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April 13, 2015

Indra Nooyi

Adam Silver

AHMAD RASHAD:  Good afternoon.  Welcome to Terminal 23 in Manhattan.  I'm Ahmad Rashad and I would like to thank everyone for joining us here today.  I would also like to say hello to everyone who's watching on NBA TV, NBA.com, and the NBA Game Time app. 
Now, it's an exciting time in the NBA right now with the playoffs just around the corner and an MVP race that is the best that I've seen in quite some time.  All kinds of excitement.  And then I mentioned that MVP race, we have a special coming up this Friday on that race, so make sure you catch that on NBA TV. 
Today we also look to add to that excitement by sharing the details behind a significant announcement.  We are fortunate to have two MVPs with us.  Our first guest has served as chairman and CEO of PepsiCo since 2007.  Among her duties she oversees PepsiCo's diverse global food and beverage portfolio that includes 22 billion-dollar brands.  PepsiCo is also recognized among the world's greatest marketing organizations. Please welcome Indra Nooyi.
Next, he was unanimously elected NBA Commissioner last year and has played a big role in leading the league that has become a model for global sports marketing organizations and one of the largest providers of sports marketing in the world. My mainest man, Adam Silver.
Some other distinguished guests joining us today, CEO of PepsiCo's Americas Beverages, Al Carey. Simon Lowden, Senior Vice President and Chief Marketing Officer of Pepsi Beverages North America. Executive Vice President of Communications at PepsiCo, Jon Banner.  Hong-Chen Wei, a member of the board of directors of Tingyi, China's No. 1 beverage company.  Chief Marketing Officer of PepsiCo and Tingyi, Richard Lee.  Mountain Dew athletes and pro skateboarders, Theotis Beasley and Sean Malto. 
NBA Deputy Commissioner and Chief Operating Officer, Mark Tatum.  Since 2011, the President of the Women's National Basketball Association, Laurel Richie.  The President of the NBA Development League, Malcolm Turner. NBA President of Basketball Operations, Rod Thorn. NBA Executive Vice President of Global Marketing partnerships, Emilio Collins.
And we are fortunate to have not one, not two, but three basketball Hall of Famers with us today.  The first one is one of the most decorated athletes in Olympic team sports history.  In five Olympics, she has earned four gold medals.  Currently an assistant coach with the Atlanta Dream, Teresa Edwards. This NBA legend played 17 seasons in the NBA, was a nine-time NBA All Star, a Defensive Player of the Year, played on an NBA championship team and two Olympic gold-medal-winning squads.  He is simply known as The Glove, Gary Payton. This other Hall of Famer's career spans 16 NBA seasons, he's a seven-time NBA All Star, two-time Defensive Player of the Year, an NBA champion, an Olympic gold medalist, Alonzo Mourning.
And without further ado, let's turn it over to our NBA Commissioner, Adam Silver, for today's official announcement.  Adam?
ADAM SILVER:  Thank you very much, Ahmad.  First of all, Indra, Hong-Chen, the Pepsi team, my NBA team and WNBA team, and WNBA and NBA legends and members of the media, thank you so much for being here today. 
We are absolutely thrilled to finally be making this announcement, Indra.  And for we at the NBA, the WNBA and the Development League to be associated with one of the world's absolute top brands like Pepsi, I can't think of a more thrilling and important announcement for this league, so thank you very much.
Many of you may not realize, but another company that Indra runs, Gatorade, is the longest-standing partner of the NBA's.  We have a 31-year relationship, so we've had lots of time to get to know each other before it ultimately culminated in this relationship with Pepsi. 
I know from the long time and many conversations that Indra and I have had over the last several years that we have a shared commitment to innovation, to excellence, to health and well-being of our fans and your customers, and most importantly, to basketball, so we thank you for that as well.
For us, the most important part of this relationship will be the activation, the world-class activation that Pepsi brings to this relationship.  That activation's going to be centered, at least initially, on two forms of basketball and wellness.  One, a new series of 3x3 basketball events, together with Mountain Dew, where we're going to begin with six cities in the United States, and then over time build that into a fully national program.  And also with our Jr. NBA program, we're going to be using Aquafina to focus on the health and well-being of players, initially in the United States and then globally. 
We're also thrilled that we're going to be partnering with Master Kong, Pepsi's partner in China.  And Hong-Chen, we are particularly appreciative that you are here today to share this announcement with us, so thank you very much.
And lastly, I would just say we are incredibly excited to be working with you and your team, Indra, and we can't wait to get started, so thank you very much and thank you all for being here today.
AHMAD RASHAD:  Thank you very much, Adam.  Here to discuss how PepsiCo will bring its sports marketing and expertise to bear under this new agreement with the NBA is Indra Nooyi.
INDRA NOOYI:  Thank you.  It's wonderful to be here with all of you.  You've been a driving force in the league for decades and you've proven to be an inspiring and innovative leader as a commissioner, and I think under your watch the NBA is in great hands. 
