Pepsi's NBA Partnership Makes It The Beverage King Of Sports

The National Basketball Association and PepsiCo , Inc. have announced a new marketing partnership that replaces rival The Coca-Cola Co. as lead food and beverage partner of the NBA.  The deal stretches as far as China, where Pepsi partner Tingyi's Master Kong will earn enhanced exposure.  It also incorporates promotion of Pepsi products throughout the WNBA, NBA Development League and USA Basketball.  The Pepsi-owned Mountain Dew brand will be highlighted throughout the deal, with signage and branding surrounding new NBA 3-on-3 programming and events.

Taking Coca-Cola's ownership of the NBA's food and beverage sponsorship category is a major coup in its own right.  However, what is most significant about Pepsi's takeover is that it now positions the brand to control advertising and promotion for all four major North American professional sports leagues: NBA, NFL, MLB and NHL.  Coca-Cola can still work endorsement deals with individual players within each of the aforementioned leagues and may be able to convince some teams to partner as well; yet, Pepsi is in control of league-wide advertising and promotion, which is a powerful place to be.

Pepsi's partnership with the NBA has been reported as a five-year deal, but monetary terms have not been disclosed .

"The challenge for Pepsi moving forward is whether the additional exposure is worth the costs," said branding expert Erich Joachimsthaler, CEO and Founder of Vivaldi Partners Group.  "I think this helps Pepsi to clearly position itself as a brand that is consumed around sports."

Vivaldi has experience working with both Pepsi and Coca-Cola from a brand strategy consulting perspective.

"The [prior] sponsorship was about Sprite , which is a smaller brand compared to Coke and Pepsi," added Joachimsthaler.  "Coca-Cola CEO Muhtar Kent has already declared his strategy to make Coke the focus of the company.  The focus on Sprite and the NBA was a side show given Kent’s strategy."

Mountain Dew is a bigger stand-alone brand than Sprite, with a U.S. market share of 6.9% in 2014.  Sprite trends at a market share of roughly 1% lower than Mountain Dew based on the same research conducted by Statista, Inc.  Thus, the expectation is high that Pepsi will focus more activation dollars on its new NBA partnership.

"The impact on consumers will come from the activation efforts that Pepsi will launch around Mountain Dew only," said Joachimsthaler.

Pepsi will also use its new position as beverage king of North American professional sports to promote its other products like Aquafina, Brisk, Doritos and Ruffles.  The new partnership also serves to build upon the NBA's existing partnership with the Pepsi-owned Gatorade brand.

PepsiCo generated more than $66 billion in net revenue in 2014.  The brand hopes that its return on the new five-year partnership with the NBA adds to its bottom-line, especially when it comes to the performance of its Mountain Dew brand.

Darren Heitner is a lawyer and the Founder of South Florida-based HEITNER LEGAL, P.L.L.C., which has a focus on Sports Law and Entertainment Law.

Follow @DarrenHeitner