Little, yellow, different. Bristol-Myers Squibb Company once used those three words to advertise its pain reliever Nuprin. But by 2002, another word seemed more apt--vanished. The pharmaceutical company stopped selling its ibuprofen product, tired of trying to outspend competitors Wyeth (which markets Advil) and Bayer AG (Motrin).
Bristol-Myers's trash was Paul Earle, Jr.'s treasure. Earle and his five-employee company, RiverWestBrands, operate as a sort of dead-brand thrift store, buying and selling (or licensing) discarded trademark portfolios. In late 2002 Earle approached Bristol-Myers about Nuprin, and a year later RiverWest bought the rights to the drug's name. But Earle's buy was risky. In the highly competitive over-the-counter pain medication market, an also-ran ibuprofen product seemed like a loser. Advil and Motrin are like the Coke and Pepsi of the ibuprofen market. Nuprin was more like RC Cola. But Earle saw Nuprin's potential as a drugstore-owned line of medicine, and he convinced CVS to buy Nuprin in 2004. The national drugstore chain priced Nuprin at a midpoint between generic ibuprofen and other name-brand products. Consumers who want to save money and buy a trustworthy brand name would have a new choice. Today CVS uses the Nuprin label on more than 12 health products, including decongestant spray, arthritis patches, and muscle and joint cream.
Since its founding five years ago, RiverWest has bought more than 25 consumer brands, from Brim Coffee to Rival pet food to Bonwit Teller. The company has already repackaged ten trademarks, including Nuprin, Coleco electronics, and Soho Natural Soda. And if some of these names don't sound familiar, that's not surprising: Old brands are usually abandoned for a reason. Still, Earle has a simple mantra: "A good brand may hibernate, but never dies." Earle believes he can bring them back to life--and make some serious profits in the process.
If there's a guru in the dead-brand business, it's Jeffrey Himmel. His company, The Himmel Group, has revived a number of dead labels, most famously Gold Bond medicated power and Ovaltine chocolate drink. Where RiverWest brokers brands, buying and flipping them to new owners, Himmel sticks with them--buying a label and handling the marketing and new product development himself. Himmel says that RiverWest's work with Nuprin shows that the company has a knack for picking strong brands, but the company hasn't drummed up an enticing enough brand for him just yet. "They are smart, they are creative, they are hardworking," says Himmel. "If they come across the right brand name, I'd do business with them in a second."
Earle has been dealing with brands since the 1990s, when he helped advertising agency Saatchi & Saatchi develop marketing strategies for Johnson & Johnson and General Mills, Inc., working on brands like Pepcid AC, Fruit Roll Ups, and Tylenol. He joined Kraft Food Inc. in 1999, managing its macaroni and cheese product lines. At Kraft, Earle learned his first lessons in brand devolution. When Kraft's parent company, Phillip Morris USA Inc., bought Nabisco Holding Corp. in 2000, the company said that it would narrow its focus to a shortlist of star brands. The trend repeated throughout the industry, as PepsiCo., Inc., bought The Quaker Oats Company and General Mills, Inc., merged with The Pillsbury Company. Good brands, says Earle, got shunted aside. "There was a pool of otherwise strong brands that weren't useful to behemoths," he says. Earle saw opportunity: He knew that companies occasionally rehabilitate old lines. The Coca-Cola Company, for example, is currently trying to bring back Tab--the iconic diet soda--as a pink-colored, diet energy drink.
Earle thought he could capitalize on big-company brand refugees. He formed his company in 2002, taking on the role of president in a four-person management team. He picked up funding from, as he vaguely describes it, "a syndicate of high-net-worth individuals and one strategic investor." The management team also invested.
The first brands were the hardest to find. Earle camped out in a Chicago public library, combing through old magazines and databases, and identifying thousands of dormant names. Then the real detective work began. With his lawyer, Sana Hakim of Chicago-based Bell, Boyd, & Lloyd, RiverWest started tracing the brands' legal status. Once brands become inactive, IP rights tend to break up and scatter to multiple owners. Hakim and Earle sought out trademark owners, and began cutting deals--buying the brand outright, licensing it, or working out profit sharing agreements.
