National Hot Rod Association Media Conference
August 29, 2012
THE MODERATOR: Thank you very much for joining us today. We had a great announcement here in Indianapolis in front of the Mac Tools U.S. Nationals downtown Indianapolis this afternoon. We did announce that the NHRA with the Coca‑Cola Company has extended its relationship through the year 2018. This builds upon our long‑standing association with Coca‑Cola and the NHRA, and also we did announce that beginning in 2013, Mello Yello, the Coca‑Cola's popular citrus flavored soft drink brand will be the new title series sponsor. For next year it'll be the NHRA Mello Yello Drag Racing Series.
We are joined today by Sharon Byers, the senior vice president of sports and entertainment marketing partnerships at the Coca‑Cola Company, and NHRA President Tom Compton. We will be taking questions from the media.
Sharon, talk about this new partnership, a continuation in one sense and a new beginning in another between the NHRA and Coca‑Cola.
SHARON BYERS: Yeah, our relationship with the NHRA goes back to 2002, and it's just been an amazing property for so many of our brands, starting first with Powerade, moving on to Full Throttle for the last four years. And as we continue to look and evolve and help grow the sport of drag racing, we really felt like bringing in a powerhouse like Mello Yello would take it to the next level, particularly since we did just announce the excitement around the partnership renewal.
And the citrus category is growing. Mello Yello really offers to many of our consumers more customer bases, more channels for us to bring this amazing property to life. So we're just really thrilled about the overall relationship, the history that we have with the NHRA, and the future together.
THE MODERATOR: Tom, your comments about this partnership, please?
TOM COMPTON: Well, if you look back to 2001 when we were looking for our next series sponsor, it would have been hard to imagine that we'd be partners with such an iconic company like the Coca‑Cola Company, and they're under contract now for a total of 17 years, and I know the spirit is much longer than that. We're thrilled the partnership obviously is working for Coca‑Cola, and I can tell you that it's working for us, as well.
Q. For Tom and Sharon, it's such an important event to get this type of sponsorship, and it means so much to companies and so forth. Could you kind of go through the kind of the behind‑the‑scenes stuff that the fans don't get to see where you guys make all those decisions and why you might make a decision as momentous as this one?
SHARON BYERS: Yeah, well, as we talked about, we've had probably one of the, I would say, A+ relationships with Tom and his team, and we have annual planning processes with them, and one of the identifications that we had was that the Full Throttle brand has been amazing to the NHRA, and it will continue to be the official energy drink, but we really wanted to continue to expand and build on the relationship and bring it into what we call our sparkling category, and that's where we felt Mello Yello because of its rich history around motorsports was a really strong connection point. So we've been working on this for a year.
To answer your question, the behind the scenes, there's really no behind the scenes. It's just something that we've been strategically talking about, and we're building out some marketing platforms that the fans of the NHRA will see bigger and different. We'll see a lot of retail activation around Full Throttle as well as Mello Yello beginning in 2013, and we'll bring that passion in to make sure that the race events are exactly what the consumer should expect from the Coca‑Cola Company and the NHRA.
Q. I actually have two questions for you. One, is this going to be anything like the days when Mello Yello was huge in NASCAR with Kyle Petty and the car owners at that time?
SHARON BYERS: Yes, that would absolutely be our plan.
Q. And my second question would be, Coca‑Cola has a huge presence in NASCAR with what they call their Coca‑Cola drivers. Is that part of the plan here with Mello Yello? Will you all have special Mello Yello drivers that are major sales points for you?
SHARON BYERS: Yeah, I mean, our focus right now with Mello Yello, again, it'll be as a continuation of a very long relationship, and we've got another five years ahead of us. So for 2013 we're really going to focus on the power of the NHRA overall. At that point we haven't pulled in personalities like we have in NASCAR.
Q. A couple questions for Tom and Sharon. Sharon, are you all trying to revive a brand? It's not‑‑ I know it's there, but it's been kind of dormant for a long time.
SHARON BYERS: Yeah, it hasn't been dormant actually, but the citrus category itself continues to grow year over year. Mello Yello is a national brand for us, but it just provides us‑‑ we wanted to get a powerhouse property behind this property so that‑‑ we don't have a Coke store, so we have to bring retail communications into our customer base, and we really felt that the power behind the NHRA growing sport, it skews younger, Mello Yello skews younger from a consumer base, so it was just a really powerful connection point.
Q. And my second question is for Tom. What does this mean in terms of payouts to the drivers? Is there going to be an increase in driver payouts at the end of the year under the new contract?
TOM COMPTON: Over time the payouts have gone up. Right now there's not a specific increase based on this announcement, but over time we've been able to elevate those significantly.
The focus right now is to get the word out and create awareness for Mello Yello in the marketplace and serve our fans out there.
Q. Do you have any plans on talking Cole Trickle out of retirement to drag race?
TOM COMPTON: You can ask Sharon that one.
SHARON BYERS: We're always looking for heroes.
Q. Sharon, I was actually on the media teleconference call when the announcement was made that Powerade would be transitioning over to the Full Throttle brand, and I'm actually looking on my computer screen at the column I wrote at that time, and the Coca‑Cola representative on that conference call talked quite a bit about activation in non‑NHRA markets, and so I'd like to ask you, is this program going to include specific activation beyond the NHRA core audience, and if so, could you give some examples?
SHARON BYERS: Yeah, I mean, that's a great question actually. We got that question from our bottling community when we announced it to them last week, so absolutely. There's a ton of power of drag racing overall, whether it's in market or outside of a race market, and our intention is absolutely to take this as broad as we possibly can.
