Wednesday, August 22, 2012
Anheuser-Busch extends MLB deal
By Darren Rovell
Major League Baseball and Anheuser-Busch announced an extension of their long-running relationship on Wednesday, a deal that will keep the brewer as the league's official beer sponsor through the 2018 season.
With the partnership, America's largest brewer will sponsor MLB Opening Week, the Player of the Month Awards and the league's Fan Cave, and will be the presenting sponsor of the new one-game faceoff between two wild-card teams to further advance into the playoffs.
The deal comes on the heels of a two-year deal that was struck as part of a settlement from a lawsuit in 2010. Anheuser-Busch claimed Major League Baseball was renegging on terms of a new deal, while MLB claimed it was not informed in negotiations that the brewer had recently signed a six-year contract to be the official beer sponsor of the NFL. Its NFL contract is reportedly worth $1.2 billion.
The alliance allows Anheuser-Busch to use the Major League Baseball logo and the logos of its teams.
"This deal gives us the ability to leverage baseball nationally, and we think it gives our sales team and wholesalers a competitive advantage," said Blaise D'Sylva, vice president of media, sports and entertainment marketing at Anheuser-Busch, a subsidiary of Belgian-based A-B InBev.
A-B's competitors are allowed to strike individual sponsorship deals with teams, but those brewers must abide by rules that specify that they can market that relationship only in a defined geographic area. Anheuser-Busch has individual deals with 24 Major League Baseball teams, of which eight are exclusive deals. None of the deals tie the sponsorship of the team to pouring rights inside the stadium.
Although the deal begins next year, D'Sylva said it was important to include the sponsorship of the first-ever additional wild-card games for this year. As part of that sponsorship, Budweiser has purchased television advertising in the games, which will be broadcast on Oct. 5 on TBS.
Anheuser-Busch is fighting two battles: the growth of craft beer and the declining interest among America's youth in drinking the malt beverage.
According to a recent Gallup poll, only 39 percent of American drinkers ages 18 to 34 said they preferred beer in 2011. That's down from 53 percent in 2001. Wine jumped from 16 percent to 29 percent in the age group. Last year also marked the first time in a decade that Anheuser-Busch shipped less than 100 million barrels worldwide, according to Beer Marketer's Insights, a trade publication.
While the beer industry as a whole is up about 1 percent in the first half of the year, craft beer is up 12 percent in volume and 14 percent in revenue, according to the trade group The Brewers Association. This year figures to be the third straight double-digit increase for those smaller brewers.
Despite the recent challenges, Anheuser-Busch -- which holds a 47.7 percent share of U.S. beer sales to retailers -- continues to spend in sports. The brand spent $456 million on U.S. television advertising in 2011, 65 percent of which was in sports, according to Nielsen. Its spending on sports TV advertising was topped by only one company, Verizon, which spent $345 million last year.
If beer brands want to tie themselves to sports, they almost have to do deals with leagues and teams because active athletes in the major sports are not allowed to endorse alcohol brands.
Aside from MLB and the NFL, Anheuser-Busch has deals as the official partner of the NBA and with the UFC. D'Sylva said the Budweiser brand would exclusively be marketed in its MLB deal, as is the case with the NBA. Bud Light is the marketed beer of choice for the NFL and the UFC.
The main Budweiser brand admittedly needs some help. Its position as the No. 2 best-selling beer in the U.S. behind Bud Light is at risk. In the past 52 weeks, Budweiser and its competitor Coors Light have sold $2 billion worth of beer, but Coors Light's sales are up 5.3 percent while Budweiser's sales are down 0.8 percent, according to market retail tracking firm SymphonyIRI.
Darren Rovell is ESPN's sports business insider.