This is a very special day for PepsiCo and we are incredibly thrilled to be expanding our relationship with the NBA because we believe that the NBA is one of the world's most exciting, awe-inspiring sports leagues.  It captures the hearts and minds of hundreds of millions of basketball fans around the world every year.  And for decades, as Adam just mentioned, we've had a great relationship with the NBA through Gatorade.  And I think in many ways, Gatorade is woven into the fabric of the game.  It's a fixture on the sidelines and locker rooms across the league, and it really fuels athletes to reach their peak performance.  It's at the center of the NBA culture and enjoys strong partnerships with many of the league's biggest stars.  I'm sure many of you here today have seen -- the first time you saw the Be Like Mike campaign featuring Michael Jordan.  And if you missed the ad when it debuted in 1992, don't worry because we recently relaunched the digitally remastered Be Like Mike campaign in conjunction with Gatorade's 50th anniversary, which we're celebrating through the year 2015. 
What we're doing today is taking PepsiCo's relationship with the NBA to the next level because beyond Gatorade, as Adam mentioned, PepsiCo is home to some of the world's most beloved brands, most celebrated brands, and they span everything from carbonated soft drinks, non-carbonated drinks to foods.  In fact, as Adam mentioned again, 22 brands in our portfolio each generate over a billion dollars in retail sales.  And what's exciting is that we can bring the power of the brand portfolio in new and exciting ways to the NBA, and not just here in the United States but also in Canada and Mexico and in our partnership with Master Kong brand in China. 
And as we sat down with the NBA and looked across our brand portfolio and the league's fan base, Mountain Dew quickly emerged as the perfect brand to lead our NBA marketing strategy because Mountain Dew's incredible growth and popularity with the NBA's millennial fan base makes it just an ideal fit for this game. 
The brand has deep ties with the game of basketball going back many, many years; for those of you who remember, to our Code Red, Mountain Dew Code Red commercial going back to 2001.  And those ties continue even today with Mountain Dew's new partnership with Russell Westbrook, one of the league's top players and a leading contender for the season's MVP award. 
Mountain Dew has always sought deep engagement with consumers and it's a mindset we share across the company.  At PepsiCo, we are focused on growing our business by pairing our wide range of iconic beverages and snack brands with innovative advertising and marketing.  What you see as part of this partnership is NBA-inspired activation from our Brisk, Doritos, Ruffles brands as well as Aquafina, which will support programs around the NBA's youth and health and wellness initiatives. 
But this deal doesn't stop here in North America.  It extends to China and it's a natural match, bringing together Tingyi, which is China's No. 1 beverage company, with the power of the NBA.  PepsiCo and Tingyi are partners in China, and we are the No. 1 beverage system in China and Tingyi's Master Kong brand is a very, very powerful leadership brand in the beverage base in China. 
As all of you know, China's a huge and growing market.  It's been more than 10 years since the NBA played its first exhibition game in China, and since then, the growth in that market has been simply phenomenal.  Today the NBA, believe it or not, is the most popular sports league in China, and basketball is China's No. 1 team sport with 300 million people playing the game.  I think it's a tremendous testament to the popular appeal of the game. 
So what I would like to do is invite Hong-Chen Wei, who is representing Chairman Wei and CEO James Wei of Tingyi Corporation, to share his thoughts on this partnership.  Hong-Chen?
WEI HONG-CHEN:  Thank you very much, Indra. 
On behalf of our chairman, Ing-Chou Wei, and our CEO, James Wei, and Tingyi Corporation, I want to express my gratitude for this opportunity to continue our partnership with PepsiCo, and now form a new partnership with the National Basketball Association. 
As Indra said, the NBA is making enormous strides in China, whether at the arena, on television, or online.  More and more Chinese are connecting with NBA as never before; particularly young adults in China, they're eager to connect with the global marketplace.  They represent a crucial and growing market, and we at Tingyi are proud and excited to work with PepsiCo and the NBA to further inspire their dynamism, professionalism and drive to excel.  We look forward to do great things through this tremendous opportunity. 
Thank you once again.  It's an honor to be here.  Thank you.
INDRA NOOYI:  Thank you, Hong-Chen. 
And Adam, thank you for the confidence that you and the NBA are placing in PepsiCo and our partner Tingyi.  We both value this partnership a great deal and we're deeply committed to making it a huge success. 
In fact, I'll tell you a little story.  A couple years ago before Adam became the Commissioner, he was going to become Commissioner in a few months, Adam and I met on the sidelines of one of the speeches I was giving in New York, and Adam asked me the question, he said, "Your activation with one of the other sports is so awesome, how come the NBA is not getting that kind of activation?"  I said, "Adam, you've got to line up with the right partner."  And we've done it, Adam. 
We look forward to providing the NBA with an all-access pass to everything the company has to offer:  Iconic brands, world-class marketing, innovative consumer engagement and flawless execution.  We pledge all of this and more.  And to be honest, we cannot wait to get started.  Thank you.
AHMAD RASHAD: Mountain Dew, Russell Westbrook.  Did I mention that we have an NBA special on the MVP coming up on Friday that Russell Westbrook is a major part of? 
Anyway, right now Adam and Indra will be happy to answer a few questions from the media on hand here in Manhattan, and for that let me throw it over to Mike Bass.
MIKE BASS:  Thanks, Ahmad. Thanks everyone for being here.  Questions?

