Enliven Beverage Deal Podcast Episode #9
Airports can receive a number of benefits (funding, traveler engagement programming, renovated public spaces, sustainability initiatives, etc.) by partnering with a soft drink company in a sponsorship and pouring rights agreement. But what motivates the beverage companies to compete so aggressively for these relationships? How do the largest beverage companies in the world view airports?
Martin Strobel, Airport Practice Leader for Enliven, joins the show to discuss three reasons why beverage companies love to partner with airports.
Listen on Your Favorite Podcast Player:
Related Resources:
3 Reasons Coke & Pepsi Want Direct Relationships with Airports
Why Major Brands Love Healthcare
The Best Customer Engagement Companies in the World Adopt Pouring Rights (And You Should Too)
Transcript:
Tim Harms:
Welcome to the Enliven Beverage Deal Podcast, where we’re all about saving and making you money by taking both the guesswork and the legwork out of your beverage partnership and by leveling the playing field, when it comes to negotiating your beverage contracts. I’m your host, Tim Harms. We’ve got a great show for you today, stay tuned. Well, I am excited today to have on the podcast, Martin Strobel. Martin is the airport practice area leader for Enliven. Martin, welcome.
Martin Strobel:
Thank you Tim, really appreciate you having me this morning.
Tim Harms:
Yeah. It’s been really fun to get to work with you over the last several years as you’ve really pioneered the airport practice area for Enliven. Honestly, I mean, you really pioneered the first beverage deals for Coke and Pepsi and for airports in that channel. And never forget, I was traveling with you early on, as we were endeavoring in this practice area. And I remember walking through an airport with you and you just stopped and looked around and said, “Man, don’t you just love airports, there’s just energy here, there’s excitement here, everyone’s happy to be here.” Do you still feel that way after several years in the business?
Martin Strobel:
Yeah, I get more and more excited about airports every year because airports continue to evolve to meet customer trends. And so customers expect more and more from airports and it’s always really neat to see them. Whether it’s changing a business model, a process or whatever they need to do to meet those evolving consumer needs. I mean, they’re like small cities, an airport is a small city and as we know our cities are always changing and growing and evolving and the same is happening at airports. So no airport is alike and they all operate a little bit differently. So it’s always fun and challenging.
Tim Harms:
What’s the first thing you notice when you walk into an airport?
Martin Strobel:
Oh, this is going to sound silly, not silly, but I am an old operations guy, so I always look at the cleanliness of the airport as I walk in. So I’m looking at whether or not there’s gum on the concrete, I’m looking at how clean the carpets are, I’m looking for cobwebs, those things that really have nothing to do with what I do now but it’s the things that when I walk into an airport, a clean tidy airport is typically a very well run airport.
Tim Harms:
Yeah, good point. Man, yeah, every time I step into an airport, it’s just, my heart beats a little faster, there’s something, whether it’s chasing a new business deal, whether it’s taking the family out, whether it’s going to a new country, I know I’m going to experience something. There’s just something about being at an airport that makes you a little happy. I mean, even with all of the waiting, even with all the security, et cetera, that can’t hold me down, there’s some energy, magic energy at airports. Well, today we thought we’d have you on to talk about actually that energy that you get being at an airport, how that translates to Coke and Pepsi and why are they excited? Why does their heart start beating a little faster when they think about airports? And I think specifically why airports are so attractive to Coke and Pepsi.
Martin Strobel:
Yeah, I think it is, it’s new to a lot of airport management teams, these sponsorship relationships between beverage companies and airports. Many airports have similar sponsorships with other type companies, whether it’s a financial services or automotive or other global leaders. And these direct relationships, they really help airports because there’s literally hundreds of thousands or millions of dollars annually that a beverage company will pay to an airport, sponsor an airport. Plus an airport gets to tap into some of the best and brightest marketing pros in the world in order to improve the traveler’s journey. Coke and Pepsi, Dr Pepper, all of these beverage companies, they are focused on their customers and they have research, trends, trend analysis, and more importantly, they’ve got human resources that can help to improve the traveler’s journey for airports. And then you also get introductions of new technology and products, whether it’s in equipment or just these companies expanding their portfolio, Coke and Pepsi both have about 4,000, 5,000 products. And they’re always introducing new products or purchasing brands and bringing those to their customers. So there’s a ton of benefit for airports.
Martin Strobel:
But one of the questions I always get is, what’s in it for the beverage company. And so that’s really what I focus on today. And I really look at their three main benefits to a beverage company when they look at an airport. So the airport gets a ton of benefits, airport gets financial assistance, most get millions of dollars a year, depending on the size. They get that access to marketing and other resources too, so that the airport can improve the traveler’s journey. But for the beverage company, the flip side of that is, the first is, is they get measurable results. And what that means for a beverage company is they’re really able to measure two things. One is the volume that they get from the airport. So the beverage volume, the number of cases sold as well as the number of fountain gallons that are sold, which is critically important to a beverage company. And then also it’s easier for them to measure impressions through an airport. So all the eyeballs that are walking through the airport that they’re able to attract.
