As Guinness are unveiled as the new 6 Nations title sponsor, we analyse whether this will be an effective sponsorship.
On the surface, this is a great deal for Diageo, if the rights fee reports of £6m are correct. Whilst it is likely that this reduced price will only be applicable for the first year, due to the short lead time until the 2019 Championship begins, this is still a bargain. The Six Nations have been trying to find an RBS replacement for over 2 years. During this time, they have reportedly turned down offers close to three times this value and are having to accept a fee 50% lower than that paid by RBS. However due to market conditions (Brexit and the over valuation of UK sponsorship rights, particularly in rugby), Guinness have negotiated a great deal. Despite this, will it be good for the brand?
Our first observation is that the Loi Evin (the French law prohibiting alcohol advertising) will severely reduce the brand exposure value and activation potential in France. Whilst, Heineken have proven that alcohol brands can overcome this challenge, with their various rugby and football sponsorships, there will be rights wastage. However, you assume, Diageo will have factored this into their planning.
A bigger issue arising from this investment is, do they need to spend this money? The brand has been managed brilliantly over decades to ensure that it is synonymous with the rugby occasion. Guinness is already a sponsor of the RFU, WRU, SRU and IRFU, through which they receive pourage and marketing rights. In addition, it has long been established as the ‘go to’ brand on rugby days through their highly effective rugby activation strategy, refined over many years.
Given Guinness already has stadium pouring rights, significant credibility within the sport and marketing inventory from their existing home union relationships, it is hard to envisage how they could strengthen their association with the sport further. Equally, it is difficult to understand how they will be driving incremental volume off the back of the sponsorship. So how are they going to generate £6m (in the first year, increasing in subsequent years) of incremental revenue off the back of this new sponsorship to justify the spend?
The key question is whether this was a knee jerk reaction to Heineken’s increasing threat in rugby, having recently been restored as title sponsor of the European Champions Cup, or a strategic shift based on cast iron commercial or brand evidence that they are losing ground in rugby to the Dutch brewer. We suspect that the carrot being offered was too cheap and too tempting for Diageo to turn down, therefore their analytical rigour was compromised.
Whilst this new deal is a bargain, it remains to be seen whether Guinness can justify this investment by generating incremental value within a territory they already have the predominant position.