Is China On Coke?

BEIJING — China's capital is decked in red: Red billboards hang at bus stops; a red kiosk sits on a popular shopping street; at the Olympic Green, the nexus of next month's Olympics, a sprawling red building is under construction.
The promotions — including a museum two-thirds as large as the World of Coca-Cola, Coke's namesake museum in downtown Atlanta — are part of a record Olympic marketing blitz by the beverage giant to capitalize on its global sponsorships of the Beijing Games and the Olympic torch relay.
Estimated at between $75 million and $90 million, the sponsorships underscore Coke's heavy bet on China. It already is Coke's fourth-largest market, with consumer spending on soft drinks more than doubling since 2001. Executives expect China eventually will surpass the United States as the company's top market.
For Atlanta-based Coke, the Beijing Olympics presents an opportunity to build its brand among China's
1.3 billion people, while attaching its name to an event that gets worldwide attention and often transcends the field of play.
"The Olympics goes beyond sport," said Kevin Tressler, Coca-Cola's director of worldwide sports and entertainment marketing. "There's a warm feeling that comes to people when they think about the Olympics. The Olympics is a very powerful brand."
Being associated with the Games should boost Coke's image — and sales — in China. During the three-month period surrounding the Olympics, Coke typically sees a bump in sales while longer-term research shows that brand loyalty rises, Tressler said.
Coke executives have not said how much they have spent toward their sponsorships or Games-related advertising. But IEG, a Chicago firm that analyzes corporate sponsorships, estimated that Coke paid
$70 million to $75 million to be a four-year Olympic partner and $5 million to $15 million to be one of three sponsors of the torch run.
In addition to those sponsorship fees, Coke typically spends three to four times more on Olympic advertising, promotions and tickets for guests, IEG estimates.
Coke is exploiting its investment through a massive Olympic marketing campaign. Hours after China was selected in 2001 to host the Summer Games, Coke began distributing 1 million limited-edition congratulatory cans.
Last August, Coke kicked off a campaign called "Year of the Shuang," a Chinese word the company translates as a "physical and emotional state of refreshment." Coke bought extensive outdoor advertising and hosted a gathering with Chinese sports stars including Yao Ming, the Chinese center on the Houston Rockets basketball team.
When the Olympic torch arrived in China in March, Coke staged a celebration with singers and athletes and released a TV ad that showed people across China rolling out a red carpet for torchbearers. As the torch has moved through more than 100 Chinese cities, Coke followed with a truck providing free beverage samples.
To reach Internet users, the company designed software that allows people to pass "virtual Olympic torches" through instant messaging. At least 58 million people have so far received the virtual torches, said Andres Kiger, Coke's senior director of integrated marketing in China.
In its "Year of the Shuang" campaign, Coke has "methodically looked for moments ... when the country has something to celebrate or there's a big emotional excitement," Kiger said.
As the Games approach, Coke's Olympic operations in China will grow from 20 people to a staff of more than 2,000.
Besides blanket outdoor advertising, Coke will run three centers. The 40,000-square-foot Shuang Experience Center on the Olympic Green will include a gallery about Coke's history, a theater showing a film about Coke's sponsorship of the Olympic torch relay, a section on Coke's charitable activities and a "perfect serve" bar where visitors will receive "perfectly chilled bottles of Coke," said Glenn Wade, a lighting engineer working at the site.
Two smaller "Olympic zones" in downtown Beijing will let residents learn about Coke's history, trade Olympic pins and sample Coke products.
During the Games, Coke expects to distribute about 26 million beverages sold through concession stands or provided free to Olympic athletes and officials. It will host 10,000 VIP guests, about 8,000 to 9,000 from China. Coke also expects about 250,000 people to pass through the Shuang Experience Center during the Olympics and following Paralympic Games.
Coke's operations for the Beijing Games are not dramatically different than previous Games, but the scope is broader than ever because of the size of the Chinese market and the significance of these Games to that nation, said Peter Franklin, Coca-Cola group director of worldwide sports and event management.
For the 1996 Summer Games, for example, interest was highest in Atlanta and then the Southeast and dissipated as you moved across the rest of the United States, Franklin said. Interest in China remains high across the entire nation, he said.
"The people of China have been extremely excited about the Olympics, and not just in Beijing, but even in the furthest west part of China," Franklin said. "From a marketing perspective, what drives the scope of what we're doing is not only the population, but a population of people who are very interested in the Olympic Games."
A survey by the Beijing offices of R3 and CSM Media Research found that more than 93 percent of Chinese had a strong interest in the Olympics and almost half of respondents connected Coke to the Games without being prompted, the highest association of any sponsor. The report was based on interviews with about 1,500 people in 10 Chinese cities.
But some experts wonder whether Coke and other sponsors are getting good value for their investments, particularly given high-profile controversies over this year's Games. The Olympic torch relay in Europe and San Francisco, its only U.S. stop, was marred by protests over China's policies and practices in issues such as Tibet and the Darfur region of Sudan. Dream for Darfur, a New York-based group that includes actress Mia Farrow, helped organize a small protest in front of Coke's Atlanta headquarters last month. Activists are likely to stage more demonstrations during the Olympics next month, potentially damaging sponsors' brand images.
"I think [Coke] underestimated the potential damage that could come from getting too close to the Chinese regime," said Matthew Crabbe, director of Access Asia, a Shanghai-based market research firm.
"If protests kick off in Beijing during the Olympics and people link Coke to a crackdown by the Chinese government, that would not help them," he said.
Other researchers have questioned whether an Olympic sponsorship is an effective consumer message. A survey early this year by Shanghai-based consulting firm China Market Research Group found that more urban Chinese thought Pepsi — not Coke — was an official Olympic sponsor, even though Pepsi is not sponsoring the event.
"The whole point of spending so much money for the Beijing Olympics was to really target Chinese consumers," said Shaun Rein, managing director of the firm. "The marketing people at Coke are going to have to take a really long look at the results," he said.
Coke officials said they remained committed to the Games. "We continue to believe in the Olympic ideals," said Tressler, Coke's director of worldwide sports and entertainment marketing. "We have been partners since 1928."