SBJ/September 30 - October 6, 2002/This Weeks Issue

Importer of Chinese beer follows Yao to Rockets

Editor's note: This story is revised from the print edition

The Houston Rockets have signed a six-year, multimillion-dollar deal with the U.S. distributor of a top-selling Chinese beer, a sign that adding Chinese superstar Yao Ming to the roster could reap big financial benefits for the team.

Harbrew Imports of New York will pay the Rockets a minimum of $1 million a year to spearhead its marketing efforts for the Yanjing beer brand. The deal could be worth more with marketing options in coming years. Team officials said the deal is the largest import beer sponsorship package in the NBA, and it includes media, courtside signs and team promotions.

"This is one of the most integrated import deals across the league," said Jason Bitsoff, director of corporate development for the Rockets. "Typically, import beer deals are year-to-year, but this is a precedent-setting deal for the category."

The deal does not include a marketing relationship with Yao, who is unsigned and whose rights the Rockets do not control in any way. But Rich DeCicco, president of Harbrew, said the importer would discuss an endorsement deal with the player's representatives eventually.

The Rockets have high hopes that they'll find other ways to leverage Yao's international appeal.

"We are talking with Asian [marketing] agencies, and we are looking at Asian-based companies that want a presence here," Bitsoff said.

Yanjing is the No. 2 beer in China. Harbrew introduced Yanjing to the United States in December, and it expects to spend an additional $1 million or so promoting the beer in the next year. Yanjing is distributed in 38 states, but DeCicco expects sales in 2002 of just a few hundred thousand cases, a fraction of the sales for top imports Corona and Heineken.

"Houston is rapidly developing as our launching pad for the beer, and that has to do with Yao Ming," DeCicco said. "We will also look for other sports properties, and Yanjing will most likely be the official beer of the 2008 Olympic Games in Beijing."

DeCicco stressed that the deal focuses on U.S. promotion, as the brand looks to define itself simply as a good beer and not as a novelty import. "Heineken and Corona are the model," he said. "I doubt most people even know where Heineken is brewed."

Outside marketers don't see deals like this proliferating. "I would see a foreign beer deal with a domestic team being the exception, not the rule," said Ray Clark, CEO of The Marketing Arm. "I've seen more American companies have a foreign player endorse a domestic company and take that promotion back to the player's home country. But I think Yao has an exceptional personality, and he commands the type of intrigue that would make the sponsorship compelling. Even though Yao isn't [officially] part of this deal, the attachment is clearly visible."

With Rockets games expected to have wide television distribution in China this season, the brand should get a boost there through the visibility of courtside signage. But DeCicco stressed that the deal was made by the importer, not the brewery.

The deal allows Harbrew to opt out should Yao fail to sign with the Rockets or wind up with another team during the six-year term. But DeCicco said he's not concerned the player won't sign. "I believe he's due in Houston on Oct. 17, and I wouldn't be surprised if he's signed on Oct. 16," he said. "That's just how business is done in China. And with the Olympics in China in 2008, the Chinese know there's a lot at stake here."

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