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Modelo goes big with UFC

Modelo goes big with UFC

By Bill King, Senior Writer

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Editor’s note: This story is revised from the print edition.

Among its local sports sponsorships, Modelo Especial has a deal with the Chicago White Sox that includes the Casa Modelo bar at Guaranteed Rate Field.
GETTY IMAGES
Rapidly growing Mexican import Modelo Especial will replace 10-year incumbent Bud Light as the official beer of the UFC beginning in January, an audacious, eight-figure plunge for a brand that announced its first U.S. sports sponsorship less than a year ago and ran its first national English-language TV campaign only 18 months ago.

Executives from the UFC and Modelo would not reveal specific financial terms of the multiyear deal. But an industry insider said the rights fee, which grants Modelo only the U.S. and allows the UFC to do individual deals in territories such as Canada, the UK and Brazil, is in the $10 million range annually that Anheuser-Busch InBev paid in its prior deal for Bud Light. Two other industry sources pegged the deal at slightly less.

UFC executives would not confirm that but said they are confident that selling the category country by country — and opening up a spirits category that was blocked by the ABI deal — not only will generate more revenue than a global deal, but also will deliver more in-market promotion for their events and fighters.

The switch also moves the UFC to a brand that will make the sport its focus as it strives for greater general market awareness.

Modelo Especial ranks as the fastest-growing beer in the U.S. over the last five years, with double-digit annual growth in 32 of 35 years dating back to its stateside introduction in 1982. It is the No. 2-selling import behind only sister brand Corona, ranking seventh among all beers in U.S. sales and ninth in volume. It also is the top-selling beer in Los Angeles.

First Look podcast, with Modelo/UFC discussion beginning at the 9:45 mark:


Modelo executives see the national sponsorship as a way to amplify that story. Their other sports deals — sponsorship of the Brooklyn Nets and Barclays Center, the Chicago White Sox, Los Angeles Angels and CONCACAF — are either locally driven or smaller in scope.

“It’s a really exciting time right now for Modelo, but the awareness of that growth is not well known,” said Ann Legan, vice president of brand marketing for Modelo brands. “We wanted to identify partners that could really take us to the next level, and not only align with our values but give us the exposure that this brand really deserves based on where we are right now.”

The turnover invites a narrative that speaks to both the growth of mixed martial arts and the seismically shifting landscape in the beer business.

The White Sox deal includes the Casa Modelo bar at Guaranteed Rate Field.
Photo by: CONSTELLATION BRANDS
When the UFC signed on with A-B in 2008, it trumpeted the deal as evidence of its arrival as a viable, credible sports property, with UFC President Dana White hailing the moment as “historic.” Tony Ponturo, A-B’s sports marketing chief at the time, gushed about the UFC’s surging popularity among 21- to 34-year-old males who Bud Light desperately wanted to reach.

A decade later, based upon those parameters, both would call the marriage a success. Yet when ABI began renewal conversations with the UFC earlier this year, it explained that while it was pleased with the sponsorship’s performance, it would not return at the same terms. The UFC opted to look elsewhere.

It soon found a fast-growing brand in search of an established national property that could amplify its story, a situation that sounded strikingly similar to the one the UFC faced a decade ago, when as a fringe upstart it turned to sports stalwart A-B.

“Timing is everything, they say,” said UFC Chief Operating Officer Lawrence Epstein. “We had a 10-year relationship with A-B and we love those guys. They were a great partner; the right partner at the right time. I believe Modelo, as we sit here today in a very different place, is absolutely the right partner at the right time.”

The category opened in the second quarter of this year, when ABI declined to renew at terms similar to those of that last deal. Not long after that, sponsorship executives from UFC owner WME-IMG presented the package to Modelo parent Constellation Brands, whose beer portfolio includes longtime boxing sponsor Corona. It was a logical path for Andrew Judelson, WME-IMG executive vice president of sales and marketing, who at that point was in the process of landing Corona as the official import for the University of Texas, an IMG College client.

