Chapter 15

The Olympic Sponsor Case Study: Coca-Cola

In August 2005, the IOC announced a new 12-year agreement with Coca-Cola to continue its TOP sponsorship of the Olympic Games. The announcement occurred at the Great Wall of China and included Jean-Claude Killy of France, winner of three gold medals in skiing in 1968, and Wu Min Xia, a Chinese diver who won a gold and silver medal at the 2004 Athens Olympics.1 The symbolism surrounding the announcement was important because it connected the rich traditions of the past with the promise of the future. Holding it at the Great Wall echoed China’s and the Olympics’ multithousand-year histories while sparking interest in the 2008 Games and reminding the public of Coca-Cola’s long-standing commitment to the Olympic movement. The attendance of Jean-Claude Killy and Wu Min Xia brought wisdom together with youth, underscoring two key themes of the Beijing Olympics while simultaneously associating Coca-Cola with these same characteristics. The deal would commence at the 2010 Vancouver Winter Olympics and encompass six Olympiads. While the deal’s financial details were not disclosed, the benefits to the Vancouver Olympic Committee (VANOC) alone would be in the tens of millions. Coca-Cola would also provide in-kind services. Jacques Rogge, president of the IOC said:

The contribution of Coca-Cola to the Olympic movement has always been the model of a true partnership. The Olympic Games would not be where they are today, and so many athletes over the years could not have competed in the Games, without the extensive corporate support pioneered by Coca-Cola as our longest continuous sponsor.2

This new sponsorship agreement was important for the IOC. With Coca-Cola as one of the world’s most recognized brands and a supporter of the Olympics since 1928, the deal would affirm Coca-Cola’s confidence in the Games as an important part of its global marketing investments, reinforce the attractiveness of the TOP program to future prospective sponsors, and secure a financial annuity and in-kind support for the IOC for years to come. (The relationship for the first few decades was with the Summer Olympics. The company’s formal involvement with the Winter Olympics began in 1952 at the Games in Oslo, skipped the 1956 Winter Olympics in Cortina d’Ampezzo, Italy, renewed its involvement at the 1960 Winter Olympics at Squaw Valley, and has continued ever since.) In 2020, near the end of the 12-year agreement, Coca-Cola’s partnership with the Olympics will be 92 years old, one of the longest-running corporate marketing programs in the world and a relationship that has provided Coca-Cola with substantial exposure and awareness benefits.

Of course, since the Olympics are one of the most visible stages anywhere, sponsors are not the only ones that can gain recognition. A potential controversy, such as a scandal or protest, could detract from the goodwill the Games foster and the concomitant benefits sponsors enjoy. Sponsors, too, can find themselves the focus of criticism. The 1996 Summer Olympics in Atlanta celebrated the 100th anniversary of the modern Olympics. But the Atlanta Organizing Committee found itself denounced for allowing the Games to be overly commercial and detracting from the integrity of the Olympics. Dubbed by some critics as the Coca-Cola Olympics (although, to be fair, numerous sponsors and companies contributed to the overt commercialism), the Atlanta Olympics were seen by many as crass and not representative of the Olympic ideals. Former IOC President Juan Antonio Samaranch remarked in his closing speech that Atlanta had delivered a “most exceptional” Olympics, a choice of words many Olympic observers interpreted as a snub at the Atlanta Organizing Committee because he had not said his customary “the best Games ever,” as he had at previous Olympiads.3

For the 2008 Beijing Summer Olympics, several controversial issues arose, and the question was how much traction these would gain in the media and public marketplace. In April 2008 at the annual shareholder meeting, a member of the audience asked Neville Isdell, CEO of Coca-Cola,

Will you tell the IOC to stop taking the Olympic torch relay into Tibet, because Tibet belongs to Tibetans?

Isdell responded:

[The torch relay] has symbolized openness, it has symbolized hopes. I don’t believe that stopping the torch run is in any way over the long-term going to be the right thing to do.4

China was an important market for Coca-Cola, with first-quarter 2008 results showing a 20 percent increase in unit case volume sales and a 19 percent increase in net income to $1.5 billion. Approximately 5 percent of Coca-Cola’s revenue came from China at the time. For the year 2008, case unit sales grew 19 percent in 2008. Sponsoring the Beijing Olympics was seen as good for business.5 As an iconic American brand with a well-known global reputation, the company has historically emphasized intangible objectives as well, including showing it is a responsible corporate citizen and associating the brand with positive lifestyle values and imagery.

Coca-Cola’s commitment to Olympic sponsorship underscores the potential for building sustained value. Yet with the highest brand value of all companies according to a 2010 Interbrand survey, and vast global distribution plus loyal consumers, a reasonable question might be why Coca-Cola would want or need to invest the sizable sums required to be a TOP sponsor. One could argue that the money might be more effectively invested in research and development, acquisitions, vertical or horizontal integration, or alternative marketing investments.

