IEG SPONSORSHIP REPORT THE LATEST ON SPORTS, ARTS, CAUSE AND ENTERTAINMENT MARKETING
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1 IEG SPONSORSHIP REPORT THE LATEST ON SPORTS, ARTS, CAUSE AND ENTERTAINMENT MARKETING APRIL 30, CATEGORY UPDATE SPONSORSHIP PERKS UP IN THE COFFEE CATEGORY New product introductions and increased competition drive new activity on behalf of established and upstart players. New product rollouts and a double-digit increase in sales are driving new sponsorship activity on behalf of coffee retailers. Demonstrating the growing popularity of the caffeinated beverage, sales in the coffee category rose 20 percent to $4.68 billion in the year-ended March 18, 2012, according to SymphonyIRIGroup, a market research firm. With the exception of instant decaffeinated coffee, every segment of the category posted healthy growth. Single cup coffee led the pack with a percent increase in sales, followed by ground coffee with a 15.4 percent rise. The increase in sales has helped prompt new sponsorship and endorsement deals on behalf of both upstart and mature players in the category. Case in point: Stumptown Coffee Roasters this year has signed new ties with Texas Austin City Limits Music Festival and Chicago s Lollapalooza music fest. It also will sponsor MusicfestNW, an event located in its Portland, Oregon hometown. The coffee roaster, which operates stores in Portland, New York City and Seattle, aligned with ACL and Lollapalooza to support its growth ambitions. The company reportedly plans to expand to new markets and launch a line of bottled chilled coffee after receiving a cash infusion last year from TSG Consumer Partners, an investment firm that specializes in specialty drinks. On the endorsement front, Dunkin Brands Group, Inc. s Dunkin Donuts brand earlier this year inked a two-year partnership with NFL New England Patriots tight end Rob Gronkowski. The tie adds to an extensive sports-centric sponsorship portfolio that includes the New England Patriots, NBA Boston Celtics, NFL New York Jets and other properties in the Northeast U.S. and other markets. Coffee has always been and continues to be a healthy and competitive category, said Marc Riccio, the New York Jets senior vice president of corporate sales, marketing and stadium development IEG, LLC. ALL RIGHTS RESERVED. 1
2 The category could become even more competitive from the growing number of upstart brands and line extensions in the energy drink category, some of which are positioning their products as an alternative to coffee. Below, IEG SR shares five hot buttons for the coffee category: Promote specialty drinks. Coffee retailers are increasingly using sponsorship to promote new product launches and other product lines. Dunkin Donuts activates the Boston Celtics with an in-store ticket promotion on behalf of its iced coffee product. The Caught Cold promo awards tickets to consumers who are caught drinking the product at a local Dunkin Donuts location. It s been successful for them, and it s a great way for us to promote our brand as well, said Ted Dalton, the Celtics vice president of corporate partnerships and business development. Dunkin Donuts runs a similar promotion with the MLB Boston Red Sox, New England Patriots and other local teams. Gain on-site sales rights. Like other types of beverage companies, coffee retailers frequently look for on-site sales opportunities. For example, Dunkin Donuts operates two express outlets as part of its sponsorship of the XL Center in Hartford, Conn. The retailer has a similar arrangement around many of its other sponsorships. Coffee retailers also look for the right to sell through venue concessionaries. That s the case with Tim Hortons, Inc., which leverages its partnership with the NHL Buffalo Sabres to gain pouring rights in the First Niagara Center. Instead of selling a generic coffee, we facilitated an arrangement between Tim Horton s and our concessionaire, said John Livsey, the Sabres vice president of sales and business development. Tim Horton played for the Sabres after founding the coffee and donut chain, he added. Coffee companies also look for sampling opportunities. For example, Dunkin Donuts samples coffee prior to the start of the Under Armour Baltimore Marathon, while Caribou Coffee Co. leverages its sponsorship of the Mall of