International licensing deals drive growth for U.S. companies and their partners
What’s in a name? For U.S. bedding companies with international licensing programs, the answer is clear: A brand can be one of the most valuable assets a manufacturer possesses, providing a major competitive advantage in its ability to capture consumer attention, instill confidence about the quality and value of products and, ultimately, drive sales. By licensing their products outside their domestic market, U.S. companies generate additional opportunities to build name recognition and position brands for continued growth at home — and abroad.
The list of U.S. bedding companies with a presence in international markets includes many of the industry’s leading manufacturers, from mattress majors to an assortment of midtier bed producers. A number of the programs stretch back decades, with a reach across dozens of countries around the globe. These days, Asia is a particularly hot market, but other regions also show strong growth and potential, including Australia, Canada, Mexico, the Middle East and South America.
In this article, BedTimes is focusing on some of the midtier manufacturers who are putting significant energy into their international licensing deals.
Leveraging domestic expertise
New to the international licensing arena is Southerland Inc., which launched the first program in its 126-year history at the Winter Las Vegas Market in January. Company officials say the timing was ideal because demand for American brands is increasing across the globe. Southerland expects the initiative to help drive growth for the company’s entire stable of brands.
“Our research shows us that there is a very strong appetite for U.S. brands,” says Bryan Smith, president and chief executive officer of the Nashville, Tennessee-based producer. “It varies from country to country, but there’s no doubt that American brands carry cachet all around the globe and are more trusted.”
In some cases, countries prefer products that are imported from the United States with a “made in the USA” label, he adds, so Southerland’s new program may include exports of its own products, along with licensed production by its partners.
Southerland’s licensing program is led by Jim Nation, executive vice president of national accounts and international licensing. During his more than four decades in the bedding industry, Nation has worked extensively with both domestic and international licensing programs.
“As the demand for American brands continues to grow, this is a tremendous opportunity for Southerland to leverage its domestic expertise throughout the world,” Nation says. “We offer an attractive alternative to the many low-margin brands out there now.”
During the Vegas show, Southerland generated interest from a variety of potential partners, Nation says. “A number of companies are shopping for U.S. brands so that they can manufacture products in-country and reduce the number of imports they bring in,” he says, adding that Southerland’s team met with representatives from India, Qatar, South Korea and Trinidad in its Vegas showroom.
“Our conversations with potential partners were very positive,” Nation says. “People are attracted to our broad selection of brands and our strong management group that has a long history of participation in the industry and with ISPA (the International Sleep Products Association) in leadership positions. That lends a great deal of credibility to Southerland’s standing in the international arena.”
The fact that Southerland is one of the oldest mattress manufacturers in the United States also adds to its appeal, Nation says. “We’re in it for the long haul,” he says, “and our heritage speaks to that.”
Southerland’s international licensing program features six mattress brands — American Sleep, Evolution, Heritage, Scandinavian, Signature and Thermobalance, as well as two adjustable lines — InMotion and American Adjustables. Companies have expressed interest in the broad portfolio and options that are available to them, Nation says.
In choosing partners, Southerland is “on the lookout for companies that are well-managed by leaders that exude a strong entrepreneurial spirit,” Smith says. “Strong prospects have a well-developed, long-term vision of where they want to take their business. We’re looking to partner with companies that have integrity and carry a trustworthy reputation.”
Smith adds that Southerland is taking its time “during the courting period to uncover the right partners in the right parts of the world. We understand the process in growing an international licensing program, and we’re committed to developing this in a thoughtful, thorough manner that benefits all parties.”
An expanding presence in Asia
King Koil, which has 30 licensees servicing more than 90 countries, expanded its already strong presence in Southeast Asia this year with the addition of a new licensee in Thailand. Based in Bangkok, King Koil Thailand is an affiliate of Sleepwell Industries, which offers mattresses and bedding products under the Dream Master brand. King Koil Thailand will sell King Koil-branded products in its company-owned retail stores and through a network of dealers and distributors.
In Southeast Asia, King Koil already had licensees in Indonesia, Malaysia, the Philippines, Singapore and Vietnam.
