Score this one for PepsiCo.
The food and beverage giant will announce later today that it is set to become the National Basketball Association’s exclusive food and beverage partner in North America starting next season, upending a relationship that the league has had with Coca-Cola since 1986.
Neither the terms nor the duration are being disclosed, but a source close to the deal said it was worth significantly more than the previous partnership with Coca-Cola (KO) in terms of the overall investment from PepsiCo (PEP).
The new agreement also covers the WNBA, NBA Development League, and USA Basketball. Food and beverage company Tingyi, PepsiCo’s partner in China, will be the exclusive partner of the NBA in China through its Master Kong brand.
Although Coca-Cola had a nearly 30-year run with the NBA, the league’s oldest relationship is with Gatorade, a PepsiCo product, which started its relationship with the league in 1984.
PepsiCo has put sports at the center of its marketing strategy in recent years. In the U.S., PepsiCo is also the official sponsor of the NHL, the NFL, and Major League Baseball, with Pepsi as the lead brand. Major League Soccer and PepsiCo had been in partnership until December, with Bloomberg reporting last night that Coca-Cola had picked up the sponsorship with a four-year deal.
The NBA deal is different for PepsiCo in that Mountain Dew, rather than its eponymous brand, will take the forward position. PepsiCo’s Aquafina, Brisk, Doritos, and Ruffles brands will also have a presence in the partnership.
The NBA and PepsiCo have plans for new and expanded content, such as building out the league’s 3-on-3 events, while the food and beverage behemoth will have exclusive rights of association with anything to do with logos and gear on a national level.
Teams and players can still do their own deals with either Coca-Cola or PepsiCo, but it’s likely that PepsiCo will ink more such arrangements now that it will be able to include imagery and video from the league in its national advertising. The new agreement does not affect which food and beverages are sold in stadiums.
The two parties have been in an active dialogue for a number of months, according to sources, with the NBA interested in expanding its relationship in the space beyond sodas. Unlike Coca-Cola, PepsiCo’s portfolio includes food products.
This is the second victory for Pepsi in recent months. In March, it overtook Diet Coke to become the No. 2 soda in the U.S. for the first time since 2010, according to Beverage Digest. Coke is still ranked No. 1 by volume.
Update: Coca-Cola provided the following statement:
We remain fans of the NBA and have shared remarkable experiences during our 28-year partnership, however we have made the decision not to renew our global contract at the end of the 2014/2015 season. The Coca-Cola Company has committed an incremental $1-billion toward its brands over the next three years, and with this commitment comes the need to focus on the most effective and efficient investments to maximize brand growth. The Company will continue to have a strong presence within basketball culture through our relationships with iconic players. We will also continue to be visible through ongoing relationships with individual teams and venues.
