Pepsis Big Splash

Written by Anushree Chandran | Updated: Dec 7 2012, 02:42am hrs
Food and beverage giant PepsiCos R396.8 crore splurge on the title sponsorship of club cricket property Indian Premier League (IPL) comes as a surprise to many and has once again spurred questions on the rationale behind rising cricket spends in the backdrop of falling cricket ratings. According to the Board of Control for Cricket in India (BCCI) which owns IPL, PepsiCo has bagged the rights for a period of five years, starting 2013 and the closest bid came from Aircel, which bid R316 crore.

Farooq Abdullah, chairman of the marketing committee of BCCI, said that the body is pleased to welcome PepsiCo as a central partner. The value of the winning bid reflects the growth and success of the IPL, he said. IPL governing chairman Rajeev Shukla added that PepsiCo is one of the largest sponsors in world sport. We look forward to working with them over the next seasons. I would also like to take this opportunity to thank DLF for its confidence in the IPL to become the leagues first title sponsor in 2008.

DLF, which had paid R200 crore for the deal in 2008, had decided not to renew their contract in July this year. A sports specialist who declined to be identified said that it was commendable that BCCI had managed to not just get another sponsor but also double the rates. Most of the teams (franchises) want to exit the IPL. The property has declined greatly both in brand valuations and television ratings. And yet, Pepsi has paid nearly double for the title sponsorship rights, he said.

PepsiCo, on its part, said that this was one of the largest investments made by the company in the game of cricket and that the IPL holds iconic status. Manu Anand, chairman of PepsiCo India region, said that they have succeeded in cementing a five-year partnership between two brandsPepsi and IPL; both enjoy iconic status not just in India but globally. With our continuing sponsorship of the ICC World Cup, we are the now biggest supporters of the game of cricket. We have reaffirmed our passion and commitment to cricket and this investment reiterates the importance of India business in the PepsiCo global system, said Anand.

The title association of Pepsi IPL and other benefits will allow brand Pepsi and other PepsiCo brands to gain more than conventional sponsorship benefits and generate immense universality across the country, said Deepika Warrier, vice-presidentbeverage marketing, PepsiCo India. No scale association with cricket is possible in India without a sizeable IPL presence. IPLthe biggest cricket event in the subcontinent has now become the new face of Indian cricket which combines the best of cricket with entertainment, regional club passion and international glamour. Brand Pepsi is an iconic youth brand and one of the most recalled and trusted brands across categories in the country, she said.

Television broadcaster Multi Screen Media Pvt Ltd (MSM) maintained that the IPL is one of the hottest cricket properties around. Pepsi is one of the biggest advertisers in India and is known for its intelligent media buying. They would have evaluated and debated a good deal, before going ahead and bidding for this property, said Rohit Gupta, president- network sales, licensing and telephony at MSM. Gupta added that the network which is closing network sales deals for IPL 2013 has also been seeing good response from the market.

The fact that PepsiCo is shelling out this kind of money only proves that the IPL is well-insulated from the hiccups that the economy is facing. I think that next year will be a great year for IPL and television spends are already picking up in a big way, he said.

Gupta added that Pepsi as a brand will do more for IPL, than DLF could ever do. Being a fast moving consumer goods (FMCG) brand, Pepsi will bring a great deal more to the table. They will market and promote the property, and would add a lot more value to IPL.

Sports specialist Mahesh Ranka, founder and CEO of Indus Sports and Sponsorship India, points out that Pepsis R396.8 crore punt is not really a punt at all. Its a very smart move by Pepsi, he said, The IPL is scheduled in the April-May period and this is the peak season for cola sales. Pepsi will not just be top of mind for viewers in India, but for viewers in all those 192 countries where the IPL is relayed. Ranka pointed out that as a result of this move, Coca-Cola will have to seriously re-think its media buying strategies for the next five years and any alternative media strategies would find it difficult to match up.

Knowing some of the creative work that Pepsi has released earlier, we can expect something outstanding from them, said Ranka. And advertising and promotion will get a 360-degree spread across the PepsiCo brand portfolio.

What does Ranka have to say about the falling valuations for the IPL, meted out by various research companies Falling brand valuations of the IPL have evidently not deterred Pepsi, says Ranka. Valuations are based on nothing but perceptions. Perceived value which is not much to go by. Other than one team Deccan Chargers whose contract was cancelled because its parent company was facing a financial crisis, which of the others have exited the IPL If there are external parties interested in buying into teams, naturally, the franchises would talk to them in order to see whats out there. Thats what is spurring reports on franchises wanting to exit. But it still doesnt say much about the lack of profitability of these teams.