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.
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.
Houston Harvest has struck deals to use household names such as Batman and Scooby-Doo, Teenage Mutant Ninja Turtles and the Bratz line of dolls.
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.
Such licensing battles represent a major shift in the industry. Five years ago, companies like Sherwood filled their Easter baskets with generic porcelain dolls and plush toys.
Some baskets had male themes; others had female themes. Retail prices for the final product ranged from $4 to $13, Splitek said.
Easter basket sales grew reliably at Sherwood, which distributes a variety of cookies and confections as well as holiday baskets, but executives wanted to become a bigger player in the estimated $90 million-a-year industry. The company had already used licensed products for its Christmas gift sets. So it tried the same tactic for Easter.
Gadgets vs. candy
It focused its branded Easter baskets on a handful of time-tested national brand names such as NASCAR and Spider-Man. Candy plays a supporting role in these baskets. There are generally five or six small packages, such as Sherwood's Fruit Bursts and Wonka's Shock Tarts, which are dwarfed by the toys stacked above them.
Splitek said consumer research shows the first priority for shoppers is the gadgets in the middle of the basket. "Candy is pretty low on the list," he said.
Sherwood pays a premium to use the branded products -- a flat fee to each licensor and additional royalties on sales of licensed products above a certain dollar figure.
With the exception of some candy, nearly all of the baskets' components are manufactured overseas to reduce costs and maximize profits. The candy, branded products and basket are put together in the United States and shipped out to pharmacies, grocery stores and discount chains.
Sherwood executives said the introduction of branded Easter baskets has boosted sales, but they declined to cite specific figures. Splitek said Easter basket sales represent a "significant" part of Sherwood's business. The company had sales of $45.8 million in 2004.
Nancy Bailey, chairwoman of Nancy Bailey & Associates Inc., a licensing agency, predicts consumer appetite for branded Easter baskets will grow because "generic baskets just don't have the appeal of Barbie, M&M and NASCAR."
Wal-Mart, the nation's largest retailer, now carries at least a dozen branded Easter baskets, citing their "growing popularity" with customers, spokeswoman Karen Burk said.
‘American Girl’ baskets
And parents, catering to their children's desire for certain items, are even putting together their own themed baskets. Paulk, the magazine publisher, is assembling an American Girl doll basket for her 8-year-old daughter. It will have books along with a typewriter, pencils and stationery for the Kit doll.
Paulk said adults are giving more candy to other adults and less to children.
"With kids, it's 'let's not rot their teeth,' " she said. "With adults, it's 'what the heck.' "
On a recent trip to the Wal-Mart in Germantown, Leslee Hayes bought two of the branded Easter baskets -- one with a Scooby-Doo theme for $14.96, the other with an M&M theme for $19.94.
"He is big into Scooby-Doo," said the Gaithersburg resident, pointing to one of her sons. Hayes said she would make an Easter basket on her own but there is no time. "This is so much easier."
Carol Forman called the Scooby-Doo and NASCAR baskets "too prepackaged." The 45-year-old mother of four prefers to make her own gift baskets every year.
But she sees the allure. "My kids would love them," she conceded.