Martin Strobel:
So for instance, if you look at the Dallas/Fort Worth Airport, their deal with, and Dallas has had a deal with a beverage company since 1995, they first had a 10 year deal with Pepsi, took them through 2005, then they had another 10 year deal with Pepsi that took them through 2015. And right now they’re almost halfway through a 10 year deal with Coca Cola. And that deal pays the airport 3.5 on average $3.5 million on average per year during that 10 year contract length. So for Dallas, I mean they are, $3.5 million even for an airport as big as Dallas is a significant amount of money. So they get that benefit. But the way that Coke looks at it is, Coke will look at that investment, that three and a half million dollar investment. And they know they’re going to get back, and this is pre-COVID, 640,000 to 750,000 cases or gallons per year. Plus, they’re going to get some vending revenue because Dallas has a great vending program.
Martin Strobel:
So that measurable result that Coca Cola knows they’re going to receive, that beverage volume, is one of the main reasons that a beverage company like Coke really wants to partner with an airport like Dallas or any other airport. They love the ability to say, “We’re going to invest X, and we’re pretty sure we’re going to get Y back.” Now, when you look at Coke or Pepsi or Dr Pepper or any of the other big beverage companies, where that money would go otherwise is, we always use the example of super bowl advertising. So 32nd spots, whatever it is, three and a half million dollars, $4 million Coke or Pepsi is looking at their marketing budgets and trying to decide, do I pay that three and a half million dollars to have the exclusive right, for my product at DFW or do I buy another 32nd commercial at the Super Bowl?
Martin Strobel:
And for a lot of the beverage companies, they look at that and they say, “We don’t know what we get from that advertising or that advertising spot, but we know what we’re going to get from Dallas and that’s why we want to do that deal.”
Tim Harms:
Yeah. And so finance guys get really excited when you can actually put measurable results and they say, yes, we’re going to spend this money, but not only is it going to build brands with all of the people that are coming through, but it’s also going to yield a very measurable return. I love it.
Martin Strobel:
And so the second reason that I always, or that the beverage companies have told us that they’re interested in airports, is airports are one of the last industries. And by industries, I’m really thinking about premier properties like theme parks and restaurants, convention centers, university stadiums, arenas, all of those industries or premier properties, have already have pouring rights agreements or the sponsorship agreements with beverage companies. Airports are slow to the game, and the reason is, is that airports have been focused primarily on safety and security. They want to get a passenger from the curb or mass transit through the airport and safely on the airplane. And they’ve left food and beverage and some of the other decisions to typically contractors or concessionaires. And what’s starting to happen as we talk about airports evolving, airports are evolving to take more of a leadership role in the customer experience throughout the airport. And that’s really evolved in the last 20 or 25 years.
Martin Strobel:
And so what we’re seeing is airports, I mean, first of all, they like the money. The money is important, it’s critical to airports, but more importantly, they’re focused on how do we improve that traveler’s journey. And you do that by tapping into all the knowledge that a Coke or Pepsi or Dr Pepper or Nestle can bring to the table for you, to improve that traveler’s journey. And so that’s the airport’s benefit, but the Coke or Pepsi or the beverage company benefit is they are struggling to find growth. North America is a mature market for the beverage companies and so they’re trying to figure out ways that they can continue to grow their business. And one of the ways that they can do that is by partnering with airports to try to capture a larger market share. So they really see the air airports and the aviation industry as a way that they can begin to build partners, new partnerships and increase their market share.
Tim Harms:
I love it. So first of all, they get the benefit of acquisition, of new measurable volume. Second of all, it’s a greenfield opportunity. They’re not competing for just business from their competitor to bring it across the goal line, switch from red to blue or blue to red or whatever. It’s actually a green, new opportunity. And there’s practically nowhere in the economy today other than airports, where that can happen. All right, so what’s the third reason that airports are so attractive to the beverage companies?
Martin Strobel:
Beverage companies love to combine an impression, a branding impression with a consumption moment. And what that means, a consumption moment with an impression, some people may say, I don’t get that. And the best anecdote I can share is when you’re at the movie theater, it is incredibly important, and Coca-Cola up until recently, has owned the movie theaters. So I’ll use them as the example. But Coca Cola pays a tremendous amount for that moment when you’re sitting in the theater, drinking their product and watching their commercial. And so for brand managers at the beverage companies, that mixture of the impression with that consumption is incredibly important to them. And so what the beverage companies look at is they say, okay, an airport like Reagan National has 24, 25 million passengers in 2019, Reagan National is a Pepsi port now, like I mentioned, Dallas was a Coca Cola port.
Martin Strobel:
So Reagan National, what Pepsi’s able to do is they’re able to put their products in a place like Reagan National, where almost 25 million passengers flow through. And they’re able to market to those passengers as they’re enjoying the product. And candidly, I mean, the beverage companies love airports because it’s a place where most people are having fun. And you had said Tim, there’s waiting and you got to hustle and there’s anxiety, but there’s also, this is the launching point for a family vacation. Even if you’re on a business trip, it can be a grind, but a lot of times you win business after going to an airport. So there are those celebratory moments for folks as they’re going through airports. And that’s exactly where Coke and Pepsi want to be.
