.

In a sign of just how heated the competition has become, all three companies have won access to the NASCAR brand for their Easter baskets. Sherwood has a direct license agreement with the racing league, while Houston Harvest and Megatoys have deals with NASCAR partners, executives say.

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