One of the reasons for Coca-Cola’s extraordinary brand success over time is the care and attention paid to building the company’s brand equity. Coca-Cola’s 2010 balance sheet indicated the value of company assets to be $72.92 billion (including short-term assets like cash, syrup, and other inventories and long-term assets like plant and equipment), and their market capitalization was approximately $155 billion,6 indicating a significantly favorable investor premium, much of which is attributable to brand value. If Coca-Cola were focused merely on selling caramel-flavored, carbonated sugar water, then it is likely that consumer interest would be diminished, as would investor interest and, ultimately, brand value. Instead, over the past 100 years, Coca-Cola has honed a solid, virtually unchanged reputation (with the exception of the well-known New Coca-Cola debacle of the 1980s) as a symbol of American values. As the U.S. economy expanded in the twentieth century, particularly after World War II, so did Coca-Cola. A defining characteristic of this expansion was the company’s use of imagery in promoting its namesake flagship cola beverage. People, from everyday consumers to the military to famous stars, were pictured enjoying themselves and their lives. With the Olympics enjoying a similar reputation for celebrating life, Coca-Cola’s ongoing Olympic support seems, in retrospect, a natural fit and a logical brand association.

In describing its sponsorship of the Olympic Games, Coca-Cola states that its values are similar to those of the Olympics,

. . .which embody the discovery of one’s abilities, the spirit of competition, the pursuit of excellence, a sense of fair play and the building of a better and more peaceful world.7

Certainly, many companies would assert similar sentiments. However, declaring these values is important for putting a stake in the ground and saying, “This is what we stand for.” Coca-Cola’s sponsorship undertakings strongly suggest a genuine commitment to bringing its values to life, beyond words on paper.

Coca-Cola’s Olympic Sponsorship Activities

To take advantage of this unrivaled sports event, Coca-Cola has developed a wide range of marketing activities and innovative programs to foster a long-term brand. Indeed, Coca-Cola has been deeply involved in more than just the commercial aspects of sponsorship. The company was involved in corporate social responsibility (CSR) through its Olympics relationship long before CSR became fashionable. Historically and through present times, the company has been keenly aware of the increasing emphasis consumers, government organizations, community groups, and society overall place on corporate responsibility. Each of Coca-Cola’s Olympic sponsorship activities, represented in Figure 15.1, are closely tied with the company’s own values and, as company management believes, those of the Olympics.8

Figure 15.1 Coca-Cola Olympic Sponsorship Activities

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Olympic Torch Relay

The carrying of the Olympic Flame in modern times started in 1928, and it took several decades for it to evolve into the transcontinental event involving thousands of runners from around the world that we know today. The Olympic Flame symbolizes the ancient Greek tradition of keeping a flame or fire burning throughout the duration of each Olympiad. The torch relay is a powerful and symbolic event that not only attracts the public but also draws the attention of protesters, who see the flame as a visible means to attract media coverage. Coca-Cola began sponsoring the Olympic Torch Relay at the 1992 Barcelona Olympics, and the 2010 Olympic Torch Relay was Coca-Cola’s seventh. Coca-Cola and the other 2010 Olympic Torch Relay sponsors (Royal Bank of Canada, Government of Canada, Bombardier) collectively paid a reported CAD$30 million. In Coca-Cola’s case, this was in addition to their TOP sponsorship fee.9

Green Branding

In the 2010 Winter Olympic Games in Vancouver, Coca-Cola unveiled its most aggressive sustainability program ever. The company’s bottles, furniture, and related hard goods supplies were all made from recyclable materials and reusable energy sources. This required significant cooperation and coordination with its suppliers. Company executives believed the effort was worth it since the company, and all TOP sponsors, are under increasing scrutiny from environmental groups about their green practices.10 For the 2012 London Olympics, Coca-Cola will further reduce its carbon emissions by outfitting its fleet of delivery trucks to run on biomethane, supplied by fuel extracted from a landfill site in Surrey. A new refueling station has been built near London to support this effort.11 Coca-Cola used some of the unused steel from the 2008 Beijing Olympics bird’s nest stadium construction to create Coca-Cola–branded Olympic trading pins. For this and other sustainability efforts in Beijing, the company was awarded Greenpeace’s “first green medal.”12 Coca-Cola used recycled materials in its 2010 Vancouver Olympics trading pins. The benefits are straightforward: The pins reduce the amount of leftover steel by putting it to use, while also creating memorable souvenirs that promote both the Olympics and Coca-Cola. The company developed its first Olympic trading pin for the 1980 Winter Olympics in Lake Placid and then in 1988 established the Olympic Pin Trading Center, a regular part of Coca-Cola’s Olympic sponsorships ever since. These centers have been popular with fans, both those who collect trading pins and those seeking a keepsake of their Olympic visit. With global concern over environment issues, repurposing the unused stadium steel matches well with society’s needs today while continuing Coca-Cola’s long-standing commitment to being a responsible corporate citizen. Interested readers can learn more about Coca-Cola’s Olympic sustainability program at www.cocacola.ca/olympics_sustainability_plan.htm.