Tim Harms:
Yeah. And it’s not just even consuming the product while you’re there having a good time, but we see that these beverage deals enable the beverage companies to create these surprising moments of delight. I’m thinking about example we saw of the new Coke activation at DFW surrounding the Stranger Things Two launch. Can you walk through some of those examples?
Martin Strobel:
When a lot of people think about these partnerships with a beverage company, they think about the direct funding that comes with it, and it is important, there’s no way of getting around that. But oftentimes what’s missed is the ability to work with some of the brightest minds in customer engagement in the world. And so a couple of examples, and I love the one you brought up about Dallas Fort Worth, Netflix who produced Stranger Things, and then the Coca Cola bottler there in Dallas. And essentially what they did is they set up a very, if people have seen stranger things, a very kind of creepy, not supernatural, but a little bit surreal vending area that mimic something from the Stranger Things series. But in that area, rather than putting in a traditional vending machine, they put in a new Coke vending machine, and the bottler there bottled what I’m going to call the old formula of new Coke, the new Coke that was introduced in the 80s and then quickly shelved or done away with.
Martin Strobel:
But that was one, I think it was the only place in the country in which something like that happened. And so for Dallas and the travelers who are going through there, it was a really, the word unique often gets overused, but it was a unique experience because there was nowhere else in the world that that was happening. And so that’s what a Coke or Pepsi can bring to the table. Just really fun and unique experiences for passengers. We did one in Philadelphia, so Philadelphia International Airport’s an Enliven client and Philadelphia this past year in 2019, hosted the Super Bowl of eGaming. And so what Philadelphia did, the airport did in partnership with Pepsi, is they set up an eGaming experience. So for the four days that people were traveling into Philadelphia to go down to the Wells Fargo Center to watch people play video games, which candidly is not my cup of tea, but there were 12 to 14,000 people a day watching it in the Wells Fargo Center.
Martin Strobel:
So anyway, you could go through the Philadelphia Airport and they had a gaming experience set up. So as all these gamers are coming through traveling to, and from Philly for the Super Bowl of eGaming, they had it set up where they could play games there in the terminal, which was really cool and got a great response from folks.
Tim Harms:
Yeah. So it’s great, I mean, those partnerships can not happen if Coke or Pepsi don’t partner directly with the airports. And it’s a tremendous benefit to Coke and Pepsi, they get a lot of PR out of it, they get a lot of fun engagement from the consumers and passengers there, but it’s also incredible amount of PR and excitement for your airport. I mean, DFW got tremendous amount of news coverage for that event. And it’s just not something you typically think about when you think about airports. And so it’s a real fun piece. That’s all made possible by having Coke, Pepsi, Dr Pepper partner directly with airport. Any last words that you want to leave us with Martin?
Martin Strobel:
Well, I think what I would say is airports sometimes don’t realize the attractiveness of their facilities. Because we all just get busy with what we’re doing, and it’s sometimes hard to step back and realize the value that you can bring to a company like Coke or Pepsi. And trust me, Coke or Pepsi realized the value of airports and are very excited about doing preferred deals or exclusive deals with airports. So it’s something that, if an airport is interested in even just talking about it, I would say, get in touch with us. We can walk you through where the beverage companies are. And if you even wanted to talk with some of them ahead of time to just get a sense of why they’re so excited to partner with airports, we’re happy to put you in touch with some of their leadership team.
Tim Harms:
Perfect. Should someone just go to our website enlivenpartnership.com and click the contact us page?
Martin Strobel:
Yep. That’d be perfect. Probably the easiest way to do it.
Tim Harms:
Awesome. Well, thank you, Martin. And if you’re an airport executive listening to this call, before Martin walks on your airport, make sure you get those floors cleaned.
Martin Strobel:
It’s the first thing I’ll notice. Good, clean, carpets.
Tim Harms:
Well, thank you. That’s just a testament to your attention to detail, but nothing gets by Martin. He’s meticulous and he does a great job in everything he does. So thank you Martin, for being on the show today.
Martin Strobel:
Thank you. Really appreciate it.
Tim Harms:
And hope to have you back soon. Thanks everyone for listening in, hope you found that informative. If you have a burning question about your beverage negotiation or partnership, we’d love to hear from you and answer it on this podcast. Reach out to us by emailing podcast@enlivenpartnership.com. And hey, before we sign off, I want to remind you that you can take both the guesswork and the legwork out of your beverage partnership. You can level the playing field in your beverage negotiations, and you can save or make your company millions through a new or an improved beverage agreement. The first step is a free beverage opportunity analysis, which will tell you just how much you can save, or you can make. Sign up for your free beverage opportunity analysis at enlivenpartnership.com and by clicking free savings estimate. On behalf of everyone here at Enliven, thanks for listening in.