America by sampling product during the mall s Black Friday shopping event. Tout new product launches. Coffee marketers are increasingly using sponsorship to promote single-serve coffee products. Case in point: Green Mountain Coffee Roasters, Inc. last year sponsored the Atlanta Arts Festival to promote its single-service ice coffee products. The company sponsored the festival on behalf of the Brew Over Ice brand. Engage distribution channels. Where possible, properties should try to leverage coffee partners with sponsors in the supermarket category. For example, Denver-based Boyer Coffee Co. activates its sponsorship with Dick s Sporting Goods BolderBOULDER road race with an event-themed coffee blend sold through King Soopers grocery stores, an event cosponsor. Boyer distributes a coupon in race packets that is redeemable at the grocery store. In a different twist, Boyer samples coffee at the event with WhiteWave Food Co. s International Delight creamer, another cosponsor IEG, LLC. ALL RIGHTS RESERVED. 2
3 Go slow on category exclusivity. While competition has increased, many properties do not sell exclusivity in the coffee category. Those that do typically include the category as part of a larger deal in the beverage or QSR category. Some companies are placing more interest in exclusive deals. For example, McDonald s Corp. over the past few years has placed more focus on the coffee category to promote its McCafé ( McDonald s Shares Its Three Ingredients For Sponsorship 01/31/11) coffee line. Properties that work with more than one company in the category can provide a point of differentiation by offering entitlements and activation platforms that partners can own. Case in point: The Boston Celtics work with Dunkin Donuts and Cumberland Farms, both of which use the partnership to promote coffee. Dunkin leverages the tie with the in-store Caught Cold promotion, while the c-store chain hosts on-court promotions on behalf of its Farmhouse Blend coffee line. We try to give ownership of specific assets to partners that share a category, said Dalton. Sources New York Jets, Tel: 973/ Boston Celtics, Tel: 617/ Buffalo Sabres, Tel: 716/ RISING SALES IN THE COFFEE CATEGORY CATEGORY DOLLAR SALES 2012 SALES INCREASE Single cup coffee $601.8 million 119.4% Coffee additives/flavoring $13.4 million 25.3% Ground coffee $2.89 billion 15.42% Whole coffee beans $349.5 million 7.83% Instant coffee $479 million 7.68% Ground decaffeinated coffee $261.8 million 3.87% Coffee substitutes $1.02 million 2.66% Instant decaffeinated coffee $88.7 million (2.38%) *Sales in supermarkets, drugstores and mass merchandise outlets in the year-ended March 18, Source: SymphonyIRIGroup IEG, LLC. ALL RIGHTS RESERVED. 3
4 IEG SPONSORSHIP REPORT THE LATEST ON SPORTS, ARTS, CAUSE AND ENTERTAINMENT MARKETING APRIL 30, SPONSOR PROFILE INSIDE WRANGLER S SPONSORSHIP STRATEGY Apparel brand uses sponsorship to support consumer passion points and generate excitement at the point of sale. While a number of apparel companies have entered the sponsorship waters over the past few years, few have embraced the medium as much as VF Corp. s Wrangler brand. With a portfolio that ranges from rodeos to country music and professional sports, the iconic western lifestyle brand has long used sponsorship and celebrity endorsements to build consideration and generate excitement at the point of sale. Wrangler s portfolio includes sponsorships with the Professional Bull Riders and Professional Rodeo Cowboys Assn. and endorsement deals with Dale Earnhardt Jr., Brett Favre and rodeo champion Trevor Brazile. IEG SR spoke with Craig Errington, VF Jeanswear s vice president of marketing communications, about Wrangler s sponsorship and endorsement programs, how the brand activates the ties, and other topics. Below are edited excerpts from the conversation: IEG SR: Sponsorship has long played an important role in Wrangler s marketing mix. Tell me about that. Errington: Sponsorships and endorsements are a key part of our marketing mix. Over the years we have found that the Wrangler brand becomes more relevant when we tie into key passion points. IEG SR: Speaking of which, tell me about your endorsement deals. Errington: In the rodeo space we have a partnership with Trevor Brazile, a nine-time all-around world champion. We use dozens of other pro rodeo cowboys as well, but Trevor is by far the one who we leverage the most. In country music we have a long relationship with George Strait. That relationship has actually morphed into a role where George has his own product line, the George Strait Collection by Wrangler. We also have a partnership with Jason Aldean. We use Jason to promote the Wrangler Retro western line, which is targeted at a younger, more contemporary western consumer IEG, LLC. ALL RIGHTS RESERVED. 4
