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Why acquiring stake in IPTL makes sense for Coca-Cola

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Why acquiring stake in IPTL makes sense for Coca-Cola

Beverage giant Coca-Cola India has taken keen interest in the International Tennis Premier League (IPTL) as is said to acquire 10 per cent equity stake in the league. The league which is promoted by Mahesh Bhupathi is said to be on the verge of completing a deal with the cola giant for a part equity-part sponsorship deal for an estimated Rs.18 crore say media reports.

The deal is said to be structured in such a way that money spent by Coca-Cola on sponsorship will add up to 10% equity that could stretch for a period of 3 years. The deal is also said to be in process and the final closure is expected to be soon.

This is the first time the cola company has made such a deal where it has acquired equity in a sporting property in India. However, what is more interesting is the beverage giant’s interest in a niche sporting league such as IPTL. Coca-Cola not being on the ICC World Cup 2015 is conspicuous. In fact, in recent times Coca-Cola’s association with cricketing tournaments has reduced and is limited to grass root cricket tournaments such as the Coca-Cola under 16 tournament. This is after Coca-Cola being a top sponsor in the 1996 World Cup and its participation during the initial years of IPL (IPL-2) where it had aggressively promoted the brand as it associated with teams Delhi Daredevils and Kolkata Knight Riders. In fact its competitor PepsiCo has been aggressively marketing on cricket platforms such as the ICC World Cup 2015 and IPL for which it has acquired the title sponsorship rights for a period of five years (2013-2017) at an estimated  Rs.396.8 crore.  
Coca-Cola however has sponsored global sporting events such as FIFA and the Olympics. The other sponsors of IPTL include Qatar as presenting sponsor, Fedex as logistic sponsor, Amity University, HEAD, Life Fitness, K-Swiss, and Yahoo are the other sponsors. The league also had various local brands as sponsors for each particular country in the league. Coca-Cola was already the title sponsor of the first edition of the IPTL that took place last year.  

Coca-Cola associating with a niche sports tournament in such a way is definitely something new. According to some senior media planners the reason for Coca-Cola to take this decision would be as they are leaders in the market they are looking at new ways other than cricket in increasing their reach among customers. While there are other media planners that say as PepsiCo has been aggressively acquiring cricket property sponsorship rights that Coke has to diversify into other non-cricketing leagues. They feel that there may be a shift in strategy and hence the investment.

India is one of the largest markets for Coca-Cola and contributes 12% to its overall volumes. They are definitely looking to increase their share in this market as western markets become even more restrictive to aerated beverages and share in these markets are expected to decline in the future. The deal would also help in creating a long-term association with the league and in turn with consumers as the association will go beyond just a few seasons. It will have the advantage of being a first mover as the deal isn’t that expensive as at an estimated Rs.18 crore it is far less than what rival beverage company PepsiCo has paid (Rs.396.8 crore) to be the title sponsor for IPL. “With India’s thrust into tennis gaining momentum, interest for the sporting leagues is expected to increase eventually. Choosing IPTL in particular also makes sense for the cola brand as it not only gains from an early mover advantage but the league featuring the top tennis stars globally enables it to leverage them,” said a media planner.

Similarly, Vinit Karnik, National Director, GroupM ESP says, “The deal sounds promising for Coke as they get to partner with a property that is exposing Indians to stalwarts in tennis on Indian soil. This may help communicate the brand promise across and create interactions and engagement with the consumers”. In its inaugural edition the league featured tennis stars such as Roger Federer, Novak Djokovic, Andy Murray, Serena Williams, Maria Sharapova, Pete Sampras among others playing for four franchises i.e. India, Singapore, Philippines and UAE. Another reason is associating with such sporting leagues helps in creating an association with the beverage and healthier lifestyles to audiences.

For IPTL on the other hand it helps definitely to get the backing of large brands such as Coca-Cola as it adds more credibility to the league. This is apart from the monetary gains that the league receives from the sponsorship deal. Big brands also make use of these sporting platforms to not only push their products but it also pushes the league through specially created TVCs on the sporting properties during its course. This can be seen for not only global tournaments such as FIFA World Cup and ICC World Cup, but also leagues such as IPL among others. Though in India it is experienced largely limited to cricket tournaments, this looks likely to change with companies such as Coca-Cola taking up part ownership in a league. Marketing for IPTL by the cola company can be expected to increase during the next edition. This is as the success of the tournament also partly falls in the hands of the beverage company.

The same was also witnessed when Star India brought stake into sporting leagues such as Indian Super League (ISL) and Pro Kabaddi League, which saw the broadcaster running large marketing campaigns successfully for both tournaments. This in turn helped the leagues gain traction in terms of viewership and created a positive image for the tournament.

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