Formula 1 - Business: Coca-Cola favours energy drinks brand for sponsorship

Bernie Ecclestone says that Coca-Cola is likely to introduce one of its energy drinks brands to Formula One if it decides to become a sponsor of the sport as has been reported.

Earlier this year it emerged that Emmanuel Seuge, Coca-Cola’s head of global sports and entertainment marketing, had been researching F1 as well as the energy drinks sponsorships in the sport. This led to reports that Coca-Cola was assessing an entry to F1 and it is thought that it could be one of several new sponsorship deals which are due to be announced in the run up to next weekend’s inaugural United States Grand Prix in Austin. However, Ecclestone says that the Coca-Cola brand itself will not be amongst these deals.

“The president of Coca-Cola is a very good friend of mine but the head of marketing has always said he didn’t think Formula One was good for them,” says Ecclestone. He adds “if they do come in I think they will come in with one of their energy drink brands not Coke itself. The only time Coke would perhaps get involved with something, other than what they currently do, is if Pepsi got in.”

Coca-Cola’s leading energy drinks brand is Relentless which favours sponsorship of music festivals but has partnered with teams in Formula Palmer Audi, the British Touring Car Championship and British Superbikes. Coca-Cola was reportedly planning to expand its energy drinks portfolio by taking over Monster Beverage Corp, which sponsors Mercedes’ F1 team, but earlier this year it denied that talks were ongoing.

Coca-Cola has never sponsored F1 before but is believed to have come close in the past. In 2005 it was reportedly in talks with Ecclestone about becoming title sponsor of the sport but in the end he decided that associating it so closely with any single company could damage relationships with other brands. “I wouldn’t do that because it would destabilise everybody. It would certainly stop all the promoters or us doing their own race title sponsorships,” says Ecclestone adding “somebody would do probably do it if I wasn’t around.”

At one stage it was thought that Coca-Cola may be considering taking title sponsorship of either the US Grand Prix or the planned F1 race in New Jersey. However, the latter is on ice after its contract was torn up, and although the organisers of the US Grand Prix have got the rights to sell their own race title sponsorship, they have not done so.

The energy drinks sponsorship sector in F1 is dominated by Red Bull which owns two teams and is a two-time winner of the constructors’ and drivers’ championship. “You wouldn’t want to take Red Bull on,” says Ecclestone. In 2010, when it first won the championship, Red Bull received almost a quarter of F1’s Advertising Value Equivalent (AVE) - the price it would have to pay to buy a similar amount of on-screen exposure. According to F1 trade guide Formula Money, this came to an estimated £224.4m and although it reduced to £164.2m in 2011 it was still over 20% of the total gained by all the teams.

Red Bull’s success has attracted numerous energy drinks to F1. Alongside it and Monster are Lucozade, which has logos on the McLarens, and Caterham’s energy drinks sponsor EQ8. However, whilst these brands have prominent logos on the cars, it takes more than that to emulate Red Bull's success.

Since taking over the floundering Jaguar team in 2004, Red Bull has implemented a long-term strategy which involved owning two teams and initially sharing resources and a talent pool. This allowed it to select world champion Sebastian Vettel as the best of the bunch from its junior team Toro Rosso and, at the same time, Red Bull poured significant funding into his title campaigns.

This money was also directed at attracting top talent to oversee the team’s transition from a middle-ranking outfit to a championship leader. Red Bull used a £6.3m a year salary to lure in F1’s most successful designer Adrian Newey as Chief Technical Officer. He joined team principal Christian Horner who founded the championship-winning Arden Formula 3000 team. It is leadership from this duo, and not the logos on the car, which has steered Red Bull to success in F1.

Christian Sylt is author of Formula Money