When Constellation reviewed the positioning of its brands, it saw the greatest potential in Modelo, which in recent years has billed itself as the beer with the “fighting spirit,” crafting creative around stories of people fighting for their beliefs or to achieve goals. With about 50 percent of its sales coming from Hispanic consumers, it sees millennial multicultural males as a growth target. Just as Modelo sees an opportunity with the UFC fan base, the UFC hopes to tap into Modelo’s strong position among Hispanics, who make up 20 percent of UFC fans, according to Nielsen Scarborough.

“When we really thought through what brand would be the right fit, I quickly raised my hand and said I want to talk to those guys,” Legan said. “It goes beyond the literal fighting. It really does speak to the values the UFC holds up and the values that Modelo holds true and how they translate to our drinkers and the UFC fans. It really is about activating to our consumer’s passion points.

“We felt like when we looked to the future and thought about where we wanted to source growth from, the UFC was really a perfect fit.”

While the deal marks a striking amplification for Modelo, the move into combat sports is a familiar tactic for its parent, Victor, N.Y.-based Constellation Brands, and its Chicago-based import beer marketing division, which has longtime boxing sponsor Corona as the jewel of its portfolio.

Though Legan said Modelo intends to put its own fingerprints on the sponsorship, it is certain to benefit from Corona’s familiarity with boxing, a touring sport that, like MMA, requires sponsors to adapt to schedules that evolve as the calendar year unfolds and airs its bigger events on pay-per view.

THE MAKEUP OF MODELO

Modelo sponsors the Nets / Barclays Center.
Photo by: CONSTELLATION BRANDS
U.S. sales of Modelo Especial have risen for five consecutive years, according to Beer Marketer’s Insights.
2016 U.S. sales: 6.13 million barrels, up 18.4 percent from 2015. At the end of 2016, the brand had a 2.8 percent market share and was the ninth-best-selling beer brand, by volume, in the U.S.
Modelo spent $26.6 million to advertise during televised sports programming from Oct. 4, 2016, through Oct. 3, 2017, twice as much as it spent during the previous 12-month period, according to SportsBusiness Journal’s analysis of iSpot.tv data. Nearly one-third of the brand’s overall TV ad spend in 2016 was earmarked specifically for sports, the same ratio that it was in 2015.
Major sports properties, which include team sponsorship and naming rights to the Casa Modelo bar at each club’s home venue: Anaheim Angels, Brooklyn Nets, Chicago White Sox, CONCACAF
Modelo’s parent company, Victor, N.Y.-based Constellation Brands, also currently activates its Corona and/or Pacifico brands with more than a dozen major league clubs and the University of Texas athletic department.
Promotions tied to pay-per-views have been strong sales drivers for Corona and competitor Tecate, both at retail and in bars and restaurants.

“It allows us to go into bars that we may not have a presence in, where we know they’ve purchased pay-per-views in the past and they plan to in the future, and to go in and … form relationships with these accounts to drive further [Modelo] distribution,” Legan said. “And it works both ways. Modelo may be in distribution [with bars] that haven’t purchased fights in the past.”

A decade ago, the UFC counted the brand rub-off that it got from Bud Light as the most valuable aspect of the sponsorship, followed by the rights fee and activation. Today, Epstein said he’d flop those three, placing activation at the top.

“One of the things that makes this deal exciting for us is Modelo’s focus on the UFC,” Epstein said. “They’ve got two properties they’re going to be worried about now. It’s going to be soccer and it’s going to be the UFC. That’s it. It’s not baseball. It’s not football. It’s not individual teams or the thousand other focuses that it could be.

“Bud and Bud Light, being this massive, massive brand, [are] always doing something. They’ve always got tons and tons of mouths to feed and that means we have to fight to get some of that activation. We’re with a partner now that is very focused on two properties. And we’re really excited about leveraging some of that focus.”

Epstein said the UFC also is bullish about its prospects to land beer deals in other markets, not only because they will add to the total rights take, but also because of the promotional support that different brewers can provide in varied markets.

“We’re going to lock arms [with Modelo] and be an important player in the U.S. market,” Epstein said. “But when you go to other markets around the world, we still have the flexibility to partner with local brands.

“I don’t care what market you go to, in virtually every country in the world there are really big, powerful beer brands. And those brands have a presence across sports and entertainment properties in those particular countries. Being able to tap into that in Europe, or in any market we’re trying to grow around the world, is really, really important.”


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