RETAILERS, START YOUR ENGINES 1998-09-14 (2)

DALE BUSS

Call him a tough sell. But when it comes to the marketing appeal of NASCAR, Tom Haggai is a doubting Thomas no more.

The chairman of IGA has authorized his cooperative to make a major investment in stock-car racing because he finally understands the attraction of the supermarket industry to this burgeoning sport -- thanks to a rather intense recent indoctrination.

Personally, Haggai said he still gets "as much excitement out of racing as from watching grass grow." But his son is a NASCAR "freak," so Haggai had developed some familiarity with the sport.

The Chicago cooperative dabbled in NASCAR promotions the last few years with Coca-Cola Co., Kellogg Co. and Flowers Industries, the baking company. Then Haggai heard about the intense retailer interest in its NASCAR program that Fleming Cos., a leading operator of IGA stores, was getting this year.

So by the time Haggai was attending a store-opening ceremony in Ohio a few weeks ago, he was ready to be closed. It turned out that Eric Thorne, a manager and son of owner Ted Thorne, also is a NASCAR fan who wanted Haggai to consider tying into the sport. By the time he left Ohio, the former Baptist preacher was converted to NASCAR.

And now Haggai is eagerly looking forward to getting cozy with NASCAR next year -- wrapping up details of a major expansion of IGA's involvement in the sport and delighted with the prospect of riding NASCAR's tails as it expands internationally.

"We're the dominant independent chain in Australia, and No. 3 in Australia, period," Haggai said. "And we have good growth in Japan."

From show cars in the parking lot to in-store displays of checkered flags and model ovals, from multimillion-dollar team sponsorships to freestanding insert tie-ins, from private-label product lines bearing drivers' names to dreams of international marketing alliances, the supermarket industry is gunning its engines in the National Association for Stock Car Auto Racing marketing derby.

By doing so, grocery chains are hitching themselves to a colorful, boisterous sport that is running at 180 miles an hour -- and growing faster than any other major American form of entertainment.

"Retailers who run NASCAR programs with us can tap into a very large, loyal consumer base and be recognized as supporters of the sport," said John Tuffin, trade development manager for M&M/Mars, Hackettstown, N.J.

"Marketing a NASCAR program can increase store traffic and attract new customers."

There's one simple reason: Fans are fiercely and loyal not only to NASCAR, but to its commercial sponsors -- like supermarkets and brand marketers.

"It's effectual, it's dynamic and it is off the charts relative to the brand loyalty of other sports fans," said Robert G. Hagstrom, author of "The NASCAR Way," a new book in which he explains the success of the circuit in the same way that Hagstrom's earlier book dissected Warren Buffett's investment philosophy.

In fact, according to an independent 1997 study by Performance Research, 72% of NASCAR fans said they felt and acted on loyalties to the sport's sponsors, compared with 38% of pro basketball and baseball fans, 36% of NFL fans and only 28% of Olympics sponsors.

And 40% said they would switch brands to buy from a NASCAR sponsor.

Participants and observers say fans simply are grateful for sponsors' financial support of the sport, and extend their brand loyalties beyond those just associated with their favorite drivers.

"Knowledgeable fans know that their favorite team needs other teams to beat, so they support the sport that they love," said George Pyne, vice president of marketing for NASCAR, based in Daytona Beach, Fla.

"For many fans, it has been a part of the fabric of their lives from a young age," said Joseph Hoff, vice president of national off-premise sales for Anheuser-Busch, the official beer of NASCAR. "It's what their families did for vacation; it's what they watched on TV; the ticket their dad or mom tried to get them as a kid instead of a baseball or football game."

But newcomers to the sport often find just as much to get excited about.

"There's one winner each race, but not 42 losers, because everybody's always out there fighting for points in the standings," explained Michael Farley, a novice fan and vice president of marketing for Thorn Apple Valley, the Southfield, Mich., meat processor that became a NASCAR sponsor this year. "So there's action from top to bottom."

More than 250 corporations now sponsor NASCAR or its driving teams in some way, including more than 70 of the Fortune 500. The average sponsorship costs around $1.5 million. It can go high as RJR Nabisco's sponsorship of NASCAR's top-tier Winston Cup series, which costs between $4 million and $5 million in cash and $25 million in NASCAR advertising and promotion. There are also a "minor-league" NASCAR race series called the Busch Grand National, a truck series and some regional races.

The continued expansionist mode of NASCAR adds to its appeal as a sponsorship venue; race attendance is up 65% since 1990 and NASCAR's cable and broadcast TV packages are constantly expanding as the sport takes aim at more Northern and larger urban markets.

"The sport is still experiencing a rapid expansion in popularity," said Hoff. "It used to be confined to a certain geography, but now fans are popping up all over the country."

NASCAR's roots are Southern and rural, but this is not just the sport of the Forrest Gumps out there. More than half of NASCAR fans have had some college, according to Nielsen Media Research; 44% have incomes of $40,000 or more, and last year 38% were women, up five percentage points from 1993.

