Coca-Cola and Pepsi Wars Extend into the Sports World
by Kelsey Doherty, Marketing Communications, 2014
This week PepsiCo signed a deal with the NHL, making it the official drink and snack supplier of hockey. This includes soft drinks and bottled water in venues and arenas as well as the official sports drink for athletes. Therefore, Gatorade will be the drink of choice for all NHL players as they take some time to quench their thirst on the bench. Now, when the goalie reaches for his water bottle it will be made from the familiar green and orange plastic with the Gatorade logo prominently displayed.
Of course, Pepsi is trying to catch up to its Fortune 500 competitors at Coca-Cola, but when it comes to sports sponsorships both drink giants have a very prominent presence. These two companies both see revenue in the billions, however, Coca-Cola is worth several billion more than PepsiCo, but still both companies actively seek a comfortable place with sports sponsorships.
Sponsorships in professional sports work a lot like signing an athlete to a team. Teams or leagues negotiate contracts with companies, looking for the best deal. The companies put their best foot forward and offer as much money and as many years they dare to spare. The teams and leagues then settle on the contract that will offer them the most money. It is really very basic but it is integral to the business model of major companies like PepsiCo and Coca-Cola.
Pepsi tends to sponsor sporting events and contests such as the Pepsi Max Field of Dreams Game and is in the midst of a five-year contract with the majors as the official snack of the league. On the other hand, Coca-Cola uses their separate brands to maintain a presence in sports with Sprite serving as the official soft drink of the NBA, and the official sparkling beverage of NASCAR. Where Coca-Cola clearly demonstrates the greatest advantage is in the Olympics which they have consistently sponsored since 1928.
Both Pepsi and Coca-Cola have sponsored NASCAR races, events, parts of stadiums, and much more. In racing, drivers participate in the Pepsi 400. On another weekend drivers race in the Coca-Cola 600. For every move that Pepsi makes Coca-Cola makes a move to match, and vice-versa. The sports world has embraced this idea, because in the end all it means for teams and leagues is more money in the bank.
Many ballparks offer something like the Pepsi Picnic Porch at Detroit’s Comerica Park or the Coca-Cola Deck at Fenway Park. Announcers regularly refer to the area of seating with the branded name and tickets even read “Coca-Cola Deck” or “Pepsi Picnic Porch” for those who are lucky enough to get the premium seats. Fans cannot forget what beverage is sponsoring their favorite team and their favorite seats while at the ballpark. There’s also no shortage of flashy signage for either soft drink company at stadiums around the majors. At this point, it is almost an expected part of baseball today. After all, what can be more American than baseball and soda?
The NFL may have taken it even one step further, allowing Pepsi to sponsor its rookie of the year award, calling it the “Pepsi Rookie of the Year.” Pepsi and Coca-Cola are not afraid to simply put their names wherever they may fit, and teams and leagues are more than happy to allow them to do so for a particular price tag that is very rarely revealed to the public.
What is known is that Coca-Cola spends about $2.5 billion in advertising each year, and although they certainly spend millions in sponsorships, it is only a small part of their advertising budget. Pepsi on the other hand spends a mere $1.1 billion on advertising each season but seemingly is able to keep up with its rival when it comes to sponsorships in the sports realm.
What’s incredible about all the deals that Pepsi and Coca-Cola have worked out with professional sports is that it is now ingrained into our culture, and how it has become an expected and ritualized part of the game. Both soft-drink companies are also each the exclusive suppliers of many minor league parks and stadiums and can be found sponsoring teams across the NCAA, high schools, and pee-wees or little leagues. There are no measurable numbers to tell us how these sponsorships effect the teams or the drink sales beyond the stadium or ballpark but it is clear that the correlation must be positive and helps to reinforce a brand image for both companies.