Why pay full price? Bud skirts IOC in bid for Beijing gold

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The 2008 summer Olympics in Beijing features a new event that's already kicked off: The Marketing End Run.

Looking to gain a foothold in a country that some have called the last great untapped market, Anheuser-Busch Cos. and Volkswagen are among those circumventing traditional sponsorships for the next Summer Games. Instead of trying to negotiate a global deal with the International Olympic Committee, they have taken sponsorships with the Beijing Organizing Committee.

The move is completely legitimate and without the stigma of ambush marketing. "Why buy the cow when you get the milk through the fence?" said David Carter, president of Los Angeles-based Sports Business Group. "They may be in a position to exact the same sports marketing benefits in that region through a more narrow sponsorship than by going through bigger channels."

Translation: Marketers are enjoying the same advantages of being a "local" sponsor of the Beijing Olympics without having to pony up big dollars.

A-B last week became the latest blue-chip marketer to become a partner of the Beijing committee, signing a deal to make its signature Budweiser brand the official international beer sponsor of the 2008 Olympic Games. Like Volkswagen and Bank of China, Budweiser will be able to use the 2008 Olympic logo from the BOC in its marketing in China, the U.S. and 28 other countries. Financial terms were not announced, but the deal is believed to be in the $15 million range.

That's far less than the 11 companies who have paid $75 million each for the 2006 Winter Games in Torino, Italy, and the 2008 Beijing Games, to be the exclusive global sponsors to the IOC. Those 11 marketers, called The Olympic Partners, are the only companies able to use the Olympic Games' five rings logo in their global marketing.

pressure to expand

Several global marketers have pressured the IOC into expanding its Olympic Partners program beyond the current 11, which are Coca-Cola Co., John Hancock, Eastman-Kodak Co., McDonald's Corp., Panasonic, Samsung, Swatch, Visa, General Electric, Schlumberger and Lenovo. But the IOC, which does not currently have beer, automobile and airline companies represented among the 11, has decided to stay put for a variety of reasons.

Tony Ponturo, VP-global media and sports marketing for A-B, said the beer marketer tried to become an Olympic Partner sponsor, but negotiations with the IOC became complicated. "There are countries where beer and alcohol is not necessarily appropriate," including Muslim countries or European nations that place limits on marketing, Mr. Ponturo said. But at least for the Beijing Olympics, not being a TOP sponsor doesn't seem to bother some marketers.

"Let's put it this way," said a marketing executive who asked that his company, currently negotiating a deal with BOC, not be identified. "If I can market in China and use the 2008 logo, am I really that upset that I might not be able to market in, say, Belgium or Australia and use the five rings? Not really."

Becoming an international sponsor fits with A-B's overseas expansion efforts, Mr. Ponturo said. The brewer's international beer volume hit 8.4 million barrels in 2003, up 5% from 2002, according to a company filing with the Securities and Exchange Commission. By comparison, domestic volume was 102.6 million barrels, up less than 1%.

A-B particularly has its sights fixed on China. Not only does it have a population of 1.2 billion and is the fastest-growing economy in the world, in 2001 China passed the U.S. as the biggest beer market in the world, according to Impact Databank. "China is an important country to us," Mr. Ponturo said.

BOC is projecting $1.4 billion in income from selling domestic sponsorships like the ones the beer marketer and Volkswagen have taken. By comparison, the recently completed 2004 Athens Games took in $780 million in sponsorships for the local organizing committee; the 2000 Games in Sydney raised $680 million.

contributing: james b. arndorfer

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