“Southeast Asia presents a real opportunity for our brand, and Thailand continues to be one of Asia’s most important economies,” says David Binke, CEO of the Willowbrook, Illinois-based company. “Our new licensee has expertise in manufacturing, distributing and selling mattresses that is critical for success.”
The partnership enhances King Koil’s two-pronged strategy of maintaining a network of manufacturing licensees outside the United States, while moving to a domestic model of making its own products in company-owned plants and through limited partnerships. The mattress maker adopted its domestic strategy in 2018, opening a new 90,000-square-foot facility in Avondale, Arizona, to service the Western United States, and entering into a new strategic partnership with Blue Bell Mattress Co. for the Midwest and East.
Back on the international side, King Koil signed a new deal last year with Everpia JSC. Under the agreement, Everpia, which is based in Hanoi, Vietnam, produces and sells King Koil products through company-owned retail stores and a network of nearly 500 distributors in Vietnam. Everpia’s assortment also includes select mattresses produced at King Koil’s Arizona facility.
“While an American brand itself carries a certain cache internationally, having certain SKUs actually made in the U.S. is even more desirous,” Binke says. “Our new plant in Arizona is producing a well-edited assortment of six or so SKUs for sale through some of our overseas partners. These models fit alongside the products being made by our partners and give them a strong ‘made in the USA’ story to market.”
In international markets, King Koil often is positioned as a higher-end luxury brand, Binke says. Recognizing the growing potential in that end of the business, the company strengthened its own domestic assortment of premium products at the Winter Las Vegas Market. Introductions included Intimate, a collection of eight hand-tufted hybrid models, and the MHybrid collection of gel-infused memory foam beds. Retail price points range from $2,000 to $4,000.
“A lot of our international partners were in Las Vegas, and they were very excited about this new direction,” Binke says. “I expect that a number of them will take these new premium designs and adapt them for their own markets.”
Princeton, New Jersey-based Therapedic International signed its first international license with a company in Argentina in 1960. Today, the company has 24 global bedding licensees in Africa, Asia, Europe, the Middle East and South America. Key markets where it does business include Australia, Canada, Israel, Mexico, New Zealand, Turkey and the United Arab Emirates.
In 2018, the fastest-growing international market for Therapedic — “without a doubt,” says President and CEO Gerry Borreggine — was Southeast Asia. In recent years, the brand has significantly increased its presence in the region, adding licensees in Vietnam (Hava’s Mattress Co., based in Dong Nai province) and Taiwan (Panbor Furniture Co., based in Taoyuan City). The company also has strengthened ties in China and Korea and in other high-growth countries in both East Asia and Southeast Asia.
Going forward, Therapedic sees an opportunity to establish deeper roots in South America, where it is “currently working on a few prospects,” Borreggine says. Europe is another market where the company would like to do more business.
Across its international markets, hybrid beds are selling particularly well for Therapedic’s partners, Borreggine says. And, while it’s still early, he expects to see increasing demand for boxed beds, as well. At the winter Vegas show, the company introduced a major boxed program, which “has provided another opportunity to extend our license agreements,” he says.
When partners sign licenses with Therapedic, they agree to pay an annual royalty based on sales for use of the company’s intellectual property and trademarks. Under the agreement, Therapedic’s partners have the ability to “take our specifications and ideas and then adapt them to fit their own marketplace,” Borreggine says.
“Our international licensees have the same access to our marketing, sales, products and training materials as do our domestic licensees,” he explains. Along with traditional print materials, those assets include email blasts, Facebook ads and other content for use online.
To keep its licensees informed about the latest developments within the Therapedic brand, the company hosts an annual international summit. The company works in other ways to stay engaged with its international licenses. Email and smartphone apps assist the process.
“I no longer take my phone to bed because it buzzes throughout the night with WeChat and WhatsApp messages,” Borreggine jokes. “Seriously, today’s technologies enable us to stay in constant touch with our partners, so they can get the information they need to make decisions quickly.”
