Coca-Cola, China Mengniu Dairy Combine For $3B IOC Sponsorship
Coca-Cola has renewed its longstanding global IOC sponsorship through the '32 Games, but its new 12-year contract unveiled today in Switzerland includes two major changes from the past. The soft drink giant will now share rights to an expanded category with a Chinese dairy company, while it also has committed to a minimum digital media spend with the IOC. Coca-Cola and China Mengniu Dairy Company have jointly acquired rights from '21-32 to non-alcoholic beverages and dairy, a category that includes everything from traditional Coca-Cola products to drinkable yogurts, cheese and milk formula. Coca-Cola’s largest Chinese bottler, COFCO, is a major shareholder in Mengniu. The deal is worth a combined $3B, a source said, but roughly half that is in the form of promised support of the IOC’s digital media properties, which presumably includes the fledgling Olympic Channel. The remaining $1.5B in sponsorship fees works out to about $250M per quadrennial for Coca-Cola and Mengniu each. That is more than double the $100M per quad Coca-Cola paid in its last IOC deal in '05, but is roughly in line with other recent long-term global sponsorship renewals done by the IOC with Intel and Alibaba.
DIFFERENT NEGOTIATIONS: Coca Cola VP/Global Sports & Entertainment Partnerships Ricardo Fort said the negotiations were made more complicated by involvement of a third company. Coca-Cola traditionally was among the first TOP sponsors to renew -- it has been an Olympics sponsor continuously since 1928 -- but Fort denied talks were hamstrung by the price. Fort acknowledged it would have been possible for Coca-Cola and Mengniu to strike separate deals and own traditionally distinct categories. “It’s not necessary, but it was beneficial to all the parties,” Fort said. “It did cause more work to get it together, but it was well worth it, because now Coca-Cola and Mengniu can offer to the IOC, and to the Olympic movement and consumers, a broader range of beverages and dairy products.” The contract contemplates, upfront, how the two companies will cooperate on distribution and development. “Membership of the TOP Programme will act as a catalyst for Mengniu to grow around the world,” said Mengniu Exec Dir and CEO Jeffrey Lu. “This is a vital step in our international strategy.” The media component, which does not include promises to NBC Universal or other third-party rightsholders, will provide robust support for the IOC’s efforts to reach younger generations, who data suggests finds the Olympics less relevant than older fans do.
IMPORTANT DEAL FOR IOC: Such a heavy commitment from two consumer-focused companies was important to the IOC at a time when many of its new sponsors are technology concerns that are relatively uninterested in traditional consumer marketing compared to B-to-B tech deals. “You can’t just have it as all technology, with nobody engaging with consumers on the Olympics values,” said consultant Michael Payne, who advised Mengniu. “You need a portfolio of the different industries and the different ways they’re communicating." Mengniu asked Payne to consider IOC possibilities after it sponsored the '18 FIFA World Cup in Russia and was pleased with the results. Coca-Cola negotiated the deal on its own, with Fort and Senior VP & Chief Public Affairs, Communications, Sustainability & Marketing Assets Officer Bea Perez leading the work.
NO CONFLICT WITH YILI: In its announcement today, the IOC took pains to insist there is no conflict between Mengnui’s new rights and those already held by Inner Mongolia Yili Industrial Group, which is an official dairy sponsor of the ’22 Beijing Games. That company raised concerns about the deal publicly last week, according to Chinese media, which may have prompted the IOC to move up today’s announcement, even though the IOC today awarded the '26 Games to Milan-Cortina. The Yili deal excludes drinkable products.