In the August 2016 issue of Sports Sponsorship Insider, Mike Sundet, VP sports and entertainment marketing for the US-based Momentum Worldwide agency, commented on sponsorship trends in the energy drink sector. Below, Sundet explains more about the sector's structure and attitude towards mainstream sports.
SSI: Five years ago, one might have expected energy drinks to become mainstream in sports sponsorship, like beer or soft drinks. Instead, they have reverted almost exclusively to motorsports and extreme/action sports. Why?
MS: Energy drinks haven’t become mainstream in the sports sponsorship world for several reasons tied to tradition, pricing and fans.
For one, newcomers to the category are following the Red Bull and Monster formula for success, which started with involvement in extreme sports, individual sponsorships and creating owned properties. Secondly, while the reach of mainstream sports sponsorships is appealing, they can also be cost-prohibitive, especially for smaller brands. Once you get below the top tier of energy drinks, the category gets fragmented quickly. Extreme sports and action sports have offered a more cost-effective way into sponsorship, along with a more targeted, efficient way of reaching the desired demographic of teen males versus paying to reach a broader audience.
SSI: Have major US sports rights holders shunned the energy drink sponsor?
MS: I don't think major US sports right holders have shunned energy drink sponsors by any means. I think most major properties would love to have a sponsor from the energy drink sector, assuming there was the right alignment of brand and property values, in a way that created the right amount of value and utility for the consumer. No-one’s going to say no to an arrangement like that, if it comes together.
SSI: After the top tier of Red Bull, Monster (Coca-Cola-owned) & Rockstar (Pepsi-owned), there is not a clear, second-tier section of challenger brands using sport for profile. Why?
MS: Cost plays a huge role in what brands at what tiers can play in major sponsorships. The category is fragmented and smaller, and challenger brands simply don't have the flexible funds to invest in major sports properties. Also, energy drink brands play somewhat on a perception of being anti-establishment or doing your own thing. Appearing to be a major corporate sponsor can often fly in the face of the brand experience and story they're trying to create.
This especially holds true for smaller, challenger brands. As brands like Red Bull and Monster have grown to be successful, they've been able to branch out and broaden their image and audience, while still keeping something of an edge. It’s a tough balance to achieve successfully.
SSI: Why do energy drink brands prefer to sponsor individuals rather than teams/organisations?
MS: Sponsoring an individual is a great way to put a face on your brand. Energy drink brands have focused on lifestyle and participatory sports, where the boost or need for energy plays a vital role. Partnering with an athlete or individual who can be an ambassador for the brand helps this energy come to life. And often times the individual athletes have much stronger social followings than a team or organisation, so the social component becomes a big draw.
SSI: Other than the big three, what other energy drink brands have a mixed sports portfolio?
MS: Currently, there's not many. 5-hour Energy has been playing in the Nascar space, along with activating in Lacrosse and some other lifestyle sports.