IOC merges categories to create joint Coca-Cola/Mengniu TOP partnership
By Callum Murray
The International Olympic Committee today, in a surprise move, announced the merger of two sponsorship categories, non-alcoholic beverages and dairy, meaning that Coca-Cola, by far its longest-serving partner, will now share the new category with Mengniu, the Chinese dairy company, which enters the IOC’s top-tier ‘TOP’ sponsorship programme for the first time.
The new 12-year deal begins in 2021 and runs through to the 2032 Olympic Games, bringing to 104 years the IOC’s association with Coca-Cola, which has had a presence at the Olympic Games since the 1928 edition in Amsterdam.
This makes Coca-Cola the longest continuous partner of the Olympics. However, the IOC has come under increasing pressure from health campaigners over the association.
Mengniu becomes the first Chinese fast-moving consumer goods company to become a TOP partner. The IOC said: “The joint TOP partnership supports Mengniu’s ambitious international growth plans, with the company aiming to become one of the top dairy producers in the world by 2025.”
The deal is reported to be worth more than $3 billion over its 12-year life, but one commentator at least questioned Coca-Cola’s motivation for entering into a joint deal. Shaun Whatling, chief executive of Redmandarin, the UK-based sponsorship agency, said: “This must be disturbing for the IOC. The only possible explanation for such an unprecedented arrangement is that TCCC [The Coca-Cola Company] aren’t getting the commercial return they need.
“The reality is that sponsors reduce investment for only one reason: the sponsorship is not working well enough to justify the investment. So the question then is, what's not working?”
However, Michael Payne, the influential former marketing director of the IOC, now an independent consultant who helped to facilitate the deal, denied that combining categories would mean a reduction in Coca-Cola’s investment. He told Sportcal: “It’s clearly innovative, and never been done before, but you have to look at how the companies are operating in the broader category. You’ve got a non-alcoholic beverages company combining with a dairy company. It’s never as simple as a double category.
“What is a first is, it’s not just about sponsorship, it’s also the first time for [the partnership’s] digital media commitments. It’s a new dynamic. This is a much more comprehensive deal than anything previously.
“The IOC has expanded the category with two partners who are market leaders. Mengniu is one of the top-10 dairy companies in the world and by 2024 or 2025 expects to be one of the top four or five. For the IOC, it gets a renewal of its longest-standing partner, with a whole new vision and new partner coming from Asia who has very exciting international plans and a great brand fit: it’s all about health and nutrition.”
Payne denied that the latter claim is at odds with health campaigners’ argument that Coca-Cola, a brand still most associated with a sugary drink that (arguably) contributes to the worldwide obesity epidemic, is an inappropriate partner for the Olympic Games, saying: “There’s no question that Coca-Cola has dramatically expanded its portfolio of products into juices, waters, isotonic drinks, energy drinks. Its vision is to become a total beverage company.”
In 2017, McDonald’s ended its long-running TOP sponsorship three years before its deal was due to expire, citing “different business priorities.”
Although not cited by either organisation, the IOC and McDonald’s had also come under regular pressure from health campaigners to end their association, given the apparent clash between elite sport and fast food and allegations that it encourages unhealthy eating.
However, McDonald’s had used the partnership with the Olympics to promote its salads and other healthy products and Jacques Rogge, the former IOC president, claimed before the London 2012 Olympics that his administration had challenged the company and Coca-Cola to help address the global obesity crisis before they renewed their contracts.The Mengniu deal represents an apparent clash with a deal announced in August 2017 for Yili Group, the rival Chinese dairy products company, to become a domestic sponsor of the Beijing 2022 winter Olympic Games. Yili became the official dairy products partner of Beijing 2022, reprising the role it had in 2008 when the Chinese capital staged the summer Olympics.
Last week, Yili published an open letter (which has since been deleted) on its WeChat account claiming that Mengniu, one of its main competitors, had infringed on its status as the exclusive sponsor of dairy products at the Beijing games.
Yili went on to state that because of the alleged infringement, it was considering ending the sponsorship and indeed cutting off all Olympic ties until 2024.
Yili alleged that Mengniu's perceived new status could confuse Chinese customers, and lead them to believe that it is also an official dairy products partner of the games.
Yili, based in the Inner Mongolia capital of Hohhot, enjoys a 20-per-cent share of the Chinese dairy market (which is worth more than $62 billion), and Mengniu, which has its headquarters in the same city, has a similar share, according to Euromonitor International.However, the IOC said today: “The current Beijing 2022 domestic partner’s exclusive rights in its designated category in the Chinese market will not be affected.”
It added that the new 12-year joint agreement “includes unprecedented investment in traditional and digital media to promote the Olympic values globally.”
Thomas Bach, the IOC president, said: “This long-term agreement is another demonstration of the relevance and stability of the Olympic Games in these times of uncertainty. Having our longest-standing partner, Coca-Cola, an iconic American brand, together with a young Chinese company, Mengniu, joining hands under the roof of our Worldwide TOP Programme is a great example of the unifying power of the Olympic spirit. This partnership will give another dimension to the promotion of the Olympic values around the world.”
James Quincey, Coca-Cola’s chairman and chief executive, said: “We are honoured and privileged to be a part of the Olympic Movement that makes it possible for athletes from all over the world to come together to represent their nations, pursue their dreams and be a part of history. A lot has changed since we sold the first Coca-Cola at an Olympic event in 1928. With a fresh approach to our business and to our sponsorship, we are proud to join with Mengniu to promote and celebrate future Olympic Games.”
Jeffrey Lu, chief executive and executive director of Mengniu, said: “Membership of the TOP Programme will act as a catalyst for Mengniu to grow around the world. This is a vital step in our international strategy, and we are honoured to have the opportunity to build the positive reputation of Chinese food and beverage brands among consumers globally. As a Worldwide TOP Partner, we look forward to using the unrivalled platform of the Olympic Games to promote health and joy to Olympians and fans alike.”
The joint TOP agreement also includes marketing rights for the International Paralympic Committee and the Paralympic Games through a recently-concluded IOC-IPC long-term collaboration agreement, as well as for the Youth Olympic Games.
In December last year, the IOC extended its TOP partnership deal with Samsung, the Korean electronics giant, confounding Korean reports suggesting that Samsung might be reconsidering its commitment to the IOC and the Olympic Games.
In September last year, Allianz, the German insurance powerhouse, joined the elite group of TOP sponsors, in a deal that runs for eight years starting in 2021.
Of the 15 current and forthcoming TOP sponsors, four are now signed up until 2020 (Atos, Dow, General Electric and Procter & Gamble), four to 2024 (Bridgestone, Intel, Panasonic and Toyota), three to 2028 (Alibaba, Allianz and Samsung) and four to 2032 (Coca-Cola, Mengniu, Omega and Visa).