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Volume 20 No. 46
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Pepsi takes over as NBA sponsor in new deal

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

PepsiCo has signed a five-year NBA deal, making it one of the league’s largest sponsors and ending a 29-year relationship between Coke and the NBA.

The deal includes Pepsi’s extensive portfolio of salty snacks, like Doritos and Ruffles, and packages rights to the WNBA, NBA D-League and USA Basketball. The sponsorship takes effect July 1 and covers North America and China, where Master Kong, an herbal ready-to-drink tea brand, will be the lead.

Included in the sponsorship is the largest activation commitment of any NBA sponsor, several multiples of a fairly sizable commitment that Coke mounted annually for its Sprite brand. The activation commitment for China is even larger than the one in North America.

Pepsi will focus much of its NBA activation on its portfolio of Mountain Dew brands. However, Pepsi’s Aquafina water will support the NBA Fit initiative. The NBA also will link with Pepsi’s Brisk ready-to-drink tea brands. With league rights since 1984, Pepsi’s Gatorade brand is the NBA’s oldest sponsorship.

Given its skill in combining music and sports assets, Pepsi sees the NBA as perhaps the best fit for any of its sports properties, which include the NFL, MLB and NHL.

“The fit is a natural one and we see it as a perfect way to target male multicultural millennials,” said a Pepsi marketer involved in the deal. “And don’t discount the value of this in the China market, where the NBA is red hot.”

Since February, NBA MVP candidate Russell Westbrook has been a spokesman for Mountain Dew Kickstart, and Kyrie Irving has performed as “Uncle Drew” in ads for Pepsi Max. Pepsi has around a dozen NBA players under contract. NBA team affiliations are currently about even between Coke and Pepsi.

Coke’s revival of Sprite through the NBA beginning in the 1990s was so successful that it has become a marketing case study. However, one of the beverage brand’s principal NBA assets — the Sprite-titled Slam Dunk Contest — is not included in the new deal. Instead, Pepsi is titling a grassroots 3-on-3 tournament, slated to tip off next spring. The slam dunk contest will be sold elsewhere.

Combining all eight of its sub-brands, Mountain Dew is a larger brand than Sprite.

More than a decade ago, The Wall Street Journal ran a story trumpeting a 99-year Coke/NBA sponsorship that can now be debunked. This past summer, Coke made the NBA a renewal offer that one involved marketer said “wasn’t indicative of the value of the category.”

Sources on both sides said they had been working on the deal since the fall and that things accelerated around the NBA All-Star Game in February. Face-to-face meetings between Indra Nooyi, PepsiCo chairman and CEO, and NBA Commissioner Adam Silver helped things along. Others identified as being instrumental were Adam Harter, Pepsi vice president of consumer engagement, along with Emilio Collins, NBA executive vice president, global marketing partnerships, and Rachel Jacobson, NBA senior vice president, business development.

Longtime Pepsi agency Genesco Sports Enterprises, Dallas, assisted on the deal.