Hui Minglian, 38 years old, had never tasted a Coca-Cola before stepping inside the “Shuang,” or “Awesome,” Zone. The giant pavilion, erected by the soda maker in downtown Beijing, is a place where visitors can watch Olympic events free on big-screen TVs.
But when a woman in a bright-red uniform handed her a frosty bottle, Ms. Hui downed it right away. “I like it – the cold is good,” she said between gulps.
The Cokes – served at precisely 37.4 degrees – are part of a campaign that Coca-Cola Co. hopes will help turn its Olympic sponsorship into marketing gold. In a country where many prefer their beverages warm, the idea, says Joseph Tripodi, Coke’s chief marketing and commercial officer, is “to teach consumers how to drink Coke and how to love Coke.”
Coke has plugged its flagship cola at other Olympiads for decades. But this blitz is especially important for the brand as the Games present a chance for it to vault ahead of archrival Pepsi-Cola in the race for China’s 1.3 billion coveted consumers – a market that Coke says could be its biggest in the future.
Coke is the global leader in the cola wars, with roughly half the market, more than double PepsiCo Inc.’s soft-drink share. In China, Pepsi-Cola is No. 1 – but early results show Coke’s Olympics push, which began in early 2007, is eating into Pepsi’s lead. Last year, the Coca-Cola brand claimed 22 percent of the country’s carbonated soft drink market, up half a percentage point from 2006. That still left Coke trailing Pepsi’s 22.9 percent share, which dipped from 23.3 percent, according to research firm Euromonitor International.
The cola giant faces hurdles. The dozens of Olympic sponsors running ads in China are playing on a difficult field. Several campaigns feature the same handful of famous Chinese athletes; Coke is one of several using basketball star Yao Ming. Celebratory messages carry risk in a year marked by both anti-China protests around the world and the Sichuan quake, the largest natural disaster in recent Chinese history.
For now, Coke’s Olympics blitz is making progress by other measures. A recent study conducted by marketing consulting firm R3 along with CSM Media Research shows that some 47 percent of Chinese identify Coke as a sponsor of the Games. On average only 3 percent of respondents similarly associate other top-level sponsors with the Games, including McDonald’s Corp. and Adidas AG.
In an early coup last year, Coke signed an endorsement deal with Mr. Yao, China’s most famous athlete, who for years had represented PepsiCo. Since this spring, the brand’s Chinese ad anthem, “Red Around the World,” has become a popular tune – even at some Olympic events. On Sunday, the Coke music blared from the Beijing National Aquatics Center after China’s Guo Jingjing, a Coke-sponsored athlete, executed a gold-medal winning dive. (Most dive events use standard pop-music or techno beats as fanfare.)
Coke won’t disclose its Olympics spending, but IEG LLC, a firm that tracks and analyzes corporate sponsorships, estimates the company has poured as much as $400 million into the Beijing Games. That figure includes $80 million for four-year Olympic sponsorship rights and $320 million spent on ads, promotions and other marketing globally.
The chief architect of Coke’s Olympics strategy in China is David Brooks, a fluent Mandarin speaker who has been in the country on and off since 1975. A 46-year-old Wyoming native, he cut his Olympic teeth heading up the company’s sponsorship of the 2004 torch relay for the Athens Games. Mr. Brooks returned to China as general manager of Coke’s Beijing Olympic project group in 2005. Today, his team numbers more than 2,000.
“There are very few people in China who don’t support the Olympics,” says Mr. Brooks. “That’s something that a mass-market brand like Coke wants to be involved in.”
Coke got a jump start on other sponsors. In 2001, the company unveiled congratulatory billboards all across Beijing that said “Cheer for China,” only hours after the city won the right to host the Games.
In 2005, the Olympics still weren’t on many marketers’ minds. That’s when Mr. Brooks’s team started planning. “For me to be dreaming up what would be happening in 2007 and 2008 – I think some people thought I was somewhat crazy,” recalls Mr. Brooks.
Coke ramped up its own Olympics ad agency, dubbed the “Red Lounge,” in 2006. From a Shanghai office, staff from 10 existing agencies worked alongside Coke brand managers to develop ads, Web sites and other marketing initiatives.
Adidas started its big Beijing Olympics marketing push in December. McDonald’s – Coke’s largest fountain-drink customer – began last August. Thanks in part to Coke’s early start, sales volume for all its drinks in China got an 18 percent jolt in 2007. “What Coke realized early on is that their competition wasn’t just Pepsi – it was the other Olympic sponsors,” said Greg Paull, the principal of R3, which consults for Coke and a dozen other Beijing Olympic sponsors.
Mr. Brooks and his team concluded that any marketing program would have to reach into China’s populous provinces, as only a tiny fraction of China’s citizens live in Beijing. A national marketing campaign, blared from the capital, wouldn’t do. He thought Coke should use the Olympics to engage people in the largely untapped provinces.
That, Coke hoped, would help it gain traction against Pepsi and other brands. Annual average per-capita consumption of soft drinks in China was a mere 35 eight-ounce servings in 2007, according to Beverage Digest, which tracks global drinks data. That leaves a lot of room to catch up with Western markets such as the U.S., where per-capita soda consumption was 789 servings last year.
