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SBJ/20100913/SBJ In Depth
Tecate's Big Hit
Published September 13, 2010
A couple of hours before the headliners entered the ring on a late July evening at Mandalay Bay, a man midway up the lower level rose to urge on Rocky Juarez, a Mexican-American fighter who won a silver medal at the 2000 Olympics, but was well on the way to his third loss in a row.
“Con carácter!” the man bellowed, his voice easily carrying down to the ring. It happened again in the next round, this time from the other side of the arena — “Con carácter!” — then twice more during the bout that followed.
“Con carácter” would seem a natural phrase to cheer on a boxer, particularly a boxer of Mexican descent, and especially on a night headlined by the rematch between Mexican icon Juan Manuel Marquez and first-generation Mexican American Juan Diaz. It translates to “with character,” and it drips with all that anchors the fight game’s place in the Latino culture: Tenacity, courage, honor, effort, pride.
“Con carácter” also happens to be the operating slogan for Tecate, the Mexican beer brand that in only three years has developed a position in boxing that may be the most dominant of any in U.S. sports, and done it for what insiders estimate to be about $10 million annually in rights fees, media and activation.
You will find the Tecate logo on the mat for about 90 percent of the fights that air on U.S. television, regardless of promoter — a total of more than 120 fight broadcasts this year. You will find its commercials on air during regularly scheduled boxing shows on ESPN2 and ESPN Deportes, on Fox Sports Net and Fox Sports en Español, and on Telefutura. About 40 percent of Tecate’s advertising this year will run during boxing.
You will find Tecate 12-packs stacked high at the entrance of supermarkets in Latino neighborhoods across the West and Southwest, topped and flanked by posters and cut-outs promoting a major upcoming fight. You will find the Tecate name on branded, red seat-covers at major fights.
Tecate has put photos of fighters on its cans and on 12-packs, turned an RV into a boxing museum that has traveled 6,886 miles since May, and grown weigh-ins into raucous events where fans line up to get their pictures taken with a faux championship belt and pretty girls.
For the bigger fights, Tecate offers coupons for rebates of $20 to $30 off the cost of the pay-per-view — a jaw-dropping promotional gambit that not only lands them prime retail space and a warm place in the hearts of cash-strapped fans, but also drives sales of the fight.
It also delivers more in increased sales revenue than it costs.
The vice president of marketing for Tecate, Felix Palau, offered a simple, fitting response when asked how the brand could stomach the risk of so large a rebate, a payout that could exceed not only the profit from, but the price of, the beer. “Everything is, again, con carácter,” he said. It helps that only 1 percent redeem the coupon, and not all qualify for the full amount.
Palau chuckled when told that fans were yelling his brand’s slogan from the stands.
“Music to my ears,” he said. “What it tells me is from a positioning and communication standpoint, we are hitting a sweet spot. It’s something that is culturally relevant for our consumer and it goes deep into what these guys are living every day.”
In a marketing world where most brands target segments of the general market and chase the growth of U.S. Hispanics as an aside, Tecate works the inverse. Its target consumer is the recent immigrant from Mexico, male and likely in his 20s or early 30s. It goes after them almost entirely through boxing.
This year, Tecate spent about 40 percent of its U.S. advertising budget around the sport. It would have been higher were it not a World Cup year. Next year, boxing will be its only sports marketing play.
Tecate, which had $102 million in U.S. store sales last year, does 78 percent of that volume with Hispanic consumers. It also tilts heavily to the West, with 72 percent of its volume consumed in that 13-state region. California accounts for slightly more than half of Tecate’s volume. Los Angeles alone provides 35 percent of U.S. sales.
Boxing resonates with Tecate’s target and continues to thrive in those strongholds. The most recent ESPN Deportes Sports Poll found that 54 percent of U.S. Hispanics said they were boxing fans and 19 percent described themselves as avid fans of the sport. That makes boxing a clear second choice behind soccer — more specifically, World Cup and Mexican soccer — which would cost far more to blanket.
