ITG Brands is poised to make a major sponsorship move in NASCAR's top racing series.
However, the company will not be involved in the iconic Winston brand, which ITG's parent company, Imperial Brands Plc, acquired in June 2015 as part of a $7.1 billion acquisition. Instead, ITG aims to increase the national profile of its recently acquired Zone smokeless nicotine pouch by partnering with Richard Childress Racing.
The Zone pouch is limited to consumers 21 and older and is scheduled to debut in 12 private markets on February 5th.
Zorn will serve as what the company calls an “anchor partner” for two-time NASCAR champion Kyle Busch, who is in his second year in the No. 8 Chevrolet race car for Richard Childress Racing.
Sponsorship efforts will be on-site marketing and promotional events at specific NASCAR race tracks.
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The zone's sponsorship will include the Food and Drug Administration's mandatory warning for adult consumers that nicotine is an addictive chemical.
Both companies are touting the benefits of their sponsorship at Speedweek events leading up to the Daytona 500 on February 18th. Zone will be the primary sponsor of several NASCAR-related races in 2024.
“Our partnership with Richard Childress Racing, Kyle Busch and the No. 8 team is a natural fit in a zone where the adult nicotine consumer demographic overlaps with NASCAR's core audience,” ITG Marketing said. said Rishi Dhingra, executive vice president.
Deployment zone
ITG, the third largest traditional tobacco maker in the United States, owns the Winston, Salem, Kool and Maverick brands. According to Nielsen's biweekly convenience store sales survey, its market share ranges from 7% to 10%.
The manufacturer says it has about 900 employees in Greensboro and an additional 775 field sales employees across the country.
ITG acquired Zone's nicotine pouches in June, when Imperial paid $82.6 million for 14 products from Canadian manufacturer TJP Labs, which will continue to manufacture the products.
Zone is marketed as a “smoking and smoking cessation experience for adult nicotine consumers” that “instantly delivers consistent nicotine strength from start to finish.”
Imperial chief executive Stefan Bomhardt said the brand needed to develop a strong following, adding: “It will take time to build our presence in this category, but we are building on that. “The proposition is clearly differentiated within the US market and strongly tested with consumers.”
ITG and Zone face tough challenges in the U.S. in today's highly fragmented oral nicotine space. As of Nielsen's January 13 research report, Altria Group subsidiary Swedish Match's Zyn brand had the top market share at 24.2%. In second place with 4.2% is Altria's On! This was followed by Rogue Holdings Rogue (1.9%) and Reynolds Bello (0.7%).
ITG's Winston Project
ITG's switch in NASCAR Cup Series sponsorship participation to Zone comes in light of strict federal marketing restrictions as part of the landmark 1998 Master Settlement Agreement covering traditional tobacco brands Winston This highlights the difficulty of marketing.
Under RJ Reynolds Tobacco Company ownership, Winston served as the title sponsor of the Winston Cup Series from 1971 until the manufacturer exited NASCAR at the end of the 2003 season.
The abandonment of the Winston Cup sponsorship was the most emblematic sign of the times for Winston, as Reynolds began emphasizing marketing in favor of Camel, once the top-selling traditional cigarette in the United States.
Over the next 12 years, Winston's profile and viability declined, but that didn't stop Reynolds from doing the once unthinkable: selling the brand to gain federal regulatory approval for the $27.4 billion acquisition of Lorillard. I was shocked to learn that he was willing to do what he said he would do.
As part of its acquisition of Newport, the No. 2-selling menthol brand in traditional cigarettes, Reynolds also acquired traditional brands Kool and Salem and Lorillard's traditional cigarette brands Maverick and Blue. I gave up my electronic cigarette.
For more than a year, ITG has been involved in a legal battle with co-owners of the Winston Cup Museum over who is the rightful owner of Winston Cup Series memorabilia housed at the museum in downtown Winston-Salem. involved in a conflict.
ITG had asked a North Carolina Business Court judge to rule that Winston's control over the legacy tobacco brand also extended to the Winston Cup items in the museum.
However, Will and Christy Spencer chose to close the museum in December after much of the memorabilia was sold at an auction that recently concluded in Florida.
plus and minus
Roger Beam, a marketing professor at Wake Forest University School of Business, said the Richard Childress Racing Zone partnership could be beneficial for both parties given the potential for overlapping customer bases.
“This modern oral nicotine pouch could emerge as a viable alternative to more tightly regulated traditional cigarettes,” Beam said.
The introduction of zones sponsored by NASCAR teams should be a good test to see if significant volume can be captured from the existing smokeless category.
“If it turns out to be an acceptable alternative, and only experience in the market can show that, then that brand will not only be successful but also currently less regulated than its product. It has the potential to create new non-tobacco product categories' tobacco-based predecessors. ”
Beam said that having the Zone logo on Busch's race car “is bound to draw intense scrutiny not only from anti-tobacco advocacy groups, but also from the FDA.”
“Nicotine administration has always been controversial given the health problems associated with tobacco,” he explained. “The Zone is marketed as an age-restricted product, which some may find appealing to minors, so it will immediately raise questions and concerns.
“For tobacco companies, marketing efforts have traditionally been questionable and all new products have been controversial. The new Zone is unlikely to be any different.”
But Beam said if Busch has great success on the race track with the Zone logo on the hood, it could help the product carve a niche in the modern oral category.
In that scenario, “there's nothing to suggest this wouldn't be a long-term win for both organizations,” Beam said.
Todd McFall, a sports economist at Wake Forest University, said ITG hopes the sponsorship will win over the loyalty of NASCAR fans.
“Their fans are some of the most brand-loyal people in sports, with one study concluding that over 90% of fans agree they would be willing to buy a product from their favorite driver.” said McFall. “Kyle Busch is a very popular driver, so it's easy to see why Zone thinks a partnership with him will bring in new users.”