A legacy of innovation
Englander, a relative newcomer to the international licensing arena, began its program in 2006 when Kevin Toman joined the company as president. Since then, the number of international licensees has grown to include 19 partners doing business in 26 countries. The Pacific Rim and Middle East have been particularly strong markets for the brand. The company has had good success in China, too. In the past two years, the company has entered Europe, establishing a presence in Belgium, France and Germany.
“We pursue international business aggressively,” says Toman, who recently retired as CEO of the Denton, Texas-based company. “It’s an important part of our business as we seek to expand our global footprint.”
Founded in 1894, Englander has strong name recognition, unique marketing and point-of-purchase tools, and a robust legacy of best practices in its approach to manufacturing, Toman says. The company shares all these assets with its international partners, inviting them to visit its factories to observe its innovations.
The Las Vegas Market also provides Englander with opportunities to meet with its partners. At the winter show, the company held a dinner for licensees to meet Mark Kinsley, Englander’s newly appointed president.
“It was eye-opening how engaged our partners are with our brand and our products,” Kinsley says. “It underscored how important our partnership is to their business, and how excited they are about the opportunities they see to move the brand forward.”
Known for his creative brand building and social media work in his previous role as vice president of marketing for Leggett & Platt Inc., Kinsley is looking forward to bringing the international side of Englander’s business into the digital age.
“We plan to roll out a variety of new social media and other creative merchandising programs to help all licensees — domestic and international — build our brand and raise awareness among retailers and consumers,” Kinsley says. “We’re going to put together a robust menu of content that our licensees can tailor to their own unique customer bases.”
In the coming year, Englander also expects to announce a number of new licensees. Areas of the world where it plans to sign partners include Eastern Europe and South America. Most recently, it added a new licensee in Turkey.
“We’re in the process of negotiating several new deals that we’ll be announcing soon,” Toman says. “Interest in our brand continues to grow, as companies gravitate to us for our track record of success, as well as our legacy of innovation.”
While 2018 was a growth year for Englander internationally, “some countries had a tough year,” Toman says. “Guatemala had a major volcano, and our Mexican licensee had a fire in their factory. Brazil also has had big challenges economically, but things seem to be settling down.”
At the same time, Englander enjoyed good business with its new licensee in Turkey, Izmir-based Cap Design. Southeast Asia was another bright spot. The company’s partner in Malaysia, Selangor-based LSK Mattressworld, which also holds the Englander license in six neighboring countries, has been doing particularly well with Englander-branded latex models, taking advantage of sourcing materials from its own rubber trees.
In some markets, including Taiwan, new store networks are being developed by licensees, who are showcasing Englander as one of the core brands. Twenty such stores are open in Taiwan, and additional freestanding stores are being opened by licensees in Belgium and France.
Diverse family of brands
Another U.S. bedding brand getting more active on the global store front is North Brunswick, New Jersey-based Eclipse International. In 2018, Eclipse entered into a joint venture with its China licensee, Shenzhen Meiting Creation Furnishing Co., to open more than 100 mattress specialty stores dedicated to the brand throughout the country. The first group of stores opened in late 2018; the remaining locations will roll out over the next three years. Target markets include Beijing, Guangzhou, Nanjing, Shanghai and Shenzhen.
“There is growing demand in China for U.S.-branded luxury goods, and our portfolio of brands has been very well-received there,” says Stuart Carlitz, CEO of Eclipse International. “These retail stores will take our 15-year partnership with Shenzhen Meiting to the next level.”
Last year was busy for Eclipse International’s family of seven brands — Bedding Industries of America, Eastman House, Eclipse, Ernest Hemingway, Pure Talalay Bliss, Van Vorst and Velika. The Eclipse brand added a new licensee for Turkey and the United Kingdom — Iskeceli Kanepe Ltd. of Istanbul. Restwell Sleep Products signed on as the new partner for Eclipse and Eastman House in Canada, and EcoSleep, in Athens, Greece, now has the rights to produce and sell the Eclipse brand in 10 European countries, including Croatia, Cyprus, Hungary and Slovenia.
