Merchandising goals
June 9, 2010
At stake in the world's biggest sporting event are hundreds of millions of euros worth of sales of replica World Cup footballs and jerseys, not to mention customer loyalty when it comes to buying new shoes.
When the championship tournament kicks off on June 11 in South Africa, Adidas aims to defend its title as the number one football brand against fierce competition from Nike, the world's largest supplier of sportswear. And Puma shows no signs of being intimated by its larger rivals.
Special sponsoring privilege
Adidas will be tough to beat, however. For one, the German company is the official sponsor, outfitter and licensee of the FIFA World Cup. It has held this status for 40 years. Among the privileges that comes with it: providing the official game ball.
An Adidas spokesman said the official match ball is the company's biggest selling World Cup product worldwide. More than 10 million official "Teamgeist" balls were sold in 2006.
Whether footballs will be as hot an item this year as in past events remains to be seen, though. The official match ball for the South African games, called "Jubulani," has drawn considerable criticism from top goal keepers, including Spain's Iker Casillas and Brazil's Julio Cesar, and other players. They say the ball can behave weirdly, suddenly changing its trajectory.
Adidas insists the ball has been used for months in league games by numerous clubs and that the response so far has been positive.
Adidas also supplies uniforms to nearly 60 national teams worldwide, including 12 that have qualified for the 2010 tournament. The line-up of endorsed national football teams includes Argentina, Germany and Spain, as well as host country South Africa.
These endorsements are highly coveted in the industry because of their high branding visibility. Only the logos of the outfitter and FIFA appear on national team jerseys. That's precious marketing real estate in the eyes of football outfitters.
Messi with new shoe
Moreover, Adidas has signed endorsement contracts for its footwear with 200 high-profile football players.
At the top of the list is Lionel Messi of Argentina, who is currently considered the world's best player. In South Africa, Messi will be wearing a new shoe, the F50 adiZero. Adidas claims the shoe, weighing 165 grams, is the world's lightest.
This year, Adidas hopes to break its record 1.3 billion euro sales of football-related products set in 2008, the year of the European Championship. That record came on the heels of sales worth 1.2 billion euros in 2006, when the World Cup was held in Germany.
"We are very confident and optimistic that we will reach a new record in football merchandise this year with the help of the World Cup in South Africa," Adidas spokesman Jan Runau told Deutsche Welle.
American rival
US sportswear giant Nike also claims pre-eminence in the game of football, which is called soccer in North America. Nike's roster includes powerhouse Brazil - a five-time World Cup champion. The Brazil jersey was biggest selling jersey of the 2006 games.
Nike also endorses a number of star players including Portugal's Cristiano Ronaldo and England's Wayne Rooney. The outfitter recently renewed its sportswear contract with Ronaldo for around 6 million euros per year, up 2 million euros from his previous contract.
Another team on Nike's roster – indirectly – is England. The team is equipped by Umbro, a traditional English outfitter acquired by the US company in 2007. Their combined sales of football-related products are worth about $1.9 billion (1.6 billion euros). That makes the group, consisting of two separate brands, the world's largest supplier of football products.
Puma - not shying away
As big and powerful as Adidas and Nike-Umbro may be in football, German rival Puma isn't shying away from the competition. The company has built up a significant following in Africa, sponsoring four of the six African national teams that will compete in the tournament.
"Puma has a long tradition in Africa," Puma spokesman Ulf Santjer told Deutsche Welle. "And we have traditionally used (endorsed teams in) Africa to launch new, innovative products."
The company was the first to introduce colored shoes in the 1998 World Cup with Cameroon after agreeing to endorse the team a year earlier. At the next tournament four years later, the company introduced sleeveless jerseys with the same team.
Africa Unity Kit
For the World Cup in South Africa, Puma is spending millions of euros to sponsor the national teams of Cameroon, Ghana, Nigeria and the Ivory Coast.
In addition, the sportswear outfitter will supply its African teams with the "Africa Unity Kit" for their third set of uniforms. The company will donate part of the proceeds from the sale of African Unity fan uniforms to an African biodiversity initiative organized by the United Nations Environmental Program.
Although Africa offers far less sales potential for sportswear than the booming Chinese and Indian markets do, it is a growing market, particularly among Africans working abroad. In France, for example, Puma ran out of stock earlier this year after selling more than 50,000 Algerian football jerseys.
But given the relatively high level of poverty in many parts of Africa and a lingering global economic crisis, can outfitters realistically expect to top their World Cup sales records in South Africa? Experts agree the question is legitimate but see huge demand nevertheless.
Crisis-proof?
Here in Germany, consumers may be spending less on sporting products and activities, but the cuts they make are not as deep as they are when it comes to other consumer products and services, according to recent survey conducted by Sport+Markt. "People are still ready to spend on sports," said Alexander Krause from Sport+Markt.
A growing number of those consumers are female, according to Krause. Women, he said, are becoming increasingly interested in football, with more of them playing the sport. In addition, the games are being marketed as family events. More than one quarter of spectators at German Bundesliga games are now women.
Author: John Blau
Editor: Sam Edmonds