It took Earle two years to assemble enough IP to relaunch Coleco. The toy company was well-known in the 1980s for selling Cabbage Patch Kids and for its gaming system, ColecoVision--which competed with the better-known Atari. Coleco grossed about $750 million in 1988, but by 1990 it was bankrupt, and within the next few years off the market. Coleco had been licensing rights to its games from companies like Tokyo-based gamemaker Namco Limited, and those rights reverted back to their original owners all over the world.
Ultimately RiverWest bought the rights to the Coleco and ColecoVision names. RiverWest then sent its licensing agent, Brand-genuity--which does licensing work for Yoo-Hoo, Snapple, Verizon, and others--to find a licensing partner. Brandgenuity matched RiverWest with Hong KongÐbased technology company TechnoSource, which licensed the Coleco name and found a manufacturer in mainland China. In 2005 RiverWest and TechnoSource launched two lines of gaming products: handheld sports games under the old Coleco "Head to Head" name, and a preloaded gaming system that plugs directly into a television set. "It's the first year since the Reagan administration that new Coleco products have been manufactured and sold," says Earle. The new products brought in nearly $10 million in revenue, and more products are expected to launch by the end of 2006.
Coleco seems like a hit, but in another sense it was a miss: RiverWest wasn't able to get Coleco's most famous trademarks, including Donkey Kong, Pac-Man, and Cabbage Patch. This is one of RiverWest's biggest hurdles: Fading brands that remain well-known usually aren't abandoned. Legally, if the original owners can show any intent to resume using a waning name--like funding, marketing plans, or development--they still have rights, making it harder for RiverWest to scoop up the brand. "Most of people who have brought back dormant brands own the original brands," says Ethan Horwitz, a partner at Goodwin Procter, who helped revitalize the Jell-O label in the 1990s, working on the introduction of Jell-O brand Pudding Pops.
RiverWest agrees that the ideal brand is the exception, not the rule. For every thousand brands that look good, says Earle, maybe ten could actually be revitalized, and five are dormant, with $0 sales. "And of those five, you are lucky if one or two can be acquired in a viable way," he says. The trick of effective brand renewal, he says, is flexibility. A brand that's not lucrative enough for a big conglomerate, like Nuprin, might fit RiverWest's smaller financial expectations. RiverWest does its homework about these lesser-known labels by conducting national surveys, interviewing consumers and industry experts, and examining financial data.
Plus, Earle says, the small size of his company allows it to be more creative in structuring deals and bringing in partners. RiverWest relaunched Soho Natural Soda by exclusively licensing the entire line to AriZona Beverage Co., makers of AriZona Iced Tea. But to relaunch the Bonwit Teller apparel and accessories label, RiverWest teamed up with the current brand owner, outside designers, and apparel experts, and formed a new company, called Avenue Brands. In the future, more of RiverWest's deals will be structured like this, says RiverWest CEO Mark Thomann, a bankruptcy specialist who joined the company from Ocean Tomo, LLC last year. RiverWest, he says, is moving away from selling or licensing complete marks to become more directly involved in the relaunching process. Right now Thomann is working with F & F Foods, Inc., to boost and expand its Smith Brothers cough drop line.
But whether old brands can be turned into new money remains to be seen. RiverWest is tight-lipped about financials, saying only that it's profitable. Earle also acknowledges that rebuilding brands is more of a marathon than a sprint. The process, from identifying trademarks to a relaunch, takes about four years. "One thing we learned quickly is the business model is not one for anyone in a hurry," says Thomann. "You can kill a brand overnight, but it takes years and years to build it and, in our case, rebuild it."
But things are looking up. "We had a whole lot of nothing when first starting--no track record, no name awareness, nothing," says Earle. Nuprin and Coleco expanded the company's reputation. Now, says Earle, most of his deal flow comes from clients contacting him. Fortune 500 general counsel and market directors call peddling their cast-offs. At any given time, brags Thomann, they are negotiating with about a dozen consumer goods companies. Owners and private equity firms contact RiverWest, asking for help with their dying brands. Stalwart Coleco fans send love letters. And Earle is spending less time hunting down brands and more time dealmaking. "I haven't been to the library in a couple of years," he says, "Although I still have a membership card."
