Why Sports has been so pivotal in PepsiCo's success?

Why is one of the world's largest companies, known for selling some of the most indulgent snacks and beverages, investing so heavily in the health-conscious sports market? Let's delve deeper into Pepsi's substantial investments in the global sports industry, whether it's e-sports, football, the NFL, or wrestling. In my early days, I found this marketing strategy by Pepsi rather peculiar, as it seemed counterintuitive for a sports franchise to promote some of the least healthy food and drinks on the planet.

However, this story is one of the most intriguing marketing narratives you'll come across today. To fully grasp the situation, it's essential to first acquaint yourself with PepsiCo, its array of co-brands, and its global marketing strategy.

PepsiCo is a colossal corporation, boasting over 500 brands worldwide and a presence in more than 200 countries. With revenues exceeding $86 billion and some of the most memorable marketing campaigns (including the iconic Michael Jackson commercials), Pepsi is renowned for its creative advertising, brand promotions, and, admittedly, occasional blunders (who can forget the Kendall Jenner incident?). Despite its success in the fast-moving consumer goods (FMCG) industry, PepsiCo faces significant criticism for the lack of health benefits in its products.

Pepsi's marketing strategy has consistently aimed to engage a younger audience while retaining appeal for its existing customers, emphasizing qualities such as youthfulness, global reach, fun, and liveliness. This is where the connection to sports comes into play.

So, why does a beverage and snack company rank as the fourth-largest spender on sports advertising globally?

1. Health Alignment: To counter criticism from health-conscious consumers, Pepsi strategically turned to sports. Associating with sports, where top athletes like Lionel Messi endorse their products, helped portray Pepsi as a healthier choice. Over time, Pepsi also introduced products like Gatorade and Tropicana to cater to performance athletes and health enthusiasts.
2. Brand Association: Recognising the benefits of sports advertising, Pepsi began partnering with popular sporting icons and teams, sponsoring 109 sports teams across 16 different sports and more than 200 sports brand ambassadors. Pepsi aimed to establish a presence in all aspects of the sports world, becoming direct sponsors of major leagues like IPL, MLB, UCL, NFL, NBA, and more.
3. Global Reach: Sports, particularly globally watched leagues like the NBA and UCL, offered Pepsi, a US-based company, a rapid pathway to global exposure. With a wider audience, Pepsi seized the opportunity to leverage this spotlight to its advantage. This was especially pertinent given that Pepsi's biggest competitor Coca-Cola, a long-standing partner of the Olympics, had been sponsoring the games since 1928.
4. Target Demographics: Sponsoring sports allowed Pepsi to tap into a demographic it had never reached before – sports enthusiasts.
5. Localisation: With sponsorship of various sports, Pepsi expanded its presence in more countries, necessitating localisation to cater to regional preferences. For example, products like Kurkure were introduced to the Indian market, and Lays flavors were adapted to suit local tastes.

On the other hand, for sports, it's often about who offers the most substantial financial support, and Pepsi consistently does just that.

So, what makes Pepsi so desirable for sporting federations and teams?

1. Multi-Year Contracts: Pepsi frequently offers multi-year contracts and maintains a clean record of timely payments, a desirable trait for any sports team, player, or league.
2. Free Marketing and Promotion: Pepsi's marketing efforts also provide free marketing for the leagues, a valuable service, given that sports leagues can struggle with self-promotion and community engagement.
3. Brand Visibility: As a prominent brand with connections in various sports, Pepsi opens the door for any sport to expand its following by attracting more sports fans.
4. Financial Support: Ultimately, for sporting teams and federations, it's about securing the most lucrative sponsorship, and Pepsi often succeeds because, honestly, they're the ones reaping significant benefits from these partnerships.

What do you think? What could be the next avenue that Pepsi should explore to increase its market share?

According to me, Pepsi should focus more on community development and engagement activities and also bringing in marketing campaigns by which the consumers of Pepsi feel they are related to one of the many brand ambassadors of Pepsi. Community engagement is something a mass consumer brand like Pepsi can use and this also increases brand loyalty towards Pepsi which will be important for their competition with Coca-Cola. Community development activities like Pepsi's annual general meeting (just a title) where all the brand ambassador of Pepsi gather and have some sort of a commercial this could make a huge impact and gain a lot of eyes for Pepsi.

All the data and links for all the sources is mentioned below.

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Links and Sources:

https://www.sportcal.com/market-data/the-ten-leading-beverages-brands-in-sports-sponsorship-in-2022-as-of-q3/#:~:text=2.,far globally across 16 sports.

https://www.scribd.com/doc/261844163/marketing-through-sports-paper

https://www.globaldata.com/companies/top-companies-by-sector/sport/global-companies-by-sponsorship-spend/#:~:text=Showing 10 out of 100,in 2021 by sponsorship spend.

https://static1.squarespace.com/static/50749503e4b0fa0ffd4b65f5/t/56142bbce4b0014b6b236f8a/1444162492133/Pepsi_LIVEFORNOW_BrandGuidelines_TEMP_32212.pdf

www.pepsico.com

https://www.prnewswire.com/ae/news-releases/pepsico-extends-strategic-partnership-with-uefa-champions-league-for-another-three-years-during-a-pivotal-time-in-the-leagues-history-301856884.html

https://www.sportsbusinessjournal.com/Daily/Closing-Bell/2023/07/25/pepsico-deal-with-southwestern-athletic-conference.aspx