A-B is stuck, at least for now, with the "Official Salty Snack Food" tag of the Summer Olympics despite the fact it no longer manufactures Eagle snacks. And it can't sell the sponsorship to the next logical company, PepsiCo's Frito-Lay.
Atlanta Centennial Olympic Properties, which sells the marketing rights, has already bowed to pressure from worldwide Olympic sponsor Coca-Cola to keep a Pepsi-affiliated company out of the Games.
The tale behind that quandary isn't only a telling saga of the competitiveness over high-profile sponsorships, but also testament to the turbulence in the cola wars.
A-B paid $40 million for the beer rights and also snared the salty snack rights in a separate deal that appeared to be a coup over category powerhouse Frito-Lay. But those close to the transaction say Eagle won by default.
In fact, Frito-Lay was negotiating with ACOP as far back as 1993, trying to winnow the $20 million asking price for the category, said a Frito-Lay executive.
PEPSICO THE PROBLEM
Another sticking point was Coca-Cola, which objected to having a PepsiCo company sponsoring an event being held in the cola king's back yard.
"ACOP told us Coke had an issue with Pepsi being in the Games," said the Frito-Lay executive. "They were making a fuss."
Coca-Cola went so far as to tell ACOP it would renege on its $20 million sponsorship of the Olympic Torch Relay should PepsiCo be allowed to get involved.
Moreover, one story making the rounds had Coca-Cola President Doug Ivestor personally visiting Billy Payne, CEO of the Atlanta Committee for the Olympic Games, to urge him not to consort with PepsiCo.
Coca-Cola denied the allegations. "We didn't influence ACOP on that nor would we," a spokeswoman said.
But even if ACOP had dealt with a Pepsi-affiliated company, it's unlikely the agreement would have been endorsed by the International Olympic Committee, which approves sponsorships.
"To my knowledge, Coca-Cola hasn't exerted pressure, not just because they wouldn't do such a thing but because they don't have to," said Michael Payne, IOC director of marketing. "We approve every deal that the organizing committees cut, and it's important to us to protect Coca-Cola's interests. Read into that what you will."
In the end, PepsiCo decided to opt out. "It wasn't worth it for just the rights to having the rings" on packaging, the Frito-Lay executive said about the deal ACOP was offering. "We'd rather just call NBC, buy ads and get a tangible return."
That left the field wide open for A-B's Eagle, which picked up the sponsorship at the bargain rate of a reported $2 million to $5 million.
Last October, A-B announced it was selling the poorly performing Eagle division; in February, the plants were sold to Frito-Lay.
According to those familiar with A-B's deal, the brewing giant has several options, including selling the sponsorship back to ACOP; contracting manufacture of Eagle snacks outside the company and distributing them at the Games; or giving away no-name chips. Or, of course, it could swallow the loss.
AN AMBUSH ON TAP
PepsiCo, meanwhile, has taken the ambush route, with its Frito-Lay division sponsoring USA Basketball's "Dream Team 3," also sponsored by Coca-Cola.
The marketer has begun running spots touting the Dream Team, featuring Scottie Pippen and David Robinson. The current execution, for Doritos, was created by BBDO Worldwide, New York, but other brands may become involved in the promotion.
"We'll be advertising during the Games," the Frito-Lay executive promised.