Yet the two supermarket chains most active with NASCAR are giants of the Southeast -- Food Lion and Winn-Dixie Stores. Salisbury, N.C.-based Food Lion becomes practically synonymous with NASCAR during the nine-month racing season. It has been the official supermarket sponsor of the sport since 1996 and is an associate sponsor of Bobby Labonte's Interstate Batteries car, meaning that the Food Lion logo is displayed on the car's trunk or roof pillars. The chain is constantly running promotions involving NASCAR because of the close overlap between its Southeastern U.S. market and NASCAR's fan base.

Winn-Dixie, based in Jacksonville, Fla., pays millions of dollars a year for its sole sponsorship of Mark Martin's racing team in the Busch Grand National Series. The Winn-Dixie logo is plastered prominently on the hood of the car and on drivers' uniforms, on raceway walls and even around the cockpit on "in-car" cameras that are featured in televised races.

In-store promotions have included a recent account-specific poster of Martin, sponsored by Anheuser-Busch, commemorating the sport's 50th anniversary. And the chain has more than three dozen private-label products in packages bearing the driver's likeness, including soft drinks, chips and cookies.

"There are only 14 Busch races each year, but the visibility that Winn-Dixie gets from that car puts it in the Top 10 for return on investment of their advertising of all 36 sponsorships," said Cindy Sisson, president of Agency Won, a Charlotte, N.C., specialist in NASCAR-related marketing. (Neither Food Lion nor Winn-Dixie is a client.)

Plenty of other supermarket chains are taking a ride with NASCAR now, and they aren't just in the Southeast. In Kansas City, Kan., for example, a track is going up in a few years. For the moment, the closest race to shoppers at Henhouse Markets and Price Chopper Supermarkets is hundreds of miles away in Indianapolis or Texas. Yet the 24-store chain devoted about two months last summer [1998] to NASCAR promotions sponsored by Thorn Apple Valley, including giveaways of a NASCAR-themed go-cart, a Ford Taurus and a trip to the Brickyard 400 race in Indianapolis.

"We also conducted some remote radio broadcasts with NASCAR drivers and teams like Darrell Waltrip," said Bill Esch, Henhouse's director of sales and marketing. "He brought in his big 18-wheeler truck with two [race] cars, and people came from everywhere to see it." The chain also challenged its managers to come up with "interesting, creative" in-store displays to complement each corporation-wide promotion.

The IGA division of Fleming Cos., Oklahoma City, leaped into the NASCAR realm this year after hearing from divisional managers that an alliance with stock-car racing could help make the distributor and store operator more competitive in an industry where rivals were using a NASCAR affiliation against Fleming. Top managers talked with counterparts at brand marketers that are NASCAR sponsors, such as Kimberly-Clark Corp.'s Kleenex brand, and double-checked the sport's demographics. "We were impressed that almost 40% of NASCAR's fans are women, because 80% of our customers are women," pointed out Jim Mills, Fleming's group president for the IGA division.

When Fleming presented the proposed plan to its 900 IGA stores across the U.S., Mills said, the company was expecting maybe 500 would be interested; it got more than 650, and Mills knew he was on to something. Fleming started out designing a 12-foot-wide, 6-foot-tall point-of-sale piece that it called the IGA Racing Station. Soon, however, the company was seizing the much more expensive opportunity to sponsor its own "Team IGA" car for five Busch circuit races this year.

And both Fleming and non-Fleming IGA affiliates across the country have gotten into the NASCAR spirit. One of the 156 IGA stores that entered Coca-Cola's Race Fans Weekend display contest last March, Jorge & Jerry's IGA in Miami, had a several-tiered display that rose right to the rafters, with pennants visible across the store and miniature race cars at eye level. Another, Mr. K's Super Saver IGA in Pekin, Ill., constructed a race car from Coke cartons.

Snyder Foods, owner of four IGA-affiliated stores in Oklahoma, brought in the Team IGA car to a store parking lot as one of about 100 special cars that were on display for a weekend, in a show that culminated in the sweepstakes giveaway of a classic 1975 TR6 roadster.

And in his three Briar Hill Foods IGA stores in and around Alliance, Ohio, Thorne has featured the Team IGA car on doughnut boxes and deli bags, and sponsored a Team IGA show car in two local parades last summer, including the local Carnation Days parade.

For 1999, Fleming's IGA division plans to sponsoring a Busch car again, expanding its show-car stable to three vehicles from one, beefing up in-store promotions and even devoting an entire flight of TV commercials to NASCAR, Mills said. Fleming also plans to aim its efforts more at families with young children. And Fleming and IGA are working together on a larger NASCAR role for IGA as a whole.

"We've always been on the periphery before, but now we're looking at it as something for Chicago" headquarters, confirmed IGA's Haggai.