“They saw what I saw when I started — an opportunity in a major sport which, in a way, has been neglected,” said Richard Schaefer, CEO of Golden Boy Promotions, the Oscar De La Hoya-owned company with which Tecate has the deepest and broadest relationship. “Start looking at cost/value ratio and you suddenly see that boxing, with the reach you get, is the best bang for the buck. Tecate is not going to be able to own the World Cup or baseball or the NFL. But they knew they could own the sport of boxing. And now they do.”
The president of promoter Top Rank, Todd duBoef, remembers the first time he saw fighters featured on a Tecate can. It reminded him of all the retail programs he’d seen sponsors roll out in other sports, but that boxing had been unable to land in a decade.
“Their integration and activation … has been something we have not seen ever in the sport,” duBoef said. “It’s fantastic. When you look at what they have done with the Tecate product, it should be a Harvard case study.”
Jorge Cornejo is Tecate’s field marketing director in the western U.S. region. Among many responsibilities, it’s his job to execute the boxing sponsorship in ways that interest distributors and retailers and boost sales in the territory that means the most to the brand.
On the afternoon of the Marquez-Diaz fight in Vegas at the end of July, Cornejo sat in a casino coffee shop, outlining the details of Tecate’s plans to make Saturday night’s pay-per-view at Staples Center the centerpiece of the bicentennial of Mexican Independence Day.
The festivities began this past Saturday, with a shopping center appearance by popular Univision radio personality Piolin, along with a handful of boxers, live music and the attractions that Tecate typically brings to its events: A ring where fans can be photographed with the belt and the Chicas Tecate; a punching game where they can win prizes; and the mobile museum, which features De La Hoya’s Olympic gold medal and other memorabilia.
The next public event will be a Wednesday night concert at Nokia Theatre, featuring the popular Mexican band Los Temerarios. While not a Golden Boy or Tecate event, per se, the concert will provide another forum at which to promote the fight, which features Shane Mosley vs. long-ago “Contender” winner Sergio Mora as the main event and Mexican rising star Saul Alvarez on the undercard.
On Thursday, Golden Boy launches a fan fest in a vast parking lot across from Staples Center, with appearances by current and retired Mexican fighters, regional music acts, and activation by major sponsors, including AT&T, DeWalt and, of course, Tecate.
Friday will be a big night for Tecate. Solo Boxeo, the weekly Golden Boy card that it sponsors for broadcast on Univision-owned channel Telefutura, comes to Los Angeles, with a night of fights from the same parking lot that hosts the fan fest, followed by a regional Mexican band performing in the ring.
In some ways, Tecate views Solo Boxeo as having the potential to provide as much impact for the brand in Los Angeles as the big fight, Cornejo said, because it is more likely to attract its core consumer, who may feel priced out of the Saturday night fight.
“It’s the biggest week of the year for us, honestly a very big deal,” Cornejo said, adding that he’d already begun initial plans for the same week in 2011. “Now, does everything happen the way we intend it to happen? Because it’s boxing, no. But the ideas are there.”
Take the Solo Boxeo venue, for example. Six weeks out, Golden Boy and Tecate executives thought they would hold the show at an outdoor arena elsewhere in Los Angeles, which would be attractive to Tecate because it could operate unencumbered there. Most of the Staples Center property can be problematic, because the venue is sponsored by Anheuser-Busch.
But then it became apparent that the benefit of holding Solo Boxeo at the fan fest site outweighed the potential detriments of the sponsor conflicts. Golden Boy’s relationship with venue operator AEG, the company’s largest shareholder after De La Hoya, helped it navigate the conflict. But even that marriage has its limits.
When Tecate entered the sport as a sponsor of the De La Hoya-Floyd Mayweather fight in May 2007, executives from the MGM Grand told Cornejo that there was no way he would get more than a few small signs, and perhaps a single tap tucked in the arena’s upper reaches. Three years later, Tecate takes its full program to that building, as it does in many others.
“It was tough,” Cornejo said. “But we proved to them and many others that by letting us activate in a certain way, they could sell more beer.”
For the Marquez-Diaz fight at Mandalay Bay, Tecate set up portable stands throughout the main concourse. Though far outnumbered by the permanent taps, it did a brisk business, attracting fans with a unique hook. Tecate produced a commemorative cup, available only at its stands.
