“Mommy, who is LeBron James?” my 4-year-old daughter asked.
“He’s one of the best basketball players in the world,” I replied, explaining some of his accomplishments. “Why?”
“I really like his drink,” she said, after stealing a sip of Mtn Dew Rise from a sample pack that Pepsi sent me ahead of my interview with James. Pandemic parenting at its best. With just one taste of the energy drink, she was hooked — and became an instant LeBron James fan.
PepsiCo is banking on that kind of reaction after luring James away from archrival Coca-Cola, which he endorsed for 17 years. The four-time NBA champion is considered to be one of the most marketable athletes in the world.
Pepsi unveiled its inaugural advertising campaign with James on Thursday. It will include a commercial that will air throughout the NBA playoffs.
The new ad, shot earlier this year, features James imagining what his life would be like if he coasted instead of “rising above” each and every day.
“Who would I be if I snoozed? Skipped a practice? If I got distracted … If I’d lost sight of my goals,” he asks in the ad. “Nah, I chose to rise.”
James told CNBC he’s excited about this new partnership and hopes he can put Mtn Dew Rise on the map despite an already crowded energy drink space.
“I think the concept behind the energy drink is what I gravitate towards,” James said. “Rise above self-doubt and rise above the occasion.”
Given the 36-year-old James dominates on the basketball court, leads various philanthropic and social justice initiatives on top of running the LeBron James business empire, which consists of a portfolio of everything from restaurants to media entities, he may be the last person who needs an energy drink.
A crowded but growing category
For everyone else, Pepsi executives hope that Mtn Dew Rise differentiates itself enough to stand out. It contains roughly the same amount of caffeine as two cups of coffee and is packed with vitamins.
The brand is being pitched as a way to “kick off the morning with a mental boost, immune support, and zero grams of added sugar.” It comes in six fruity flavors, including Berry Blitz, Peach Mango Dawn and James’ favorite, Pomegranate Blue Burst.
The Los Angeles Lakers star will be its face alongside other influencers who will named over time.
“We know it’s a crowded category,” James said. “But we believe there’s more room.”
According to Euromonitor, energy drinks generated $14.15 billion in retail sales last year.
“It’s a category that is growing significantly,” said Duane Stanford, editor and publisher of Beverage Digest.
The category is seen as the next frontier for Coke and Pepsi, since soda consumption has waned as people have become more health conscious. The category’s leader by volume is Monster Energy, which is distributed by Coke.
Pepsi is not new to the category. It acquired Rockstar Energy for $3.85 billion in March 2020, and early results have been positive. During its first-quarter earnings call, Pepsi CEO Ramon Laguarta said Rockstar’s sales are growing again after years of flat or declining demand. Laguarta said it was too soon to say whether it was bringing new consumers into the category, but the brand’s revival was encouraging.
“Energy is a major priority right now for PepsiCo, and they have basically pulled out all the stops by signing LeBron,” said Stanford. “It gives you an indication of just how serious they are about energy, but also the extent to which they think LeBron can really help them.”
In March, Pepsi renewed its sponsorship with the NBA as the official soft drink of the league. Mtn Dew will remain the title sponsor of the 3-point contest during All-Star Weekend. Pepsi took over the relationship with the NBA in 2015, after Coke had partnered with it for nearly three decades. Pepsi also has relationships with NBA stars Zion Williamson and Joel Embiid.
‘An unbelievable ride’
James was an 18-year-old phenom when he signed his deal with Coke and began working with its Sprite brand. During his time with the company, he helped market Sprite and Powerade by appearing in many commercials and even introduced a limited-edition flavor. Last September, he mutually agreed to part ways with Coca-Cola.
The decision came as Coke was reevaluating its finances in response to the pandemic. The company’s sales were hurt as fewer consumers were going out to restaurants, sporting events and movie theaters. At the time, Coke said it was looking to invest in places that ensured long-term growth. In addition to cutting more than 2,000 jobs, Coke slashed its global drink portfolio from 430 brands to 200, retiring brands like Tab soda and its smoothie business.
“I had an unbelievable ride with Coke and I still have some some great friendships over there, and that’s going to last forever,” James said. “But when this opportunity came about, it was perfect timing for us to move on.”
Stanford said it’s likely Coca-Cola couldn’t justify the cost of working with James. It’s not known how much the deal was worth but for perspective, Nike’s deal with James is worth more than a billion dollars.
“He’s got his hands in a lot of buckets now in media, sports and entertainment, and that becomes a much more powerful asset when it comes to reaching young consumers,” said Stanford.
Pepsi would not comment on the value of its deal. It said James is the first athlete to launch an entirely new brand, and the partnership uses a new model to support James beyond being just an athlete. Pepsi will work with him on issues related to education, social justice and initiatives in underserved communities.
“Pretty much all the partnerships and things that I do at this point has always something to do with my foundation and making sure we continue to highlight my community and other communities that need a voice, need an opportunity,” James said.
His foundation’s philanthropic endeavors include The I Promise School in his former hometown, Akron, Ohio. He has also involved in More Than A Vote, a group backed by athletes to combat voter suppression.
“I think we all can all do more,” James said, when it comes to issues related to social justice and closing the wealth gap. “We all can do better,” he said.
When asked whether he could have a future with Pepsi’s sports drink Gatorade, a seemingly natural fit, LeBron didn’t rule it out.
“We shall see, we shall see,” he laughed. “Obviously we want to start with baby steps — crawl before you walk. We’re in a good place right now, and we will see what are the opportunities going forward that best fit us,” he said.
Gatorade famously taunted and then apologized to James for a 2014 tweet saying, “The person cramping wasn’t our client. Our athletes can take the heat,” after James left game 1 of the NBA Finals due to leg cramps.
Pandemic deal
James signed this endorsement deal in the midst of the pandemic and an NBA season that had strict protocols to prevent the spread of Covid-19.
“I haven’t had an opportunity to meet anyone face to face and that’s because of the season that’s going on where we are stuck in our hotel rooms,” he said. “I look forward to the opportunity to meet the CEO and meeting all the great people at Pepsi.”
He has been involved on the creative side through Zoom calls and email.
“Because my name is attached to it, when you’re doing something that means something to you and it hits home — you absolutely want to be involved,” he said.
With seemingly endless energy himself, the Lakers star said it is his family and the kids at the Promise School that gets him energized to get out of bed every morning and push him to be better.
“They need that motivation. They need that person that gets up every single day that wants to be better and wants to be greater, that wants to challenge things that other people don’t want to challenge,” he said.
Yet James said even he has lazy days.
“There’s weeks, there’s days, there’s months where I lack a little energy as well, because how hard I work, hard I go and how hard I strive to be the greatest at what I do. So any little kickstart from a drink, a person or from music — I try to take full advantage of it.”
For Pepsi, getting King James on board is a big win, according to marketing executives.
“He’s iconic,” said Bob Dorfman, a creative director at Baker Street Advertising. “He will definitely help move product and on the PR side, it looks kind of cool that they have stolen him from Coke.”
And if you’re wondering about my daughter — potentially Mtn Dew Rise’s youngest fan — yeah, the drink works. She was up until midnight bouncing off the walls.
Source: Business - cnbc.com