Also in 2018, Eastman House added Dubai-based Three Stars Foam as a licensee for Bahrain, Jordan, Kuwait, Oman, Saudi Arabia and the United Arab Emirates; and Sleep Wealth, in Thailand. In addition, an agreement was reached with Huasheng Home Furnishings in China for the Ernest Hemingway brand.
Eclipse International now has 60 international licensees, in addition to its 17 domestic partners.
“Our international business was up 18% in 2018, and we’re planning to have similar strong results this year,” Carlitz says. “While there are challenges in some of our markets, such as China, where the economy is slowing down, we expect our international sales overall to continue their steady climb.”
The fact that Eclipse International has a diverse stable of established brands has been an advantage as it works to expand its presence around the globe, Carlitz says. In some countries, its licensees carry two or three of its brands, each targeted to different market segments, while in other countries, there are several licensees, each with a different brand.
“We’re known as a global licensing company, so companies will often seek us out to see what we have available in their markets,” Carlitz says. The BIA licensing program was developed, he says, after a Taiwanese partner brought some friends from Singapore and Malaysia to the Eclipse showroom and they saw the brand, which dates back to early in the company’s history, on some signage. “All of our other licenses at the time were already spoken for, so we ended up reviving the BIA brand for a new line that we license both domestically and internationally.”
When Eclipse is in talks with a potential partner, there are several key elements it seeks, Carlitz says. “First, they need to have a certain level of capacity to service their market,” he says. “They also have to be financially solid, and they need to show a strong commitment to our brand.”
Eclipse also prefers partners not have existing licensing arrangements with other U.S.-based bedding companies, and that they have a clear plan for how its licensed products will fit with other bed models they produce. “In many cases, we’re the step-up brand to their existing lines,” Carlitz says.
In its agreements, Eclipse gives partners the flexibility to adapt its brands to fit the tastes and demands of the local market, provided they meet certain specifications. “We don’t want our brand being used on lower-end price points, but other than that, they generally have the ability to adjust fabric colors and other features as they see fit, as long as they meet our quality standards,” Carlitz says.
To support its licensees, Eclipse International offers a broad range of marketing tools and other services, including in-house graphic design. The company has its own website for each individual brand, including a new site for the Ernest Hemingway bedding.
On the production side, the company’s team includes Russell Bowman, former president of sales and market development for L&P’s Global Systems Group. Eclipse hired Bowman as a consultant in 2017 to help implement a new companywide quality control and process improvement initiative.
“Throughout the year, Russ visits our licensees’ factories in the U.S. and overseas, checking that quality of materials is up to par and that beds are being made to specifications,” Carlitz says. “During his visits, he also shares ideas for ways to improve and make operations more efficient. Our licensees welcome his input since it enables them to do their jobs better and be more successful.”
In his new role at Eclipse International, Bowman works closely with Armando Murillo, vice president of licensing. “Internationally, demand remains strong for our American brands because of the high quality and prestige associated with them,” Murillo says. “Our commitment to quality is a big part of that success.”
Forging a bond
For Buffalo, New York-based Restonic Mattress Corp., which has licensees manufacturing its brand in 50 countries across Australia, Brazil, Europe, the Far East, India, the Middle East, North America and South Africa, the key to success in licensing starts with finding the right partner.
“Our strategy is different than most companies,” says Ron Passaglia, president and CEO. “A lot of people just want to put a pin in the map so that they’re represented in that country. Our commitment is deeper: We always look for the strongest partner in the region, then give them multiple countries and territories in which to do business so that they have a chance to grow and expand their footprint.”
Because of the care it takes when choosing partners, Restonic hasn’t lost a single licensee in more than 10 years, Passaglia says. “We look for profitable, stable companies that share the same vision and understanding of our brand. They usually are the No. 1 or No. 2 producer in their country and have a strong hold on the marketplace.”
A good example of the long-running relationships Restonic seeks to build is its partnership with Stylution Bedding in Taiwan. Restonic’s first international partner in 1983, Stylution was named the first “permanent continuous licensee” for the brand in 2017. Stylution has exclusive rights to manufacture and distribute the Restonic brand in Taiwan, as well as China, Hong Kong, Japan, Malaysia and Singapore. Stylution also owns and operates a network of more than 150 Restonic-exclusive stores.
