Formula 1 returns to the Circuit of the Americas on Sunday for the 2021 Aramco United States Grand Prix. Fans in the United States might be surprised to see the publicity of Phillip Morris International (PMI) and British American Tobacco (BAT) during the race (look for the Mission Winnow brand on The car of Ferrari driver Carlos Sainz). But one new report industry watchdog STOP says tobacco industry spending on F1 is at its highest level since 2006, the year the FIA ââ(FÃ©dÃ©ration Internationale de l’Automobile) recommendation to ban tobacco-related advertising came into effect. Money Formula estimates that PMI ($ 75 million) and BAT ($ 30 million) collectively spent around $ 105 million on sponsorships with Ferrari and McLaren, respectively, in each of the past two years. Phil Chamberlain (Editor-in-Chief, Tobacco tactics, and a STOP partner) explained that without anyone trying to stop them, tobacco companies – which have a lot of money to spend and new alternative products to promote – have been encouraged to increase their presence in F1 at in recent years. And both teams have been prepared to take their money. McLaren said in a statement that âour partnership with BAT is rooted in technology and innovation and provides a global platform to promote new BAT category products such as Vuse and Velo, which can play a vital role. in reducing the harm of tobacco globally. McLaren and BAT’s racing branding and marketing activity will always comply with legal and regulatory environments. Ferrari did not respond to our request for comment.
Taking from JWS: Tobacco companies have been largely exiled from the sports sponsorship ecosystem over the past 20 years, at least in the developed world. “You have examples where [ties] strength [still] be strong enough with the cigarette companies [and teams or leagues] in Southeast Asia. But it’s really kept at a national level. [As it relates to] those kind of international sports brands, the FIA ââis in danger here, âChamberlain said.
In 2001, the FIA, F1’s governing body, announced its intention to eliminate tobacco-related sponsorship from the sport by the end of the 2005 season. But by the time 2006, the organization backtracked. his decision and simply “recommended” a ban. In an email to Johnwallstreet the FIA ââ(via F1) explained that while it remains “firmly opposed to tobacco advertising“, it is “not in a position to interfere with the private commercial agreements of the teams and their sponsors”.
While the FIA ââended up recommending a ban, several of the tobacco companies that had invested in the sport made alternative advertising plans after the 2001 announcement. As a result, tobacco company spending fell off a cliff. in the mid-2000s. PMI was the only company to sponsor a team after the 2006 season.
Spending by tobacco companies fell to a two-decade low in the early 2010s after Marlboro was removed from the official Ferrari team name. But sparked by a growing market for alternative tobacco products (which were not covered by the recommended ban), PMI resumed advertising Ferrari cars in 2018, and BAT joined the sport of the year. next. The amount of money flowing in from big tobacco has since been on an upward trajectory. The addition of new races (and therefore, more ad inventory and more spend) to the F1 calendar is another factor contributing to the recent increase.
Chamberlain suggests that the lack of resistance encountered since the re-emergence in 2018 and 2019 has led to high spending over 15 years. âThey are kind of welcomed by regulators [and the teams] themselves, âChamberlain said. “And above all because they put a mind-boggling amount of money into [the sport]. “
While Ferrari and McLaren may try to replace the tobacco companies as sponsors, Stephen Curnow (EVP, General Sports Worldwide) says it would be a challenge, “regardless of the marketing power of F1 and the two teams.” To do this, a new âsuper sectorâ must probably emerge. He suggested that the crypto category could fill the bill. “Crypto companies are investing large sums in both football and F1 to stand out from the brand, and sponsorship is seen as a platform to legitimize an industry, which many consumers are still unsure of.” , did he declare.
That’s not to say the two teams aren’t trying to replace their tobacco partners. While PMI continues to be Ferrari’s âtitle sponsorâ, said Curnow, âit’s no secret that the team is in the market for a replacement, a significant challenge given the expense of sponsorship that they will have to replace “.
While Chamberlain maintains that tobacco company money is still “absolutely vital” to Ferrari and McLaren today, it should be noted that other teams have managed not only to survive, but also to win races without it. So it’s hard to argue that these two teams couldn’t find a way to do the same.
You would think that Liberty Media, owner of Formula 1, could also ban tobacco-related advertisements in sports. But the publicly traded conglomerate has decided to take action. In a statement (via F1) Liberty said: “The rules in this regard are governed by the FIA ââas the governing body and not by the rights holder.” As you can see there is “a really good pass the buck game [going on] here, ânoted Chamberlain.
Formula 1’s trajectory would seem to help explain why PMI and BAT invest so heavily in the sport, again. They see F1 “receiving a younger demographic [and re-]position itself as a technological innovator which is an exciting science, âChamberlain said. Being associated with something young (32% of F1 fans are between 18 and 24) and forward-thinking is appealing to advertisers looking to woo the next generation of fans.
The sponsorship of F1 also gives them the opportunity to ‘meet and socialize with [a host of powerful] political, media and sporting actors at Grand Prix events around the world, ânoted Chamberlain. The possibility of organizing company hospitality outings and off-piste events is particularly valuable for companies in a sector which has had great access to social situations cut off over the past two decades.
There is also a quantifiable return on the capital that both companies spend. âOur report estimates that [BAT] received $ 54.2 million in [on-screen exposure for their brands] on an expense of $ 30 million, âChamberlain said.
But just because PMI and BAT are sponsors of Ferrari and McLaren doesn’t mean you should expect to see the Marlboro or Lucky Strike branding on a car or fire suit on Sunday. As Chamberlain explained, âWhen they know the rules are being enforced very strongly, they back off a bitâ¦. They adapt their approach according to the hindsight they will obtain [from regulators in the country]. “
Instead, look for milder brand types (think corporate slogans like âA Better Tomorrowâ from BAT) and advertisements for e-cigarette products. Remember, last week the FDA approved the sale of an electronic cigarette product for the first time. This product, by Vuse Solo, is manufactured by RJ Reynolds Vapor Company, a subsidiary of the tobacco company Reynolds American Inc. Reynolds American is owned by BAT. It should be noted that Vuse is also a sponsor of the Arrows McLaren IndyCar team.