Nestlé's KitKat Signs Formula 1 Global Sponsorship....

Nestlé’s KitKat Signs Formula 1 Global Sponsorship….read mor

Nestlé’s KitKat has entered into a global sponsorship agreement with Formula 1, marking a significant strategic shift for the company under its new CEO, Laurent Freixe. This deal, which will span from late 2025 to 2028, aims to elevate KitKat’s global presence and attract consumers under the age of 30.

According to a senior executive who spoke with Reuters, the partnership will kick off in Mexico and Brazil, featuring KitKat branding prominently displayed at Formula 1 racetracks, including advertising in pit lanes and special events. Additionally, KitKat chocolate wrappers will feature Formula 1 branding, and Nestlé plans to distribute hundreds of race tickets as part of its promotional activities.

This sponsorship represents a notable departure for Nestlé, which, throughout its nearly 160-year history, has never engaged in a global marketing deal, typically opting for country-specific agreements. Chris O’Donnell, KitKat’s global category leader, emphasized that the deal is a crucial element of their strategy to transition from a fragmented, local marketing model to a more cohesive global approach. However, he declined to disclose the financial details of the agreement.

The global marketing budget for KitKat has seen a near 20% increase this year, reflecting the brand’s valuation of over CHF 2 billion (approximately $2.29 billion) worldwide. O’Donnell commented that the investment in KitKat’s marketing has returned to pre-COVID levels, highlighting a significant shift in strategy, with plans to continue investing in the brand going forward.

Nestlé, known for its diverse product portfolio that includes Nescafé and Häagen-Dazs, typically does not provide details about its marketing expenditures or the specific financial performance of individual brands. Nevertheless, KitKat stands out as one of the company’s major revenue contributors, although it still lags behind certain brands in the coffee and pet care sectors, as well as Maggi.

The increase in KitKat’s marketing budget is substantial compared to Nestlé’s overall spending trends in recent years. In 2023, the company reported that advertising and marketing expenses accounted for 7.7% of total sales, reflecting an increase of 80 basis points from the previous year. This surge in KitKat’s marketing investment contrasts sharply with the overall decline in Nestlé’s marketing budget during the pandemic under former CEO Mark Schneider, which has had lingering effects on the company’s current revenue performance.

Following a series of weak sales volumes attributed to a reduction in innovation and marketing aimed at cost savings during a time of rising prices, Schneider was dismissed from his position in August. The company’s strategy to cut back on marketing led to a shift in consumer behavior, with shoppers gravitating toward more affordable or distinctive brands, resulting in a loss of market share for Nestlé.

Since taking over in September, Freixe has focused on revitalizing Nestlé’s core brands and has been a strong proponent of the KitKat sponsorship deal, according to O’Donnell. He remarked that Freixe views this partnership as a significant statement for the brand and a powerful catalyst for growth. O’Donnell indicated that this level of investment in marketing would be standardized across many of Nestlé’s brands moving forward.

In a related development, last month, French luxury conglomerate LVMH announced a 10-year sponsorship deal with Formula 1 that encompasses its brands, including Louis Vuitton, Moët Hennessy, and TAG Heuer, replacing the long-standing sponsorship held by Rolex. This trend of major brands seeking partnerships with Formula 1 reflects the sport’s growing global appeal and the potential for brands to engage with a younger, more diverse audience through high-profile sponsorships.

As Nestlé’s KitKat embarks on this new chapter, it aims to leverage the excitement and visibility of Formula 1 to enhance its brand image and connect with a younger demographic, ultimately driving sales and strengthening its position in the competitive global market. Through this innovative approach, Nestlé seeks to reshape its marketing strategy and solidify KitKat’s status as a beloved confectionery brand around the world.