“Stylution is a true partner in every sense of the word,” Passaglia says. “We look forward to continuing to work with them for many years to come.”
Restonic’s traditional licensing deal calls for a core minimum payment, combined with an annual fee structure based on a percentage of sales that enables the brand “to grow in a manner that is fair to both parties,” Passaglia says. The agreement gives licensees the flexibility to customize products as long as they meet certain quality standards and product specifications.
“Some models are firmer or more plush, depending on local tastes, or they may have different covers that are much darker than ours would be here in the States,” he says. “But, generally, our products have a common look in most countries when it comes to the cover and the branding.”
Popular Restonic collections around the world include ComfortCare and HealthRest.
While Restonic’s sales growth internationally doesn’t match the robust rate of its domestic business, which was up 25% in 2018, global licensing remains a strong, steady performer. “American brands continue to be in high demand internationally,” Passaglia says. “Things ebb and flow, but right now there’s particularly strong interest throughout Asia and other spots, such as South Africa and Barbados.”
Going forward, Restonic plans to continue developing innovative products and marketing programs that enable its international partners to increase their market share, says Julia Rosien, vice president of brand and digital marketing. “Our digital program is very robust, and this will be an important asset for all our partners as they evolve to meet the needs of tomorrow’s marketplace. We have an amazing amount of content that is available for their use through an easy-to-access online portal that can be easily adapted to use in their own markets.”
Spirit of engagement
Also expanding its footprint globally is Spring Air International, which has headquarters in Chelsea, Massachusetts. The brand licensed its first international partner in 2002 in Dubai and expanded its global network to seven countries by 2007, when the company was sold to private equity and paused its international efforts. In 2009, when the brand was reborn as Spring Air International, the company chose to reinvest in the global side of its business. Today, it has a presence in more than 40 countries.
“Our international licensees are an integral part of our growth, and when we changed our name to Spring Air International, we took that concept into account,” says Eric Spitzer, chief operating officer.
Currently, the Eastern European market is “really strong,” according to Spitzer. “The region had not been a focus for us early on,” he says. “However, since our participation at Interzum in Germany, we have found the Eastern European countries have a lot of interest in our brands.”
Spring Air also sees continuing demand for its brands in the Asian and South Asian markets, and is looking to expand into South Africa and Russia. Last year, it signed a deal with a new licensee in Israel (TopMarket Holdings, based in Rishon LeZion), and in the past two years, it has added programs in Belgium, France, Luxembourg, Singapore and Turkey.
In choosing licensees, Spring Air looks for partners that have passion for the brand and a spirit of engagement. “For the group to take advantage of the strengths of the licensees, and for the licensees to take advantage of corporate successes, everyone needs to be a participant,” Spitzer says. Every company that Spring Air works with is a “top-notch, premier manufacturer,” he adds, “and they are all active in the business.”
To foster idea sharing, Spring Air holds a global summit each October, where it reviews corporate initiatives and new products, and asks each licensee to share an update on its business. The most recent conference was in Dubai — the home of its first international licensee.
Spring Air supports its international licensees with a robust marketing program that includes password-protected websites with images for marketing and advertising. “All of our marketing collateral is available to our partners,” Spitzer says. “We want to keep everyone on a level playing field.”
When the company launches new products, it develops labels, top-of-bed materials and other branding to support them. “Our team makes certain that our DNA is present on all point-of-sale material throughout the network,” Spitzer says.
Spring Air offers a complete assortment of Spring Air products to its global licensees but model mixes differ from country to country. To meet the needs of its diverse group of partners, the company has developed brand standards for each country to follow during manufacturing.
“We see the international market as a growth opportunity as the appetite for U.S. brands continues to grow,” Spitzer says about the prospects for Spring Air’s global business. And as the company continues to build deeper relationships with its partners, activity at the upper price points is showing particular promise, he adds