5 In sports we have a couple of high-profile relationships: Dale Earnhardt Jr., the nine-time most popular driver in NASCAR, and Brett Favre, the former quarterback with the Green Bay Packers. We use those guys in different ways to reach different groups, but what is consistent is that they each represent a key passion point for our consumer, whether it s NASCAR, rodeo or country music. All of the celebrities wore Wrangler before we had a formal endorsement deal. That s the magic. The relationships are genuine, authentic and believable. IEG SR: How does Wrangler activate PBR and other events? Errington: We tie in retailers around every event. We leverage the PBR, country music tours and other properties with local promotions that include ticket giveaways, point-of-sale displays and incremental co-op advertising. IEG SR: Can you share a recent example? Errington: George Strait just completed his winter and spring tour, and we leveraged the partnership with multiple retailers in each market. The retailers ran an in-store promotion that offered a George Strait poster and the chance to win two tickets. We also support promotions like that with local radio stations. IEG SR: Do you activate at events? Errington: We focus on retail activation, which is where the action has to happen. All of our sponsorships and endorsements have to lead to sales, and we spend a lot of time making sure the relationships are leveraged as much as we can at retail. IEG SR: Has Wrangler s approach to sponsorship changed at all over the years? Errington: Sponsorships and endorsements are more important than ever to the Wrangler brand. We have found them to be a great way to differentiate our brand in the marketplace. The right relationships help us achieve greater brand awareness and consideration, which ultimately leads to greater brand loyalty. That all ties back to the Wrangler brand showing consumers that we understand their interests and support their passions. Sources VF Corp., Tel: 336/ IEG, LLC. ALL RIGHTS RESERVED. 5
6 IEG SPONSORSHIP REPORT THE LATEST ON SPORTS, ARTS, CAUSE AND ENTERTAINMENT MARKETING APRIL 30, STRATEGY AMGEN TOUR OF CALIFORNIA RESTRUCTURES SPONSORSHIP PACKAGES Pro cycling race restructures sponsorship packages by providing key assets to jersey sponsors. A new Franco-centric packaging strategy is paying dividends for the Amgen Tour of California pro cycling race. Looking to replicate the sponsorship model at the Tour de France, the May race has restructured its sponsorship packages to provide more visibility for its top-tier jersey partners. The effort has been a success, with the race posting a roughly 15 percent increase in sponsorship revenue over the 2011 event. The tour this year has brought on two new jersey sponsors: Renewable energy supplier Exergy Development Group and Nissan North America, Inc. ( Nissan North America Expands Sponsorship Program ), the latter of which stepped up from a lower-level partnership. The crux of the packaging model: Provide prominent on-site and TV broadcast inventory to jersey sponsors while assigning ownership of specific on-site assets and activation platforms to lower-level partners. We had assets spread out among our big and small sponsors. We decided to group our more visible assets with jersey sponsors, said John Greene, vice president of sponsorship sales with AEG, which owns and produces the event. Case in point: The tour s five jersey sponsors will receive dominate on-site exposure and TV visibility at the 2012 event. The final stage of the race this year will be broadcast live during a two-hour show on the NBC Sports Network. Lower-level sponsors gain ownership of specific assets. For example, UnitedHealth Group, Inc. ( Who Does What: Health Insurance Companies 03/191/12) will title the Chairman s Ride dinner as a B2B play to reach business decision-makers. The company also receives media inventory. The race decided to restructure its sponsorship packages after all of its partnerships came up for renewal after the 2011 event, said Greene IEG, LLC. ALL RIGHTS RESERVED. 6
