It’s another year for the Olympic games, this time in Sochi. For Coca-Cola, every Olympic year is a boon based on the event partnership agreement where they hold the distinction of official Olympic non-alcoholic beverage partner. As one of the Olympics’ global partners, the beverage giant pays about $100M to monopolize non-alcoholic beverage serving rights in all Olympic venues (other global partners hold exclusivity in their respective industries). In recent years, the definition of “non-alcoholic beverage” has expanded to include more than just carbonated soft drinks. Coca-Cola has gained exclusivity to serve sports drinks (Powerade), juices (Minute Maid), and waters (Dasani, vitaminwater) over the past few Olympics games. The “Olympic Wolrdwide Partner” logo has also started appearing on Coca-Cola’s ZICO coconut water brand lately. So given the substantial cost, how beneficial is it for Coca-Cola to be a worldwide Olympic partner? And with the expanded definition of “non-alcoholic beverage”, which product categories are next to gain Official Olympic product status?
Despite a cost of $100M each active Olympic year, Coca-Cola has renewed their Olympic partnership until 2020. It would appear that this agreement delivers substantive returns. For one, Coca-Cola has blocked out their global competitor in all product categories that the conglomerate participates in. No Pepsi-branded soft drinks, Aquafina, Gatorade, or Tropicana can be served within all Olympic-event venues. Brand visibility is another partnership benefit. Every game or after-party event that becomes broadcasted will feature a Coca-Cola logo or Coca-Cola beverage product. Live viewers and spectators may only celebrate with Coca-Cola branded products and nothing else. Positive associations is another partnership benefit. Spectators seeing their athletes win also see them hydrating themselves with Coca-Cola products. These same spectators will associate hard work, performance, and winning all being supported by Coca-Cola. From a qualitative perspective, these are invaluable benefits that Coca-Cola has been able to enjoy – reduced competition, brand visibility, and positive associations.
With changing taste preferences among spectators and athletes alike, incorporating other product categories as “Official Drinks” certainly makes sense. Some people will choose carbonated soft drinks, some will want flavored water, and still some people prefer juices. With coconut water emerging as a beverage category, expansion to include this as an Olympic-approved beverage makes sense. However, increased exposure of Olympic branding potentially cheapens the Olympic brand with broader availability on all products – not just beverages. Furthermore, not all products will be suitable to display the Olympic logo on its packaging. For example, energy drinks may be one category that could be denied Official Olympic product status given possible negative associations despite the category growth. Within Coca-Cola beverage portfolio, it’s likely that liquid enhancers (Dasani Drops, Powerade Drops) and teas (Honest Tea, Fuze) could gain approval should they apply for it. Both these categories are enjoying growth and have fewer negative associations portrayed by the media.
Coca-Cola has been one of many key sponsors that has supported the Olympic games through the years, and it appears that both parties are satisfied with the results. 2020 is still three more Olympic games away, but given the goodwill both parties have been generated, it’s very possible that this relationship goes well beyond 2020.