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Why acquiring stake in IPTL makes sense for Coca-Cola
Wednesday 01-April-2015, 10:54,
Why acquiring stake in IPTL makes sense for Coca-Cola
[img]http://www.exchange4media.com/StoryImages/fs_59534.jpg[.img]
Beverage giant Coca-Cola India has taken keen interest in the International Tennis Premier League (IPTL) as is said to acquire 10 per cent equity stake in the league. The league which is promoted by Mahesh Bhupathi is said to be on the verge of completing a deal with the cola giant for a part equity-part sponsorship deal for an estimated Rs.18 crore say media reports.

The deal is said to be structured in such a way that money spent by Coca-Cola on sponsorship will add up to 10% equity that could stretch for a period of 3 years. The deal is also said to be in process and the final closure is expected to be soon.

This is the first time the cola company has made such a deal where it has acquired equity in a sporting property in India. However, what is more interesting is the beverage giant’s interest in a niche sporting league such as IPTL. Coca-Cola not being on the ICC World Cup 2015 is conspicuous. In fact, in recent times Coca-Cola’s association with cricketing tournaments has reduced and is limited to grass root cricket tournaments such as the Coca-Cola under 16 tournament. This is after Coca-Cola being a top sponsor in the 1996 World Cup and its participation during the initial years of IPL (IPL-2) where it had aggressively promoted the brand as it associated with teams Delhi Daredevils and Kolkata Knight Riders. In fact its competitor PepsiCo has been aggressively marketing on cricket platforms such as the ICC World Cup 2015 and IPL for which it has acquired the title sponsorship rights for a period of five years (2013-2017) at an estimated Rs.396.8 crore.

Coca-Cola however has sponsored global sporting events such as FIFA and the Olympics. The other sponsors of IPTL include Qatar as presenting sponsor, Fedex as logistic sponsor, Amity University, HEAD, Life Fitness, K-Swiss, VelvetCase.com and Yahoo are the other sponsors. The league also had various local brands as sponsors for each particular country in the league. Coca-Cola was already the title sponsor of the first edition of the IPTL that took place last year.

Coca-Cola associating with a niche sports tournament in such a way is definitely something new. According to some senior media planners the reason for Coca-Cola to take this decision would be as they are leaders in the market they are looking at new ways other than cricket in increasing their reach among customers. While there are other media planners that say as PepsiCo has been aggressively acquiring cricket property sponsorship rights that Coke has to diversify into other non-cricketing leagues. They feel that there may be a shift in strategy and hence the investment. http://www.exchange4media.com/59534_why-...-cola.html

India is one of the largest markets for Coca-Cola and contributes 12% to its overall volumes. They are definitely looking to increase their share in this market as western markets become even more restrictive to aerated beverages and share in these markets are expected to decline in the future. The deal would also help in creating a long-term association with the league and in turn with consumers as the association will go beyond just a few seasons. It will have the advantage of being a first mover as the deal isn’t that expensive as at an estimated Rs.18 crore it is far less than what rival beverage company PepsiCo has paid (Rs.396.8 crore) to be the title sponsor for IPL. “With India’s thrust into tennis gaining momentum, interest for the sporting leagues is expected to increase eventually. Choosing IPTL in particular also makes sense for the cola brand as it not only gains from an early mover advantage but the league featuring the top tennis stars globally enables it to leverage them,” said a media planner.
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