Q.  Question is for Indra here.  What does "official status" mean?  You always hear the talk of so-and-so athlete, it seems like obviously the fans always think about the athlete to the endorsement, but what is "official status" by you, especially since you're now the official partner of the four major leagues?
INDRA NOOYI:  Adam, I should let you talk about what does official partner of the NBA mean.
ADAM SILVER:  Well, for us it confers an associative status, meaning that Pepsi can uniquely do things with the NBA that no other brand in that category can do, and it means priority treatment from the league, and whether it's at our events, whether it's access to our telecasts, access to our players and executives.  It signifies a partnership and a first-class partnership at that.
INDRA NOOYI:  Let me add, one of the things that PepsiCo does well is activate sports the year round, whether it's MLB or the NFL.  We don't just do it once in so many years; it's woven into the fabric of the company.  So when you look at the start of the MLB season, we actually get into the baseball mood and we do everything to make the sport larger than life.  We do the same for the NFL.  You've seen it in the Super Bowl and how we activate NFL through the season.  I think the NBA deserves the same treatment because it's a great sport watched by millions of fans around the world.  And it now allows us to partner with the NBA, the official partner, using all the logos of the NBA, and really weave it into the fabric of what PepsiCo does. 
And I'll tell you why it's important.  Sports is one televised activity which you cannot TiVo or watch later.  You've got to watch it in real time.  By linking our brands with sports, we actually bring to life more excitement for the brand and for the sport.  So that's what the official partnership means.  It means PepsiCo becomes wedded to the sport, top to bottom in the company.

Q.  Can you just talk a little bit more about how the 3x3 will work and just a little bit more concretely about what this means throughout the operations of the NBA?
ADAM SILVER:  So I'll begin, thank you, John.  So what we see in terms of 3x3, first of all, our federation, FIBA, has become very active on a global basis with 3x3 competitions and it's something we've also been involved with historically.  But we see a unique opportunity beginning in North America to focus on a 3x3 competition beginning at 18-year-old men and women and older. 
As I mentioned earlier, we're going to begin in six cities that we're going to select together based on interest and the fantastic first-rate activation that Pepsi and Mountain Dew will do around those cities.  And we'll begin on somewhat of an experimental basis and I think use those six cities to create the most successful model and then we'll spread it from there into other cities. 
And also, just to complete the portfolio of youth activation, as I said earlier, we have an existing program called Jr. NBA, and Jr. NBA includes Jr. WNBA as well.  So it's a basketball skills and life skills program for young boys and girls, and together with Aquafina and I'm sure ultimately other Pepsi brands, we're going to be bringing that directly to kids throughout the country.  That's going to start at a younger age, and then in essence, those programs will take you up to roughly 17, and then the continuation will be with the 3x3 programs.

