SBJ/February 11 - 17, 2002/This Weeks Issue

Pepsi re-ups with MLB for $80M

Pepsi is not only renewing its sponsorship of Major League Baseball, it is putting at least $80 million behind a five-year deal, which makes the soft-drink giant one of the largest of MLB's corporate supporters.

Sources said both parties have agreed in principle to the renewal, which will include $60 million in media commitments and at least $20 million in rights fees and fees for a host of MLB marketing programs.

Pepsi's commitment is more than 10 times larger than its previous five-year MLB deal and represents the strongest endorsement yet of baseball's resurgence as a marketing vehicle.

The company plans its most aggressive marketing push yet behind the sponsorship. It had previously renewed a marketing deal with the MLB Players Association and endorsement contracts with Sammy Sosa and Ken Griffey Jr.

Pepsi will pass along rights to powerful partners like Subway, with more than 13,000 U.S. locations, and 7-Eleven, with 5,300 U.S. stores.

The renewal also brings sister brand Frito-Lay, one of the most innovative promoters in package goods, into the MLB fold along with PepsiCo's Cracker Jack brand. Frito-Lay products will be the league's official potato chip, potato crisp, pretzel, popcorn and salsa. It also becomes the official dip of MLB.

Pepsi's new MLB promos will launch in April with the “Open the Season” contest.

Pepsi's full-tilt MLB promotional calendar begins in April with "Open the Season With Pepsi," an on-pack, instant-win contest splashed across 30 million 12- and 24-packs of Pepsi-branded beverages, including Pepsi, Diet Pepsi, Pepsi One and Pepsi Twist, offering a World Series trip as top prize.

All-Star balloting in Subway stores, 83 percent of which pour Pepsi, is scheduled to run from May 15 to July 1. That promotion will offer 40-ounce "cruiser cups" to anyone buying a value meal.

Subway replaces Kroger, the nation's largest supermarket chain, as the retail all-star balloting partner. MLB expects to print and distribute 25 percent more ballots at retail.

Pepsi will brand 109 million 12- and 24-packs with a "Take Home the Tickets" slogan. The scratch-and-win promotion from May 1 to June 15 will dangle All-Star Game tickets as prizes. NASCAR tickets and Britney Spears concert tickets will be included in the ticket giveaway, leveraging Pepsi's endorsement of Jeff Gordon and its contract with Spears.

Local market activations include trading card promos in the Arizona, San Francisco Bay area and Seattle markets. A bobblehead premium featuring representations of Hank Aaron and Ryne Sandberg and other active and retired players will be offered in the Chicago and Milwaukee markets.

Player cup promos will be offered at 7-Eleven stores.

Pepsi also takes title to MLB's youth skills competition, which reverts to its original name of Pitch, Hit and Run.

Plans for Frito-Lay's involvement in all-star balloting have not been completed, nor have plans for a possible retail extension for Pitch, Hit and Run.

Cracker Jack, back as an MLB sponsor after a year's hiatus, plans a mini-trading card program in May.

In sum, it's one of the most comprehensive promotion programs of any MLB packaged-good partner. Clearly, Pepsi and its bottlers think MLB moves cases of soda.

"We had more local activation [of MLB] than ever last year across our bottling system and they asked for even more," said John Galloway, director of sports marketing at Pepsi N.A.

Galloway said Pepsi will not be deterred by the threat of baseball labor unrest. "We're making a bet that baseball will be played next season and we are protected against any eventuality," he said.

For MLB, the Pepsi re-up and geometrically increased activation continues a strong off-season during which it also renewed large sponsors including MasterCard, Gillette, Gatorade and Nabisco.

Tim Brosnan, MLB's executive vice president for business, said sponsors will back their affiliation with at least $175 million in media during the 2002 season, up from $130 million last year.

Considering that MLB does not sell individual team rights, as some other leagues do, the recent success of its sponsorship program is a tribute to the rebuilding of MLB's sponsorship department under Brosnan since 1998.

"The marketing commitments and the fees we're getting from our sponsors are both growing exponentially," said Justin Johnson, director of MLB corporate sales and marketing. "That ought to tell you it works."

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