7 The company has since signed a multiyear deal with every partner, he said. Source AEG Global Partnerships, Tel: 213/ AMGEN TOUR OF CALIFORNIA JERSEY SPONSORS Amgen Inc. Race Leader Jersey Amgen s Breakaway from Cancer Most Courageous Jersey Exergy Development Group Most Aggressive Rider Jersey Nissan North America, Inc. King of the Mountain Jersey Rabobank, N.A. Best Young Rider Jersey Visit California Sprint Jersey 2012 IEG, LLC. ALL RIGHTS RESERVED. 7
8 IEG SPONSORSHIP REPORT THE LATEST ON SPORTS, ARTS, CAUSE AND ENTERTAINMENT MARKETING APRIL 30, ACTIVATION ZURICH TAKES OLD-SCHOOL APPROACH TO ACTIVATION Swiss insurance giant activates PGA Tour stop to promote 100-year anniversary in the U.S. market. Zurich Insurance Group Ltd. has taken a decidedly oldschool approach to activation around this week s Zurich Classic of New Orleans PGA Tour stop. Looking to promote its 100-year anniversary in the U.S. market, the Swiss insurance giant leveraged the April event with a three-hole charity golf tournament that featured Keegan Bradley, Graeme McDowell and five other pro golfers that play under the Zurich banner. The catch: The athletes competed in the event using antique golf clubs and wearing turn-of-the-century clothing. It s been fun watching them prance around in their outfits. They re more concerned about being the best-dressed player than winning on the course, said Dick Kearns, a Zurich Insurance Group senior advisor. Zurich created the event to support a year-long advertising campaign that celebrates the company s U.S. centennial. We took stock of existing sponsorships to commemorate the anniversary, and the Zurich Classic is one of our largest undertakings. We discovered that 1912 was a huge year in golf with the birth of Bryon Nelson, Ben Hogan and Sam Sneed and the legendary impact they had on the game. Zurich hopes to gain exposure for the event on the Golf Channel and other media outlets, said Kearns, noting that Golf Channel Morning Drive host Gary Williams covered the event wearing period clothes. The company also plans to distribute content from the event through its Web site and on DVDs that it will give to customers. Zurich hosted roughly 700 customers and prospects at the tournament. Zurich signed title of the Zurich Classic in 2005 as part of a golf-centric global marketing strategy. The company uses the platform to gain a point of differentiation from Allianz SE, AXA and other insurance companies that focus on Formula One, professional soccer and other types of properties, said Kearns. Of all of our competitors, we have the most global footprint. The global aspect of golf was very appealing to us IEG, LLC. ALL RIGHTS RESERVED. 8
9 Zurich broadened its presence on the golf scene in 2009 with a tie to the inaugural Asian Amateur Golf Championship. It also is mulling an involvement with the PGA Tour s inaugural development tour in South America. We re watching to see what happens ahead of the Olympics, said Kearns, who manages the company s global sponsorship programs after retiring last year from the position of chief administrative officer. Zurich in 2011 kicked off the player ambassador program to extend the golf platform beyond tournaments. The company expanded the program later in the year with a partnership with Bradley, the 2011 PGA Tour Rookie of the Year. The company takes the ambassadors to customer events around the world. There are only so many customers you can bring to an event. We wanted to expand our sponsorships throughout the year, said Kearns, who picked out players in part based on their popularity in specific geographic areas. Zurich also sponsors the PGA Tour Farmers Insurance Open, an event titled by its Farmers Insurance Group, Inc. ( Farmers Sponsorship Strategy Stretches Beyond Farmers Field Deal ) subsidiary. Zurich earlier this month changed its name from Zurich Financial Services Group to reflect its focus on insurance products. CAA Sports helps Zurich develop sponsorship strategy. Source Zurich Insurance Group Ltd., Tel: 847/ IEG, LLC. ALL RIGHTS RESERVED. 9
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