Mr. Brooks’s team latched onto a single word – shuang – to convey a degree of street credibility among Chinese youth. “Shuang” is akin to “awesome” or “cool” in English, with a bit more of an edge. “It represents intense physical and emotional refreshment,” said Mr. Brooks. “How was your dinner? Shuang. How was that ride on the roller coaster? Shuang. I say shuang about a thousand times per day.” Coke launched its shuang blitz in August of last year.
A focal point of the campaign was the Olympic torch relay. Sponsored by Coke along with Samsung Electronics Co. and Lenovo Group Ltd., the relay wound through 111 Chinese cities over a four-month period. When Coke held an online contest to select 1,188 torchbearers, about 310 million votes were cast.
As Coke was strategizing, Pepsi was counterpunching. With a former MTV executive in charge of its China drinks marketing, Pepsi had long been deft at linking its cola brand with singers and Chinese youth culture – arguably more so than Coke.
Last year, Pepsi managed to tap into the wave of Chinese patriotism by swapping some of its iconic blue cans for red ones. More recently, Coke torch-relay staff complained that in at least two cities, local Pepsi bottlers tried to infiltrate the torch route by handing out Pepsi shirts. The moves seem to have been effective: The R3 and CSM research found that more than 10 percent of Chinese consumers thought that Pepsi was an Olympics sponsor – a rate higher than actual sponsors Adidas and McDonald’s.
PepsiCo declined to comment on market share.
Dick Detwiler, a PepsiCo spokesman, says he isn’t familiar with reports of torch-route interference. As for Pepsi’s marketing tactics, including the red Pepsi-Cola cans, he says, “We’re simply joining the fun and supporting China at a very exciting time.”
Last month in Dalian, a northeastern city of roughly three million, throngs of spectators wearing freebie Coke T-shirts cheered as a red Coke truck carrying a miniature version of the “Bird’s Nest” national stadium passed by at the head of the torch parade. “Go for it, China! Go for it, Olympics!” chanted an emcee on the float. Ice bins filled with Cokes dotted the torch route, and the company also gave away samples in shops nearby.
The torch route gave the company a chance to tackle a cultural issue with its cornerstone beverage: how to best drink the soda. Chinese consumers – including many of Coke’s own bottling and distribution staff – don’t sip theirs cold. Chinese medicine preaches that warm drinks are better for the body. But Coke executives have always maintained that a higher temperature detracts from the drinking experience, since warm colas don’t deliver the same pop, or “mouthfeel,” from carbonation.
Changing local tastes is tough to do. Stopping by a free-sample station in a Dalian Wal-Mart, 30-year-old Wang Wei said he “cannot drink cold Coca-Cola – it’s not good for my stomach.” While Ms. Hui gulped her icy Coke at Beijing’s Shuang Zone, several others around her waited for their bottles to warm up first.
Over the course of its campaign, Coke has had to deal with other obstacles. Earlier this year, when unrest broke out in Tibet and protests disrupted the torch relay outside of China, the company came under attack from activists in the U.S. and other core markets. Among other things, groups such as Dream for Darfur, whose board is led by actress Mia Farrow, called on Coke to protest the Games in light of China’s human-rights record.
Although Coke didn’t change its marketing plans, company executives quietly sought counsel earlier this year about how to manage the political situation from diplomatic and policy experts, including the Albright Group LLC, whose principals include former Secretary of State Madeleine Albright. Coke’s board of directors also includes U.S. Olympic Committee Chairman Peter Ueberroth.
An Albright Group spokeswoman says that Coke has consulted the group on a number of issues, including the Olympics, but didn’t elaborate on specific discussions.
In a recent interview, Muhtar Kent, Coke’s chief executive officer, said of the company’s stance: “We are a better company as a result of supporting the Olympics, and the Olympics are a better movement as a result of our support.”
As the last phase of Coke’s Olympics plan was gearing up in May, a magnitude 7.9 earthquake rocked Sichuan province, leaving 70,000 dead and thousands still missing. The company had just launched a new ad, featuring a red carpet rolling across the nation – including scenes in Sichuan – to welcome the torch to China. Within hours, Coke decided to pull its TV ad and halted its music on the torch caravan for a month. Banners on its mobile units carried a more somber message, inviting consumers to share compassion.
“We grabbed the volume control and took it all the way down to zero, and gradually found a way to bring it back to celebratory,” says Mr. Brooks. Following the lead of Beijing Games organizers, the company took a cautious approach. It waited until a month of mourning had passed before fully resuming its branding activity.
The Games will be over before the long-term results of the campaign can be measured. Brand awareness doesn’t necessarily translate to actual sales. Bill Pecoriello, a Morgan Stanley analyst, pegs Coke’s volume growth in China at roughly 17% this year. That’s slightly slower than last year, after disruption from the earthquake upset sales, but it’s still a hefty clip given the size of the market.
Mr. Brooks says the company’s Olympic effort has been more about brand-building than a quick sales hit. “We feel we’re on track longer term.”