One Olympics...But Three Beer Sponsors?

Nielsen Compares Their Strategies

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BEIJING--There is tremendous risk for beer companies associated with the 2008 Olympic Games in Beijing. In all other categories, there is only one Olympic sponsor. But when it came to beer, the international and local Beijing organizing committees selected three. Anheuser-Busch's Budweiser is the international beer sponsor, and the local sponsorship is divided between two Chinese companies--Tsingtao Brewery, which is 27%-owned by A-B, and Beijing Yanjing Beer Co.

Each company has developed a different strategy to associate its brands with the upcoming games. Anddespite the potential for confusion among consumers, they all appear to be working.

Consumer research conducted online by The Nielsen Co. among 3,115 respondents in Beijing, Shanghai, Guangzhou and Chengdu found that Tsingtao, Yanjing and Budweiser top the lists for brand awareness and preferred beer brands in China, ahead of rivals such as Japan's Suntory brand; Snow Beer, produced by a joint venture between SAB Miller and China Resources; and Guangzhou Zhu Jiang Brewery Co.'s Zhu Jiang brand.

"In spite of not being the market leader in any of China's three largest cities, Tsingtao came out as the clear leader when it comes to top-of-mind awareness, with close to one-third (28%) of consumers nationally mentioning Tsingtao first when asked to name a beer brand, well ahead of other sponsors Yanjing (13%) and Budweiser (12%)," said Richard Basil-Jones, Nielsen Media's managing director, Asia/Pacific in Sydney.

Taking all unprompted mentions into account, Tsingtao topped the list, with close to four in five consumers (77%) mentioning the brand. The top-ranking non-sponsor, Snow Beer, was mentioned by one in 10 consumers, ranking fourth but very close behind Budweiser (43%) and Yanjing (42%).

Tsingtao's leadership in brand awareness is partly explained by its heritage as one of China's oldest beer brands and one of the few early successes as achieving close to national distribution. Tsingtao has also invested heavily in marketing, with three major ad campaigns since mid-2007. The first had a diving theme and the second, launched at Chinese New Year, featured the Olympic mascot Fuwa. During the spring, a third campaign with evocative creative depicted young Chinese transfixed by television coverage of Olympic moments.

These campaigns appear to be succeeding in capturing consumers' attention. Two-thirds of respondents said they recalled seeing Tsingtao's Olympic-related television advertising recently. Tsingtao also topped the list in ad spending in the first four months of this year, investing RMB 115 million ($16.6 million) in TV ads, based on rate card estimates from Nielsen's Advertising Information Service.

Yanjing lags Budweiser and Suntory in 2008 advertising, spending only one-third the amount of Tsingtao. ButYanjing still registered with a significant portion of consumers--43% of respondents claim to have seen Yanjing TV ads with an Olympic theme.

Compared to Tsingtao, however, Yanjing has followed a more traditional strategy with its creative, emphasizing Chinese New Year and wedding themes, then ending the spots with a prominent Olympic logo. But Yanjing has done print ads with a heavy Olympic component, such as contests and promotions to win tickets to the games.

Budweiser has spent RMB 88 million ($12.7 million) on marketing efforts, mostly TV, in the first four months of 2008. The Olympic logo is prominent even in Bud ads unrelated to the games, such as spots focusing on a Celine Dion concert in Shanghai. Budweiser has boosted ad spending this year by 42% compared to the same period last year. That's a bigger increase than all its major rivals, and much more than the industry average of a 20% hike.

Consumers aren't deceived about who has paid to be an Olympic sponsor. Shanghai's top-selling beer Suntory has run print ads featuring Beijing landmarks, sports fans and a promotion to win trips to Beijing. But the majority of consumers are in no doubt about this ambush marketing strategy. Only 2% of respondents nationally and 20% of those in Shanghai are under the impression that Suntory is an Olympic sponsor--compared with 63%, 62% and 42% sponsorship recognition respectively in Shanghai for Tsingtao, Budweiser and Yanjing, even though the latter is a minor player in Shanghai.

Olympic sponsorship efforts by Tsingtao, Yanjing and Budweiser appear to be paying off. In two major markets, Guangzhou and Shanghai, the leading non-sponsor brand is losing market share to sponsor brands, excluding on-premise restaurant and bar sales, according to Nielsen's retail index.

In Guangzhou, Zhu Jiang held an 80% market share in March 2006. That lead fell to 74% in March 2008, while the three sponsor brands picked up eight share points between them. In Shanghai, Suntory has slipped from 52% to 46% market share, and Tsingtao's share has increased by two points.

Budweiser was losing share in Shanghai, but has recovered in recent months, from a 7% share in September 2007 to 14% in March 2008. In Beijing, where sponsor brand Yanjing dominates with a 73% share, the market has remained stable.

In addition to growing their market share, sponsor brands may also be upgrading their market positioning. Asked how much they would be willing to pay for each brand, 62% of respondents said they would pay a lot more for Tsingtao compared to the cheapest beer brand. Fifty-two percent agreed they would pay more for Budweiser, comparable to 50% who would pay a lot more for other premium brands like Heineken and Carlsberg.

Asked to name their favorite brand, Tsingtao once again came out on top, with a quarter (26%) of respondents, followed by 13% for Budweiser and 10% for Yanjing. The top-ranked non-sponsor was Snow at 8%. Olympic sponsorship appears to be a key influencer of this preference, with almost three-quarters of respondents also stating that they are more likely to support a brand if they think it is an Olympic sponsor.

"Highly targeted advertising strategies are key to ensuring that a brand owner reaps the benefit of paying to carry the Olympic rings alongside your brand, and your sponsorship status is recognized by consumers," said Mr. Basil-Jones.

This is the third in an ongoing series of special reports by Nielsen Co. about marketing aspects of the 2008 Olympic Games. The second report, "Do suppliers benefit from sponsoring the Olympics?," was published May 21, 2008. The first report, "Who's leading Olympic adspend in China," was published April 9, 2008.

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