Sports And Beer Consumption Show Why Sponsorship Spend Is Unique During the Coronavirus

BY ADAM GROSSMAN

In past posts, we have examined the impact of the Super Bowl and major sporting events on beer sales. More specifically, we highlighted research that demonstrated that television advertising during the Super Bowl directly helped Budweiser generate $45 million in incremental revenues.

A recent story in The Wall Street Journal, however, shows that our past descriptions on sports’ impact on beer consumption may be understated. In particular, “brewers and distributors face more challenges in the months ahead as big summer sporting events are put on hold or cancelled altogether, supressing (sic) demand for months to come.”

The lack of sporting events have played a significant role in forcing tens of millions of gallons of beer to spoil. The National Beer Wholesalers Association estimates that unsold and expiring beer will cost the industry at least $1 billion with the lack of sports playing a leading role in the problem.

It would seem that breweries and distillers would potentially want to spend more money on sports sponsorship and advertising given the situation. Yet, companies are largely taking the opposite approach. For example, Anheuser Busch “redirected [$5 million] from planned sports marketing spend for the year” to the American Red Cross “to provide the immediate resources needed to support national and local response for COVID-19.”

A recent post by Front Office Sports that contained multiple interviews with brand and agency marketers articulates one reason why this occurred. It stated, “The first reaction of many was to pull back or rely on digital and social media channels to communicate brand messages without having them be associated with the virus.”

However, the issue now appears to be that lack of sports content rather than a desire to pull back on spending. As sports marketing and media consultant and professor at Columbia University Joe Favorito states, “Brands that would have spent money at the Kentucky Derby, Indianapolis 500 or the NBA can’t do that anymore.”

This dynamic appears to be changing as multiple sports organizations are planning returns to competition in the next few weeks. However, no fans will be in attendance even as leagues, teams, and athletes return to venues. Therefore, the irony is that sports returning to venues is it provides brands with new opportunities to reach fans at home with new or changing sponsorship spend.

Both the National Football League (NFL) Draft and The Last Dance documentary show there is a huge demand for sports content consumption at home right now. Each continue to set television viewership records for the draft and documentary content, respectively. In addition, last week’s NASCAR iRacing Series Event had the second highest viewership since the start of the coronavirus with 1.24 million viewers   

This is good news for brewers and distillers who (like toilet paper manufacturers) are seeing increased beer consumption at homes rather than at bars and events. That is why they “are switching their packaging and putting more fresh beer in cans to be sold in liquor and grocery stores, where demand is still strong.”

It is clear that people are still watching sports and drinking beers at home. Therefore, creating experiences at home with a focus on beer consumption during live events is an example of how sports properties can help beer companies maximize sales during the coronavirus. The Miami Dolphins demonstrated how this can be successful achieved by hosting its NFL Draft party in the Official Miami Dolphins Fans Group with its presenting partner Bud Light Seltzer.

The larger takeaway is that companies are looking for ways to engage with their consumers during the coronavirus in ways that can help them generate revenue but are not always sure how to accomplish this goal. The sports industry is in a unique position in that people are craving its content and are used to having partnership activations integrated into their at-home viewing experiences.

While we focused on beer companies for this post, leagues, teams, events, athletes, and media rights holders have the opportunity to achieve similar results for their partners in other industries. The key is to show how sports can directly help companies maximize revenue growth through sponsorship spend in this environment.