Rights Holders Face Strong Headwinds Securing CPG Partnerships

The term “food and beverage” is a common one, reflecting the natural link between products we humans eat and drink. But when it comes to sports and entertainment partnerships, there is a marked distinction between the two.

Beverages, in their myriad forms, top the list of the most active categories in sponsorship. And not only do they outspend all others, the soft drink, beer, isotonic and spirits companies that make up the overall category are among the medium’s best practitioners—selecting, activating and measuring results better than many others.

On the other hand, major manufacturers of food products, despite their resources and prowess in other areas of marketing, have neither invested in nor been as successful with partnerships as their beverage counterparts—with a few exceptions such as Procter & Gamble’s worldwide Olympic sponsorship and, arguably, Kellanova’s recent Pop-Tarts Bowl and Cheez-It Citrus Bowl deals.

Given the category spends billions of dollars on marketing, it is a frustrating situation for properties seeking partnership revenue and offering a targeted audience and a plethora of rights and benefits that consumable products could take advantage of.

Unfortunately that situation is unlikely to change anytime soon. Despite providing promotional and engagement platforms that could help food companies meet multiple business objectives, sellers face historical and new challenges when approaching CPG manufacturers for partnerships.

Among the most significant is the fact that the largest players in the category, unlike big beverage marketers, do not have a centralized sponsorship or sports marketing function. Companies such as Nestle, Unilever, Mondelez, Danone and Campbell Soup (soon to be known simply as Campbell’s) have for decades left partnership evaluation, spending and execution to individual brands.

It is not difficult to understand why consolidating sponsorship authority in the hands of senior-level specialists would be challenging given the size of these companies’ product portfolios and multinational reach. But relegating it to individual brands not only makes it exponentially more difficult for rights holders to find the right contacts, but it also misses key opportunities to identify multi-brand synergies and economies of scale while leaving decisions to less senior brand managers who often are not in their roles for more than a year.

On top of that decades-old obstacle, current conditions don’t bode well for an increase in CPG sponsorship spending. As McKinsey noted in a June trends report, “the consumer goods industry was an investor darling for decades, delivering a reliable formula of more than five percent growth at healthy, stable margins. Over the past ten years, however, top-line growth has faded away. While CPGs have searched for it, they have ended up scrambling to generate the earnings growth they need through cost reduction.”

McKinsey further notes that “CPGs’ strong financial incentives to stay focused on core equities and mass products has opened up the space for small brands to capture the premium segment and to lead on “better for you” positionings while private labels take the value segment. For these and many other reasons, CPG brands are losing relevance. In 2002, Interbrand’s global ranking of brands included eight CPG brands in the top 50. In 2022, only two made it.”

All of this is not to say teams, leagues, venues and events should not keep making the case for CPG partnerships.

Despite the challenges to getting in the door and persuading brands to spend in the face of lower overall budgets, sponsorship sellers can demonstrate that an alignment with their properties can help food manufacturers achieve critical goals such as differentiating from competitors to steal market share, obtaining first-party consumer data and insights that they otherwise don’t have direct access to, expanding into new markets and helping launch products in the premium and health-focused segments.