(Convenience-store chains, too, have latched onto the NASCAR phenomenon, encouraged by fan demographics that even more closely mirror their customer base.) For the vast majority of supermarket chains that aren't ready to make the multimillion-dollar commitment of a Food Lion or Winn-Dixie -- or perhaps even the corporate-wide commitment that IGA is making -- store-site promotions are one of the most popular and fastest-growing venues for getting some mileage out of NASCAR. Usually, they center around one of the hundreds of actual circuit race cars or replicas that are constantly being hauled around the country by one of the sport's sponsors. Often, these how cars pull into grocery parking lots on the weekend of a nearby NASCAR race.

Procter & Gamble Corp.'s Tide brand, for example, a sponsor of its own car on the top-tier Winston Cup circuit of NASCAR, has 20 show cars that book more than 4,000 appearances each year. Miller Brewing Co. has a show car as part of its associate sponsorship of the Rusty Wallace driving team. "It helps Miller and it helps the market where the appearance is being made," said a Miller spokesman. "It shows that we're making an effort to work with the market."

"Every week, racing is in and of itself its own Super Bowl to its fans," said Agency Won's Sisson. "So 34 weeks out of the year, you'll see a geographic promotion going on in a location, and it's a great thing for grocery stores to leverage that."

"You can pick any time of day and announce that we're going to have the car, and we have a lot of people all day," said Snyder, the Oklahoma store owner. And while one might assume all the buzz outside the store would dampen sales inside, Snyder said, "we have tremendous days" when show cars appear.

The relationship starts with the drivers, who are highly accessible and constantly taking in nonrace events. Fans can relate easily to what they do and what they drive. "Everyone drives a car, so I guess everyone can envision themselves on one of those tracks," said Henhouse's Esch. "The Tauruses they race are modified extensively, but you can still visualize yourself in one."

And that activates brand loyalty. "When [a driver] gets out of his car and fans are looking at him adoringly and he starts out by saying, 'I want to thank Tide for sponsoring my car,' that's pretty powerful testimony," Hagstrom explained.

"When you see a football or baseball player endorse a product, you only see them supporting it in a commercial, not in a game setting," said Buckshot Jones, a colorful driver whose 00-number car is primarily sponsored by SmithKline Beecham's Aquafresh toothpaste. "In racing, anytime they see me, they see my sponsors' names on my hood or my uniform, and there's a huge connection made."

Of course, drivers respond to fans as they do in large part because their livelihood depends very directly on that relationship.

Pro hockey, baseball, basketball and football teams share equally in the crucial national TV revenue that supports their leagues. But in NASCAR, track owners strike deals with TV networks, and racing teams operate more or less like independent contractors. And because prize money isn't that great, they're dependent on corporate sponsors for about two-thirds of revenues.

Visibility in the store aisles is, of course, the other major venue for NASCAR in the supermarket. Close-Up toothpaste sponsors top-notch driver Jeff Gordon, and last year featured his smiling image on 4 million packages. "We don't have a logo on his car or uniform, but we have him in a retail environment, which is most important to us," said Nancy Heller, Close-Up brand manager for Unilever U.S., based in Greenwich, Conn. "And our equity really always has been about social confidence, which is consistent with NASCAR. People look at these drivers as leaders."

The move has produced dramatic results. During the three-month promotion, Close-Up catapulted to a 52% share of toothpaste sales in key retailers, compared with its usual 2% share, and the 25,000 in-store displays it sold to retailers totaled more than Close-Up had moved during the preceding three years. "It's helped us maintain our share during a real difficult period when activity in toothpaste has escalated dramatically, and we've got people like Colgate to compete with," Heller said. Unilever plans a 50% boost in NASCAR-related spending for Close-Up this year, including a sweepstakes.

M&M/Mars encourages supermarkets to warm up to NASCAR by offering a variety of in-store tie-ins, such as the ubiquitous NASCAR-themed bins of Skittles packages that it scattered all over U.S. supermarkets last summer. For 1999, the company will offer a king-size shipper and a half-pallet, each with racing graphics; themed point-of-sale and corrugated display vehicles, and a self-liquidating offer for a special NASCAR collector's item.

The cutting edge of NASCAR marketing both inside the store and out in the parking lot is cross promotions among the growing ranks of brand marketers who are using the sport to promote their products.

Polaroid Corp., for example, is considering a deal in which, for $5, consumers could get a picture of themselves inside another brand's show car, along with a frame and a coupon that is immediately redeemable on purchases of Polaroid film and cameras inside the store, Sisson said. And she added that she was working with a number of brand marketers about joining supermarket chains in cross-promotional NASCAR activities.

The already abundant enthusiasm of brand marketers, of course, is a huge factor in supermarkets' embrace of NASCAR. Kellogg, for example, has been sponsoring NASCAR for nine years. This year, it invested $40 million alone in special packaging for its cereals, ranging from depictions of driver Dale Jarrett, for whom Kellogg is an associate sponsor, to an offer on a side panel of Frosted Mini-Wheats for die-cast replicas of all three of the cars the company sponsored last year. The cereal market leader offers retailers in-store banners and posters as well as show-car visits featuring a racing simulator and "appearances" by cereal characters Tony the Tiger and Cornelius.