“There are ways to accomplish what we want to accomplish and have everybody happy,” Schaefer said. “And if we can’t do that someplace then maybe we have to go to another venue.
“I’ll tell you what we’re not going to do. We’re not going to say to Tecate, ‘Too bad. You can’t pour beer or put up those signs.’ We just don’t do that because we have the relationship. We will make sure that that Friday night Solo Boxeo show [in Los Angeles] is going to be a big Tecate night.”
It was a slow day at Mariana’s Supermarket on the north side of Las Vegas, particularly for a Friday, shortly after quitting time.
Still, every few minutes there was activity near the store’s entrance, where 12-packs of Tecate were stacked, topped by a display promoting the next day’s Marquez-Diaz fight and a stack of coupons for rebates on the pay-per-view. The Chicas Tecate stood at the ready, prepared to pose for photos with anyone who bought beer.
One or two at a time, men came in, grabbed their beer and a coupon, smiled with the chicas, and headed for the checkout line.
Among men 18-49, Hispanics are more likely to view
and order boxing events on television
This is how it works. How well it works is the bigger story.
A month ago, Tecate deployed the in-store promotion behind this week’s Mosley-Mora fight. The displays, which include a $25 pay-per-view rebate with the purchase of an 18-pack, covered about 6,500 stores in 13 Western states, with the heavier concentration in California, Nevada, Arizona, New Mexico and Colorado. Tecate has gone from covering about 800 stores with its early promotions to reaching as many as 9,500 a few times of late.
When Tecate’s U.S. brand director, Carlos Boughton, walks colleagues and customers through a presentation outlining the hows and whys of the boxing sponsorships, he shows a slide that charts sales, with dots that point out the periods during which Tecate backed a major fight. The year-over-year sales spikes are striking:
Up 27 percent in sales thanks to De La Hoya-Mayweather
Up 24 percent in August 2007 from Bernard Hopkins-Winky Wright
Up 19 percent in October 2007 from Manny Pacquiao-Marc Antonio Barrera, and again in December of that year from Mayweather-Ricky Hatton
Up 33 percent for De La Hoya’s Cinco de Mayo weekend fight in 2008 against Steve Forbes
Up 26 percent last September from Mayweather vs. Marquez.
While the sledding has gotten tougher as the economy has tightened, with sales of all beer in the U.S. down about 4 percent and Tecate holding flat, executives said the boxing sponsorships continue to generate a positive ROI. Spending has quadrupled as the program has grown.
For years, the sponsors that have dabbled in boxing have looked at it purely as a play for brand awareness. They would buy an ad position on the ring, calculate the visibility bump they got from the 3.5 million impressions generated during a big pay-per-view, and call the spend a success.
Tecate saw the potential for more.
“Some people feel very happy to have their logo on the mat, get fantastic ringside tickets and say ‘Hi Mom’ on HBO,” Boughton said. “But for us, we need to see very clear benefits from this activity, otherwise we wouldn’t do it.”
One is a fit not only with the target consumer, but with the message behind the brand. But, even with that, Boughton said Tecate would not have stuck around if boxing had not delivered increased sales.
The sport presents its share of hurdles. There is no established calendar. Boxing has no Super Bowl, no All-Star Game, no regular season or postseason.
With no established fight schedule to build around, Tecate created its own.
It has two Super Bowls: One pay-per-view each in May and September, timed to coincide with Cinco de Mayo and Mexican Independence Day. It has playoff games: Prominent positions on a handful of other pay-per-views and premium cable fights throughout the year. And it has a regular season: Title sponsorship of the 50-week Solo Boxeo series on Telefutura; of “Friday Night Fights” on ESPN Deportes and ESPN2; and of “Top Rank” Live on Fox Sports En Español and Fox Sports Net.
Golden Boy is Tecate’s primary content provider. Its deal calls for the promoter to deliver major pay-per-views during its two make-or-break holidays of the year, in May and September. There also are positions on one premium cable show per quarter, as well as title sponsorship of the weekly show on Telefutura. Tecate allocates percentages of its budget to each of those areas at the outset of the deal, and then the sponsor and promoter plug the specific numbers in as the year goes along.
