5-Hour Energy expects boost from Sprint Cup sponsorship

5-hour Energy is projecting it will do $13 million more in business this season by moving from sponsorship of a NASCAR Nationwide Series team to a Sprint Cup team.

The company, which late last year signed a 24-race primary sponsorship deal with Michael Waltrip Racing to sponsor the No. 15 car driven by Clint Bowyer, expects to generate $30 million of sales from its $10 million spend on the car. It will do so through a multifaceted marketing strategy that includes TV advertising, retail promotions and hospitality at the track.

“We learned what worked for us [in Nationwide] and what didn’t,” said Scott Henderson, president of 5-hour Energy. “A lot of what we’re doing in Sprint is the big brother of what we did in Nationwide.”

Clint Bowyer drives the 5-Hour Energy-sponsored Michael Waltrip Racing entry during testing. Photo by: GETTY IMAGES

The marketing efforts are built on 5-hour Energy’s belief that it needs to win at retail. It plans to offer convenience stores like Circle K and national retailers like Family Dollar and Walgreens space on the back of the No. 15 car in exchange for favorable placement and promotions at retail. Such swaps were central to the company’s retail success against its Nationwide Series sponsorship in 2011, when it sponsored Rusty Wallace Racing’s No. 66 car in a deal valued at $6 million a year.

In addition to partnering with stores, 5-hour Energy executives are looking for consumer packaged goods companies that would be interested in partnering. It hopes to find a CPG company that’s equally strong in convenience store sales, put its logo on the back of the car, and bundle 5-hour Energy with its products at retail. The idea is modeled after the “Power of Pepsi” approach, which sees PepsiCo create a display in stores that showcases both its soft drink and Frito-Lay chips. Such displays can help drive sales of both products, Henderson said.

5-hour Energy already has begun to see the benefit of moving up to Sprint Cup at retail. The company is being featured in Wal-Mart stores nationwide alongside other major NASCAR sponsors in a special “Race Time” program. Henderson said that prominent displays alongside participating brands like Coca-Cola and Clorox will strengthen 5-hour Energy’s credibility and fuel more sales.

“That’s a great thing and is something we could not have done if we didn’t move up to this level,” Henderson said.

5-hour Energy also plans to drive people to retail with TV advertising. It historically advertises on weekday nights, but the Sprint Cup race schedule will see it become a daytime advertiser for the first time as it buys spots on Fox, Turner and ESPN.

“Moving up to the Sprint level and being about as mainstream Americana as you can get will really add to the brand’s credibility,” Henderson said. “TV’s a big part of that because we’ll be on Saturdays and Sundays where we weren’t before.”

The company plans to entertain customers at 29 races during the season. It built a mobile sports bar that it will put in the infield at tracks and host about 60 guests per race. Henderson said the approach allows 5-hour Energy to put key executives in the middle of the action at the track and gives the company’s sales force a chance to strengthen relationships with key clients.

Henderson said the combination of retail activation, TV advertising and hospitality should allow 5-hour Energy to hit its sales projections on the sponsorship, making any success Bowyer has on the track a bonus.

“In the past, hard dollars have paid for the whole sponsorship,” Henderson said. “If we can hit the hard dollar, the rest is gravy.”