Q.  Given the statistic that you mentioned, 300 million basketball players in China, how important, how critical was the involvement of Tingyi's Master Kong to this deal?
INDRA NOOYI:  I think it's a great partnership.  You know, PepsiCo, and take one of the largest markets in the world and bring it to bear.  The good news is that we have a great relationship with Tingyi, and I think what we can do is bring the activation we're going to do in the U.S. to China and then amp it up for China.  We have some of the best marketing teams in China and I think with the power of the Master Kong brand, with the size of the Tingyi business -- not just the Master Kong brand, the Tingyi business in China is the largest beverage business but larger than the No. 2 by a huge margin. 
What you're going to see is the U.S. type activation brought to China with a uniquely Chinese twist.  So I think you should think of this as two ends of the world activating NBA in incredible ways.  300 million people live in the U.S., 300 million viewers in China.  That a big difference.  So I think it's going to be an exciting partnership going forward.

Q.  My question is regarding the Developmental League.  Do you see this relationship playing any sort of role in the improvement of the Developmental League and its investment?
ADAM SILVER:  You know, I do.  Again, what made this relationship so attractive to me and the NBA was the activation that Pepsi brings to bear through all of their various brands.  And for us, youth basketball, then ultimately leading into the Development League and the NBA, is where it all starts. 
Actually, this is a case where we've learned in some cases from the activation in countries outside the United States what the additional things that we can be doing here at home.  And I think, as I said, coming out of the All-Star Game in New York this year, people were asking me what's the priority for my second year, and I said youth basketball.  And the only way we can really make an impact is with great partners like Pepsi.  To us, when we can intersect with young boys and girls at an early age, begin teaching skills, the values of the game directly to them that we know they're ultimately going to grow to be great players, whether or not that means they play at the highest level in the NBA or WNBA is a separate issue.  But we know for the millions and millions of young boys and girls who play basketball in this country, it is critical we get to them at a young age and teach the values of the game.

Q.  Adam, just to clarify on the 3x3, you said you're going to start in six cities.  Is this going to be like individual leagues in each city?  What exactly are you guys going to lay out with that?
ADAM SILVER:  It will all be connected nationally.  It's a national program, but we're going to begin launching it in six cities just to get it off the ground.  The grassroots effort, we need to experiment with the appropriate way to register the men and women who will be playing in the tournament, how exactly we'll run the competition.  But that's all it is.  It's a coordinated six-city program that we hope to spread into a much larger national program over time.

Q.  Indra, how much growth do you see in something like Mountain Dew, which is the lead partner, obviously it's the third biggest soda brand in the U.S., but the category is kind of stagnant.  So when you do this, how does using the NBA kind of help grow that?  And how does the NBA compare to other areas or other businesses you could go to help grow that share in a business that's kind of flat?
INDRA NOOYI:  You know, outside of extreme sports, we've never really associated Mountain Dew with a mass sport so far.  So the fact that we've linked Mountain Dew with NBA is very special because it's one of the few growing brands, Mountain Dew.  The new Kickstart product, it's really on fire.  Mountain Dew's doing very, very well.  And I think the brand and the spirit of the brand, the way it talks to millennials, really overlaps with the NBA fan base.  We think that the spirit of NBA, the consumer target that Mountain Dew touches, is going to result in Mountain Dew remaining one of the growing CSD brands in the marketplace. 
What we've done with Mountain Dew is very interesting.  We've got the regular Mountain Dew, the diet Dew, then we've got lower calorie options like Kickstart and all of the new versions of Kickstart.  These are brands that in the first year, by year two are reaching $250 million of revenue.  So we're innovating on Mountain Dew in interesting ways.  The new DEWshine product is really taking the world by storm.  So I think you're going to see innovation on Mountain Dew, innovation with the 3x3 league, and whatever else we do with NBA, we're just getting started.  I think it's going to get exciting as we go along.  Watch and wait, it's going to be a blast.  Just enjoy it.  Come along for the ride.
AHMAD RASHAD:  So I have one question.  So you start at 18, right, on 3x3?  What if you happen to be like, you know, 39, still love the game, love Mountain Dew.  Is that too old to play in the 3x3?
ADAM SILVER:  Not at all.  That's why we're experimenting in communities throughout the country.
AHMAD RASHAD:  Just checking if I should get in shape.
INDRA NOOYI:  Are you allowed to wear a pink tie?
AHMAD RASHAD:  If I'm 39, I can.  That will conclude the formal part of today's announcement.  Thanks to everyone who made today's exciting announcement possible, and look out for that MVP special on Friday on NBA.TV.  I'm Ahmad Rashad, good afternoon from New York.

FastScripts Transcript by ASAP Sports

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