“There are going to be some TBDs and game-time decisions, and we deal with those when we get there,” said Bruce Binkow, chief marketing officer of Golden Boy. “We both have to understand that we have to be flexible, because it changes. Everybody is OK with flexible, as long as they’re getting value.”
To complete the menu, Tecate has a similarly structured, though smaller, deal with boxing’s other top promoter, Top Rank. And there is the deal with ESPN, which includes “Friday Night Fights” on both ESPN2 and Deportes, as well as spots on Deportes radio, online components, and sponsorship of a weekly boxing studio show, “Golpe a Golpe.”
That’s the sort of breadth required to blanket boxing.
“There are way too many people involved in this,” Boughton said. “You have the promoter. You have the broadcaster. You have the venue. You have retailers that you want to get involved in building displays. You have consumers. You have our distributors. And in the end, everybody needs to see the value.
“The thing that has been working great for us is that nobody disagrees that Tecate and boxing make all the sense in the world. It’s not a hard sell at all. The platform of the brand, this idea of ‘con carácter’ — boxing fits, no pun intended, like a glove.”
The crowd at the bar stood shoulder-to-shoulder. Buckets of Tecate topped the tables. At the back of the room, Golden Boy fighters Mora and Victor Ortiz posed for photos, signed autographs and mingled with guests. This was the scene at Tecate’s after-party following the Marquez-Diaz fight.
At the entrance, where the Chicas Tecate checked tickets and handed out wristbands, the brand manager of the beer division from one of Nevada’s larger distributors explained the way boxing helps him drive sales not only in supermarkets and convenience stores, but in bars.
“You want to get a new draft handle, get features with your product, get the bar to make you a bucket special,” said Kevin Wilkerson, brand manager for beer at Wirtz Beverage Nevada. “You want to get your point of sale out there. Get neon (sign) placement. A fight can do all those for you.”
With the beer market down about 4 percent, Tecate is up about 5 percent year to date for the Nevada distributor. Thanks to the fight at Mandalay Bay, it was up 15 percent for the month of July.
“We see huge spikes, even in an economy that’s very difficult,” Wilkerson said, “because boxing continues to enable us to get more product on the floor.”
It’s the same as the way that beer brands use league and team sponsorships in other sports. Tecate gets boxing for a fraction of what a national play in most leagues would cost. The fight audience is smaller, for sure, but the demos are in Tecate’s wheelhouse. And the pay-per-view coupon creates an emotional connection with consumers.
“They’re based on authenticity, the true Mexican beer, and they’ve found a sweet spot with boxing,” said Loretta Lucero, principal at Touch Point Marketing, the agency that manages boxing activation for Tecate. “When they came into boxing their brand became bigger than life.”
Tecate has beaten rival Corona on the two major Mexican holidays in 14 key U.S. markets every year since entering boxing, Lucero said.
That’s what boxing offers Tecate. What the brand returns to the sport is at least as powerful as what it gets.
“Sponsor deals are not about the cash for us,” said Mark Taffet, senior vice president for pay-per-view at HBO. “They are about the marketing and promotional value. When you can leverage advertising and promotion and convert it into pay-per-view revenue, it almost always has an ROI that’s significantly more valuable than any cash component in a deal.
“Tecate’s sponsorship absolutely helps us sell pay-per-views.”
That all of this comes together so well, and so consistently, in a sport notorious for its unpredictability and unwieldiness is nothing short of astonishing. The promoters, networks and agencies all credit Tecate’s nimbleness.
Given two months notice, it can implement a full national retail promotion, including commemorative cans. Cut the lead time to six weeks and it still can get a robust program in place in its 14 key markets. At 30 days, the retail possibilities are limited, but Tecate still can get its on-site activation into place.
“With the NFL or MLB, you have a calendar, and everything is laid out for you in a very easy way,” Boughton said. “Boxing is much more fluid. That’s why whenever we have a contract we put it in a drawer. Hopefully we don’t remember it again until somebody says our contract is up.
“If you’re an anal-retentive person, this is not the right sponsorship for you.”