Support for Hellenic Olympic Committee

Aside from its substantial TOP program participation, in 2007 Coca-Cola donated US$2 million to the Hellenic Olympic Committee to aid in restoring Ancient Olympia, the historic Olympic site. The summer of 2007 brought devastating fires to this area, and the company’s donation, along with that of other contributors, contributed toward repair and restoration work.

Minos Kyriakou, president of the Hellenic Olympic Committee, said,

We cordially congratulate The Coca-Cola Company for its significant initiative and thank the Company and its employees for always demonstrating their commitment to the Olympic values and ideals.13

Support for National Olympic Committees

An important piece of Coca-Cola’s Olympic sponsorship is its support for more than 200 NOCs around the world. One of the challenges for world-class athletes with the ambition to compete in the Olympics is finding the resources to support their training, and Coca-Cola’s sponsorship money (and that of other sponsors) helps support these needs. These resources include:

Although many athletes have lucrative endorsement contracts and related support deals, most do not. Consequently, this funding is vital to ensuring athletes have an opportunity to compete in the Olympics.

Olympic Solidarity Program

The Olympic Solidarity Program was started by the IOC in 1983, and a portion of Coca-Cola’s sponsorship money funds this program to this day. The funds support training programs for each NOC, as well as scholarships for athletes. In addition, this program helps fund the construction of sports facilities and related infrastructure in NOC countries, particularly those ravaged by war. Academic programs devoted to understanding the Olympic movement and how to host and execute successful sports events provide NOCs with vital knowledge and skills-building insights that can benefit countries for years following an Olympic Games.

Olympic-Consumer Experiences

Coca-Cola has regularly run promotions that give away free tickets to fans around the world in an effort to connect consumers more directly with the Olympic Games. This has included tours of the Olympic Village, meet-and-greet sessions with athletes, and special Coca-Cola Olympic fans centers designed to provide fans a place to rest, have refreshments, and watch live coverage of the Olympics. Large-scale exhibits and targeted investments, some above and beyond their core TOP sponsorship fees, have been made, such as the Coca-Cola Olympic City at the 1996 Atlanta Olympics (an interactive venue adjacent to the Olympics), Coca-Cola RedFest Celebrations at the 2000 Sydney Olympics (featuring live, big-screen broadcasts of the Games, plus live music, entertainment, food, and dancing), Powerade-Aquarius Training Camp in Sydney (behind-the-scenes tours designed for teens), Coca-Cola “On the Ice” at the 2002 Winter Olympics in Salt Lake (including winter sports simulations, luge course, and hockey rink), Coca-Cola Live multimedia shows, and Coca-Cola “O.N. Air in Athens” at the 2004 Olympics (featuring themed entertainment, music, live sports reporting). The Shuang Zone at Chao Yang Park in Beijing was designed for family entertainment and included an area for visitors to take photos with an Olympic Torch, and in Vancouver, the company donated $350,000 to help fund an outdoor sport court for inner-city youth. These are among many examples of Coca-Cola’s involvement at each Olympic Games to directly engage with spectators and consumers in the energetic atmosphere of the Olympics while reminding the public that Coca-Cola was the company that made this possible.14

Olympic Museum

Coca-Cola sponsors the Olympic Museum in Lausanne, Switzerland, a facility devoted to Olympic history. Coca-Cola was the first sponsor of the museum, donating $1 million in 1987. Coca-Cola’s early involvement in this museum reflects another dimension to the company’s community involvement, providing the company with a more substantial link to the Olympics than just that of sponsor.

“Nutrition for Athletes” Guide

Coca-Cola’s Powerade brand sports drink copublished this guide with the IOC. Within the guide is information about the important connection between fitness and proper nutrition. This guide has the benefit of reminding the market that Coca-Cola produces more than just cola beverages—it makes products the world’s leading athletes use to enhance their competitive performance and training.

Paralympic Games

In another display of CSR and concern for the communities it serves, Coca-Cola has also sponsored the Paralympics, which follow the Olympic Games in each host city.

Companies today are expected to be engaged, supportive, and active members of society. The public wants companies to demonstrate their commitment to the greater good, beyond the creation of profits and wealth for a few. Coca-Cola has long seen itself as a responsible corporate citizen, and the broad set of programs it rolls out for each Olympic Games is a purposeful and very public demonstration of its values and that the company is serious about its role in the world as a company that offers more than a famous beverage.

