Character licensing on food and drink has suffered through its association with unhealthy foods and the restrictions imposed on its use in the advertising of HFSS (high fat, salt, sugar) products to kids.

According to Mintel's 2007 report on Character Licensing, this downward trend began in the late 1990s and has led to a halving in value of licensed food and drink since 2001. This is attributed to a reliance on younger children, but also to the proliferation of retailer brands that have taken shelf space away from character goods.

Gary Pope from brand licensing agency Kids Industries, who is leading two seminars on the subject, believes retailers have had it too easy in the past - when character licences virtually guaranteed sales. The stakes are a lot higher now and buyers need to cultivate a better understanding of how the industry works.

"Buyers haven't really had to delve too deeply into the workings of the industry in the past," he says. "Retailers need to understand kids, the brands and the parents these days. More and more mothers are refusing to buy products perceived to be unhealthy and they are also choosing to leave their kids at home to avoid the constant pressure from them to buy. Therefore retailers and suppliers now need to target parents instead of kids and choose products and licences more carefully."

The emphasis on healthy eating is a wide-open opportunity for both manufacturers and retailers. "I can't think of any healthy eating licences on the market at the moment," says Pope. "Yoghurts, desserts and dairy products targeting kids are creating their own brand and are not character-specific - with the exception of Thomas the Tank Engine on yoghurt. Licensing really needs to embrace healthy eating. It is important for brand owners and licensees to take responsibility for kids, as well as the retailers."

Fortunately, food and drink is a relatively small part of the character licensing market and approximately 91% of character licences are on non-food products. Games and toys account for the largest overall share, at 31%, and stationery is also a major sub-sector.

"Toys are massive - nearly every toy is licensed - and similarly stationery is going through the roof at the moment," says Pope. "Some companies, such as Disney, go to great lengths to make character licences work, but this is not true of all brands."

Pope does, however, point out that of the thousands of character properties available there are only a handful really worth investing in.

"There are only 86 pre-school licences that are credible, and these cater for 3.5 million kids," he says. "Between £800 and £3,000 a year is spent on goods per kid in the UK and a good proportion of these are character-licensed. Kids are drawn to certain characters and for a retailer not to commit heavily to these is mad."n