Can the NFL Lift Bud Light?
Anheuser-Busch InBev's mega-million dollar bet on the NFL is about to kick off in a big way, with a TV campaign and in-store activation that will leverage Bud Light's sponsorship deal with the league.
And in the wake of less-than-stellar second-quarter sales results, A-B executives are not bashful about predicting big returns on its NFL investment, which is costing the brewer an estimated $50 million a year for six years.
"When you become the exclusive sponsor of something as huge as the NFL, the biggest sports franchise in the U.S., you have tons of content and that 's what consumers are looking for," CEO Carlos Brito said on an earnings call. "They're not just looking for nice ads before and after games. They are looking for content ... and we can provide those contents."
While the brewer said revenue grew 3.7% globally in the second quarter, A-B InBev could use a lift in the U.S., where it said sales-to-retailers dropped 3.4% in the quarter -- almost a full point higher than the 2.7% decline MillerCoors reported last week. The brewer pinned some of the blame on strategy to raise prices on its subpremium brands -- a move designed to get drinkers to trade up -- noting that it saw share gain on Bud Light and Michelob Ultra, but lost ground on less expensive brands.
But when quizzed by an analyst, Mr. Brito conceded that Bud Light failed to gain share within the premium-light segment, which includes Miller Light and Coors Light. (Bud Light is the top-selling beer brand with a 19.1% market share as of the end of 2010, according to Beer Marketer's Insights.)
On the earnings call, Mr. Brito repeatedly pointed to the NFL deal as a key to springboard Bud Light to new growth. But it remains to be seen whether the brewer can recoup the hefty cost of the sponsorship. MillerCoors walked away from the NFL rights last year because it felt like it could not longer get a return on investment with the price tag the league was seeking, Chief Marketing Officer Andy England told Ad Age earlier this year.
MillerCoors can still run ads during games, just as A-B did when MillerCoors' Coors Light was sponsor. What the sponsorship gives A-B is the right to use the NFL shield and other logos in advertising and retail displays. It also offers certain intangible benefits, such as cache with retailers, as well as the ability to use footage in promotions. (NFL rules prohibit the use of footage of current players for beer sponsors; but they can use footage of fans, coaches or retired players.)
A-B plans to launch an NFL-themed TV campaign soon by roster agency Cannonball, St. Louis. The effort will be "coupled with the strong digital platform to drive consumers to retail," Mr. Brito said. "Consumers can expect to find new packaging and innovations including limited-edition theme-specific cans and packs with innovative functional benefits." Bud Light will also begin a 60-city tour in which of consumers compete in football skill tests, with the winning teams earning a trip to the Pro Bowl.
But MillerCoors is hardly expected to cede the field to A-B. Mr. England told Ad Age earlier this year that the brewer "will still be all over NFL broadcasts." Also, MillerCoors has sponsorship deals with 21 of 32 teams -- including a few exclusive deals in key markets such as Dallas and Chicago -- meaning it can use team helmets in ads or in-store promotions, according to figures shared with Ad Age earlier this year.
It's debatable which is more important -- owning local team rights or the league sponsorship. Former Anheuser-Busch creative chief Bob Lachky, who was at the company while MillerCoors had the NFL sponsorship, noted that while he was at A-B, "we grew market share as a company. We grew share for the Bud family. And we did it without the [NFL] shield." He added: "We proved you can do it without the shield, but you've got to be really ready to dig into your pockets and throw some money down to buy those local teams [rights] and then to have great advertising that cuts through the clutter."
But there are limits to individual team deals. For instance, rules prohibit rights holders from activating the deals beyond a certain geographic radius of a home team's market.
Also, the NFL shield carries weight when negotiating for prime retail space, Mr. Lachky said. Store managers "want a compelling display," he said. "They don't want junk up in their store and if it's got the NFL shield and if it's a compelling hook for the consumer, my goodness, it's an absolute no-brainer that I think you're going to get that extra display. So from that standpoint, I think A-B's done a smart thing."
And sponsors can also leverage NFL content digitally. Jim Andrews, a senior VP at WPP's IEG, which tracks sponsorships, pointed to Gatorade, the NFL's official sports drink. Gatorade is running a series on its website called "Everything to Prove," which features behind-the-scene footage of rookies getting ready for the season.
Indeed, the fight over which sponsors get access to what content has emerged as a major issue in contract negotiations, he said. "Everybody wants content," Mr. Andrews said. "Who's getting which clips and which rights? They fight over it constantly." But "the good news is there is lots of content to go around."