Coca-Cola’s Olympic sponsorship is a key part of a broad-based effort to connect with the lives of consumers. Coca-Cola has evolved and expanded its Olympic sponsorship activities to make certain the company stays relevant to consumers. Through the Olympics, Coca-Cola has been able to extend the brand’s presence in both tangible ways, through the introduction and sale of products including giveaways and new launches, Olympic Pin Trading Centers, and interactive exhibits in Olympic venues, and intangible ways, through support of the Olympic Torch Relay, the Olympic Solidarity Program, and extensive consumer-experience touchpoints designed to foster strong emotional ties. The Games provide a unique setting to convey the positive, uplifting lifestyle values Coca-Cola believes its consumers associate with the company.

Each of Coca-Cola’s marketing activities directly serves the company’s desire to bring people closer to the Olympics. With the Games representing peace among nations and competitive goodwill, Coca-Cola has had more than 80 years of Olympic association that has benefited the company’s image, brand reputation, and product sales. Over the years, as the Olympics have changed and grown, so, too, has Coca-Cola.

Questions

1. Coca-Cola has used its Olympic sponsorship over the years to do more than just sell its products. Is this an effective way for the company to leverage its sponsorship? If you were in charge of the company’s Olympic sponsorship, what would you do? Explain.

2. While each of Coca-Cola’s Olympic sponsorship activities is intended to be positive, what are the risks to the company of its Olympic sponsorship? What potential risks exist for the IOC?

3. Explain why Coca-Cola and the Olympics are a match or a mismatch.

4. Was the criticism of Coca-Cola over the 1996 Summer Olympics in Atlanta fair? If so, explain. If not, discuss why the IOC is so restrictive about sponsor signage and advertising in competition venues, unlike, for example, the World Cup.

Notes

1. “The Real Thing: Coca-Cola Extends Sponsorship of Olympic Games through 2020,” BrandWeek, August 1, 2005: www.brandweek.com/bw/news/recent_display.jsp?vnu_content_id=1001001168.

2. Scott Simpson, “Coca-Cola Uncaps 12-Year Fizz in Olympics Deal,” Vancouver Sun, August 2, 2005: www.skyscrapercity.com/showthread.php?t=241195.

3. Widen & Kennedy, “Advertising Plan for the Coca-Cola Company 1996 Summer Olympic Games,” www.unc.edu/~jdee/adplan.html; Jere Longman, “On the Playing Field, Atlanta Games Were a Success,” New York Times, August 6, 1996: www.nytimes.com/specials/olympics/0805/oly-rdp.html; Glenn Collins, “Coke’s Hometown Olympics: The Company Tries the Big Blitz on Its Own Turf,” New York Times, March 28, 1996: www.nytimes.com/1996/03/28/business/coke-s-hometown-olympics-the-company-tries-the-big-blitz-on-its-own-turf.html.

4. Coca-Cola corporate web site, 2008 Annual Report, 41, www.thecoca-colacompany.com/investors/pdfs/2008_annual_review/2008_annual_review_Operating_Group_Highlights.pdf.

5. Ibid.

6. Coca-Cola 2010 Annual Review, 5: www.thecoca-colacompany.com/ourcompany/ar/pdf/TCCC_2010_Annual_Review.pdf; Yahoo! Finance. Retrieved periodically from December 3, 2010, to February 2, 2011, from finance.yahoo.com/q?s=ok.

7. “Partnership History,” Coca-Cola corporate web site: www.thecoca-colacompany.com/heritage/olympicgames.html.

8. “The Olympic Games,” Coca-Cola corporate web site: www.thecoca-colacompany.com/heritage/olympicgames_difference.html.

9. Ibid.

10. Ben Berkon, “Coca-Cola Comes Clean about Going Green at Olympic Games,” BrandChannel, February 1, 2010: www.brandchannel.com/home/post/2010/02/01/Coca-Cola-Comes-Clean-About-Going-Green-At-Olympic-Games.aspx.

11. “Coca-Cola’s Delivery Fleet Will Run on Biomethane,” NGVJournal, July 7, 2011: www.ngvjournal.com/en/vehicles/item/5675-coca-colas-delivery-fleet-will-run-on-biomethane.

12. Coca-Cola corporate web site, “What Steps Is Coca-Cola Taking towards Improving the Carbon Footprint of Its Olympic Sponsorship?” www.coca-cola.co.uk/faq/olympic-games/how-is-coca-cola-improving-the-carbon-footprint-of-its-olympic-sponsorship.html.

13. Coca-Cola corporate web site, 59: www.thecoca-colacompany.com/citizenship/pdf/SR07_OG_56_62.pdf; www.olympic.org/marketing-commission?articleid=55118.

14. Coca-Cola corporate web site: www.thecoca-colacompany.com/heritage/pdf/Olympics_Partnership.pdf.