Q. Can you provide some specific examples, for example, when the announcement was made several years ago, there was talk about the retail promotions, NHRA signage on trucks, promotion in non‑race markets. It's unclear to me how much of that actually happened, but beyond the general statement of it's going to happen, do you have specific commitments to activating beyond the NHRA core audience?
SHARON BYERS: Yeah, what we're doing right now is doing‑‑ so this is taking place in 2013, so we're actually in the process of planning this out with Tom's team along with Gary. But obviously we'll pull in a lot of driver appearances, we'll do some national promotionals, consumer take rates, take large customers, like Dollar General are very interested in taking this nationwide. So we will do the power of Coca‑Cola's marketing. We're going to take it to the finish line on this one.
Q. When you say driver appearances, do you mean in retail outlets?
SHARON BYERS: Yes.
Q. I haven't heard it specifically said other than a reference to age demographic why Coca‑Cola corporate feels that the NHRA is the best available fit for Mello Yello. Could you be more specific on why the demographic works in your opinion?
SHARON BYERS: Yeah. I mean, Mello Yello's consumer base is a youth‑based consumer group. Really the history that Mello Yello has had in motorsports really helped us tip it over the edge with some other brands that we were looking at between the relationship with Kyle Petty, what we did with Days of Thunder, and we really wanted Mello Yello to get centered and focused on a huge passion point here in America, and we just felt with all of those tenets, the NHRA was a fantastic fit for that brand from a consumer base, from a customer base, and just overall strategically.
Q. For Tom, when consolidation in the telecommunications industry caused the NASCAR series to go from NEXTEL to Sprint identification, Brian France said in that announcement that he did have concern about confusion within the marketplace, and he specifically said that a change of sponsor ID was, quote, not ideal, unquote. Next year will represent the third ID change in six years for NHRA. Do you have concern about that from a public ID standpoint?
TOM COMPTON: Actually I don't. Two parts to that: One is I think we're very fortunate to be enjoying basically 17 years under contract with the Coca‑Cola Company, and we've already received calls, Tweets, things today from fans and the fans here in Indianapolis that have come up and said what a great move, that's terrific. Our fans know where to find us, and I think with the power of the Coca‑Cola Company behind us with the Mello Yello brand, it's going to be a good thing for the sport, terrific actually, as opposed to largely being in convenience stores as Full Throttle is. And again, they're still going to be part of this program. Mello Yello is available in grocery stores, big box stores. The distribution is much greater, so the touch points are many.
Q. Could you just speak to the question I asked Sharon about activation beyond the NHRA core fan? Is that something that was a specific negotiating point in putting this deal together?
TOM COMPTON: You cut out but I think I have the gist of your question.
Obviously Mello Yello is a much larger brand. It has tremendous resources. The bottling group as Sharon mentioned was very excited about this announcement because there's an association with motorsports and Mello Yello.
The brand planning is still in the works right now, but as always, we're looking to reach beyond the race markets and do things on a national basis which will now be much more able to do with this brand.
So I think, yes and yes, we'll be doing much more activation around the races, and there will be opportunities to do things beyond the race markets on a national basis that probably weren't‑‑ wouldn't be as effective with Full Throttle. And again, Full Throttle we're happy to have still as a partner on a certain level.
Q. Tom, does this change or reopen the energy drink category for individual team sponsorships, or is that still locked up?
TOM COMPTON: Yes, it does. Obviously our partner is Coke, but for race teams, race teams are the most important form of sponsorship, and we have such a great partner in Coke. They understand that, and they're willing to let competitors come in now in the energy category and be on cars, that's correct.
Q. Starting in 2013 does that take effect?
TOM COMPTON: Yeah, next year, next season.
Q. Tom, I wanted to ask you a little bit about, Sharon mentioned the youth audience for Mello Yello. Was that a factor for you guys, too? Everyone knows that drag racing's core audience isn't getting any younger. Are you hoping that this is going to help you get into a different market in that respect?
TOM COMPTON: Well, actually we are getting younger. We are the youngest sport in the 18‑to‑49 demo in the country against any sport. NHRA has the third‑‑ we're the third youngest sport on an average basis, and we're the number one youngest sport in the 18‑to‑49 demo. So it's a misnomer to think we're getting older; we're actually getting younger. And yes, it's a great fit.
SHARON BYERS: Can I add on to that, one thing around the consumer base, too, that's amazing about the NHRA is it is very multicultural. It's unique that it has so many women drivers, and again, that's a very attractive piece that the NHRA I think brings to the table, particularly when we're looking at the connection points with Mello Yello.
Q. Sharon, do you have a lot of Mello Yello people with the Full Throttle people? Is there a lot of cross workers there, or are they completely different teams, or are some of the Full Throttle people going to come over to your team and promote the NHRA? How does that work internally at Coca‑Cola?
SHARON BYERS: Do you mean our brand team?
Q. Yeah, just the promotional team that's going to be working with NHRA. Is it going to be an all‑new team for Mello Yello, or is it going to be a mixture of them and Full Throttle people? How does that work?
SHARON BYERS: Coke is very unique, so we have in my group what we call the sports and entertainment group, so we're really the glue that pulls together the relationships between the brands and the properties, so I think that's a very unique setup that Coca‑Cola brings to the table. But yes, we have dedicated brand managers who are on Mello Yello, and then we have dedicated brand managers who are on Full Throttle. So the combination thereof of all of our teams working very closely together develops these amazing marketing platforms.
THE MODERATOR: Thanks, everyone, for joining us today.
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