SBJ/September 19-25, 2011/Marketing and Sponsorship

Amp shifting off Dale Earnhardt Jr.

Diet Mountain Dew to take Earnhardt primary spot

Four years after making waves in NASCAR by signing on as the primary sponsor of Dale Earnhardt Jr., Amp Energy is phasing its brand off the car of the sport’s most popular driver.

PepsiCo is expected to announce this week that Diet Mountain Dew will replace its Amp Energy brand as Earnhardt’s primary sponsor for 16 races in 2012. The company has the primary sponsorship rights for 20 total races on the No. 88 car, and Amp will serve as an associate sponsor while also appearing on the hood for the other four races.

GETTY IMAGES
Earnhardt grew up drinking Mountain Dew.
The shift is a major downsizing in the sponsorship between Amp, an upstart energy drink, and Earnhardt, the sport’s biggest driver. Pepsi, which owns Amp and Mountain Dew, has one year left on its contract with Earnhardt and Hendrick Motorsports, and the company’s executives believe that Diet Mountain Dew, which is one of the fastest-growing soft drinks, stands to benefit more from Earnhardt than Amp.

“The story is really about opportunity,” said George Cox, Mountain Dew brand manager. “With Dew, Dale and NASCAR there’s this awesome marriage. Dale is the embodiment of the person we’re trying to target with Diet Dew. We wanted to tap into that equity Dew has in NASCAR and put it into overdrive with Dale.”

Pepsi and Hendrick Motorsports are expected this week to unveil a new paint scheme for the No. 88 car for next year’s Daytona 500. The unveiling comes just weeks after Earnhardt signed a five-year extension with Hendrick Motorsports that will keep him with the team until 2017.

Cox said Pepsi plans to focus on developing its marketing and activation plans for Diet Mountain Dew and won’t begin discussing a possible renewal with Hendrick until next year. Its current agreement with Hendrick and Earnhardt runs through 2012, but the company has had a long-standing relationship with Hendrick that dates to 1996.

Amp Energy signed a deal with Hendrick Motorsports and Earnhardt in 2007, shortly after the team added Earnhardt to its stable in one of the sport’s most anticipated free agent signings. The sponsorship was valued at $25 million to $30 million and made the brand the primary sponsor for 20 races on the No. 88 Chevrolet.

At the time, Amp was the fifth-largest player in a fast-growing category, which then had more than $6 billion in annual sales. But the category’s growth has stalled recently. The category added only 1 million new energy drink consumers between 2007 and 2009, compared to 9.3 million new consumers from 2005 to 2007, according to Mintel, a global market research company. Amp Energy has remained a small player in the category, generating an estimated $234 million for the past year across key retail channels for energy drinks except Wal-Mart, according to SymphonyIRI Group, a company that tracks retail sales across consumer packaged goods.

The shrinking number of new consumers made it difficult for Amp to justify the cost of the sponsorship. The brand also is planning to relaunch its product later this year and reposition it as an energy drink for older users, sources said.

By shifting the bulk of its marketing support of the driver from Amp to Diet Mountain Dew, Pepsi can save the Amp brand money and align Earnhardt with a brand he’s already passionate about. Earnhardt is a fan of Mountain Dew and grew up drinking the soft drink in North Carolina. When Brian Vickers drove a retro Mountain Dew car in a 2006 Nationwide Series race, Earnhardt famously asked for some of the retro hats that the brand rolled out for the occasion.

Though not as prevalent, Amp Energy will continue to have an association with Earnhardt, which PepsiCo hopes can preserve the connection Amp made with NASCAR fans during the last four years.

“They’re going to continue to speak to the NASCAR Amp drinker we’ve developed, but Amp is going through an evolution,” Cox said. “We’re not to a point of where we can talk about where we’re going with that, but once it’s public it will make sense how we’re using the NASCAR platform going forward.”

When the deal was signed in 2007, the energy drink market was dominated at the time by Red Bull, Monster Energy and Rockstar, which represented more than two-thirds of sales in the category. Amp brand managers hoped that by latching onto Earnhardt, they could quickly raise the energy drink’s profile by delivering a more diverse and mature consumer than any other energy drinks.

During the following four years, Amp Energy put Earnhardt at the forefront of its marketing efforts. It ran a full-page ad in USA Today that featured a letter to Earnhardt fans and immediately developed a Wal-Mart program that featured his image on cans at retail.

It later created a series of commemorative cans that were inspired by Earnhardt and featured imagery related to some of his favorite things in racing, like Talladega Motor Speedway. Its biggest promotional program was known as “Get on the 88,” a campaign that allowed fans to submit their names to Amp Energy and then see their name featured on Junior’s car at an upcoming race. A total of 88,000 names appeared on the car.

Amp Energy’s combined efforts in NASCAR, where it title sponsored the fall race at Talladega from 2008 to 2010, helped lift the brand from fifth in the energy drink category to fourth nationally and third in most NASCAR markets.

“We know from various studies and research that race fans are 2.5 times more likely to reach for Amp than the typical consumer,” Cox said. “The brand really made a place for itself within the sport and with Dale.”

But as the category’s growth flattened in recent years, the brand found it tougher to justify the cost of the sponsorship.

From the beginning, Mountain Dew contributed to that total sponsorship cost. The brand appeared on the rear quarter panel of the No. 88 car throughout the sponsorship. Mountain Dew began getting more prominent exposure with Earnhardt in 2008 when it was featured on the hood of the No. 88 car for the first time in a race. The brand got even more primary exposure this year when Diet Mountain Dew appeared on the hood of Earnhardt’s car twice during the summer, and it will appear in four additional races this fall during NASCAR’s Chase for the Sprint Cup.

Next year, that transition from Amp Energy to Diet Mountain Dew will be made complete. The National Guard will continue to be the primary sponsor for the other 18 races Earnhardt drives.

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