SBJ/December 20 - 26, 1999/No Topic Name

Nabisco spends millions on star power

Nabisco will launch an aggressive sports marketing campaign next month built around five high-profile athletes who will likely get more than $500,000 each in endorsement fees alone.

The sports marketing campaign, featuring Mia Hamm, Lindsay Davenport, Ken Griffey Jr., Derek Jeter and Dan Marino, is a first of its kind for the nation's largest cookie maker and bucks the corporate trend away from athlete endorsements.

One industry observer said the Nabisco deal could rekindle the demand for athletes to endorse products.

Beginning next month, Nabisco, the maker of such popular snacks as Planters peanuts and Oreo cookies, will launch ads, products, sweepstakes and promotions, according to agents who represent the athletes.

The effort is unusual in that while most corporations, particularly footwear firms, are shying away from shelling out big endorsement bucks to athletes, Nabisco's unfolding strategy is the opposite. Indeed, Nabisco is expected to spend several million dollars annually on the endorsement fees alone.

Nabisco did not comment.

"The demand for celebrity spokespeople is dwindling," said Nova Lanktree, whose Lanktree Sports firm matches companies with athlete endorsers. "[Nabisco's deal] has the potential to be a rejuvenating, clear shot in the marketplace" for endorsements.

Exactly how much Nabisco will pay the quintet is unknown, though a source said that Davenport would receive a mid six-figure annual sum. The Davenport endorsement will also include a sweepstakes that awards the winner a trip to a Grand Slam tennis event.

They are probably all mid six-figure deals, Lanktree estimated.

For Nabisco, the endorsements mark a departure from its past sports marketing efforts. As part of the tobacco company RJR, Nabisco historically had been a strong sponsor of golf and tennis events. More recently, the food company has become a big supporter of NASCAR and the NCAA.

While it is unclear if Nabisco's split earlier this year from tobacco giant RJR had an effect on the new focus on celebrity endorsement, observers believe it may have freed the food company to invest sports marketing dollars in new ways.

"There could have been some handcuffs on them in the past with the tobacco," said Eric Bechtel, a vice president at SFX Sports Group, a unit of SFX Entertainment Inc. "In the food category, you need to cut through the clutter. Ten or 15 years ago, you may have had one competitor in the cookie and biscuit category; now you have got 200."

Athletes' endorsements can differentiate products, Bechtel said. Nabisco, for example, plans to place the athletes on product packaging. Davenport will be on Newtons boxes, while Griffey will promote Oreo and Planters as well as a yet to be released new product, Sportz, which are crackers in the shapes of sports balls.

Griffey plans to spend several days in Orlando next month filming commercials for Nabisco, said the superstar's agent, Brian Goldberg. "The deal gives them a certain number of days per year with Kenny," Goldberg said.

It is unclear what other products Nabisco plans to promote through the athletes. Some of its other brands include Chips Ahoy!, Ritz, A-1 steak sauce, Grey Poupon, LifeSavers and SnackWell's.

Nabisco, whose 1998 marketing and advertising budget was $237 million, is the market leader in the $7.2 billion U.S. cookie and cracker industry, according to Moody's Investors Services. The company's market share position is more than 38 percent in cookies and 50 percent in crackers, Moody's estimated.

Nabisco Holdings Corp.

Founded: 1898 as National Biscuit Co.

1999 sales (first nine months): $5.935 billion (down 4%).

Background: Nabisco Group Holdings (formerly RJR Nabisco Holdings, and formerly the owner of No. 2 U.S. cigarette maker R.J. Reynolds) owns 80.5 percent of Nabisco Holdings Corp. Nabisco Holdings sells its products in more than 85 countries, with 30 percent of total sales overseas.

CEO, Nabisco Holdings and Nabisco: James M. Kilts, 51.

1998 compensation: $1.7 million.

1998 employees: 74,000.

Recent activity: RJR Nabisco sold its international tobacco operations and spun off its domestic tobacco operations, taking on a new name (Nabisco Group Holdings).

November: Nabisco bought candy maker Favorite Brands International (Jet-Puffed marshmallows, Farley’s fruit snacks, Trolli gummies) for $475 million.

December: Partnered with investment group Hicks, Muse, Tate & Furst to form Burlington Biscuits, to bid ($1.87 billion) for underperforming United Biscuits, Britain’s largest biscuit and snack maker.

Sports activity (partial listing): “Official Snack of NASCAR” (Planters peanuts), and sponsors of the Dale Jarrett, Bobby Labonte and Ricky Rudd Planters team, Dale Earnhardt Jr. (Nabisco), the NASCAR Winston Cup Series (Pop Secret), and the LPGA Nabisco Dinah Shore tournament.

Source: Street & Smith’s SportsBusiness Journal research

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Related Topics:

Dale Earnhardt Inc., LPGA, NASCAR, NCAA

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