PepsiCo, Inc. PEP recently announced that it has secured a multi-year, North American partnership deal with the National Basketball Association (NBA), replacing rival, The Coca-Cola Company KO as the official food and beverage partner of the league. Coca-Cola had an almost 30-year partnership with the NBA.
The lead brand in the NBA partnership will be Mountain Dew soft drink, instead of Coca-Cola’s Sprite brand. Pepsi will also promote Aquafina, Brisk, Doritos and Ruffles brands under the deal. Pepsi’s Gatorade brand is already a sponsor of the league.
The multi-year agreement includes sponsorships for the Women’s NBA, NBA Development League as well as USA Basketball. The terms of the deal have not been disclosed.
Apart from the NBA, in the U.S., Pepsi is the official sponsor of the National Football League, Major League Baseball and the National Hockey League.
National sports events are a major passion point, especially for the younger generation, across the country and are therefore big marketing opportunities for food/beverage companies.
Over the years, Pepsi has countered competition successfully through aggressive marketing campaigns. In 2014, the soft drink maker increased investments in social and digital marketing as well as advertising efficiency by directing more of the spending to consumer-facing activity.
Coca-Cola, on the other hand, increased its marketing focus in 2014 through incremental media investments and aggressive marketing campaigns like Share a Coke. In addition, management has incremental media investments planned for 2015 to accelerate top-line growth.
In a separate development on the same day, the beverage giant announced a partnership deal with United States Soccer Federation and Major League Soccer to be the official beverage partner for U.S. Soccer and the Mexican National Team’s U.S. Tour, replacing Pepsi.
Both Pepsi and Coca-Cola have a Zacks Rank #3 (Hold). A couple of better-ranked beverage stocks include Monster Beverage Corporation MNST and Coca-Cola Amatil Limited CCLAY. While Monster sports a Zacks Rank #1 (Strong Buy), Coca-Cola Amatil has a Zacks Rank #2 (Buy).
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