Sobeys’ parent signs Olympic sponsorship deal as it looks to reclaim market share

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When Michael Medline was appointed CEO of Empire Co. Ltd. in 2017, he already had an Olympic sponsorship on his mind. During his time at Canadian Tire Co. Ltd., he had seen the impact the marketing partnership had made on the brand. But in 2017, the struggling parent company of Sobeys was not in a position to make flashy brand investments. Now, on the other end of a major restructuring plan that saw Empire cut more than $500-million in costs, the grocery retailer is announcing a multiyear sponsorship of Canada’s Olympic Team.

On Monday, Empire announced it is “the official grocer of Team Canada,” a deal with the Canadian Olympic Committee (COC) that spans all its retail brands: Sobeys, Safeway, IGA, Foodland, FreshCo, Thrifty Foods, Farm Boy, Rachelle Béry and the soon-to-launch e-commerce business, Voilà.

The deal is part of a larger effort by Empire to take back the market share it lost after a mishandled takeover of Safeway in 2013. Mr. Medline announced the three-year transformation plan, Project Sunrise, in 2017 and recently signalled that the company will have exceeded its cost-cutting targets. During that time, Empire was not spending enough on marketing, Mr. Medline said in an interview. Empire is now working on its next three-year plan, to be unveiled in the spring.

“We want to spend more money on telling our story,” he said.

Empire already invests in a number of sports sponsorships, including the Special Olympics. Sobeys has national deals with Tennis Canada, the Toronto Blue Jays and the Toronto Maple Leafs, as well as regional deals with the Toronto Raptors and Toronto FC. FreshCo’s regional sponsorships include the Toronto Argonauts and Safeway has regional deals with the CFL, Edmonton Oilers, Calgary Flames and Winnipeg Jets.

The COC has different tiers of sponsorship. “Premier national partners” include Canadian Tire and Hudson’s Bay; “national partners” include Petro-Canada and Toyota; and “official supporters” include Air Canada, Molson Canadian and now Empire.

“We’re a property that has more fans than any other national sports property in the country. We have an incredibly diverse demographic,” COC secretary-general and chief executive David Shoemaker said in an interview.

Mr. Medline said the ability to focus on female athletes was part of the appeal of an Olympic sponsorship over professional sports. On Monday, the company also announced a partnership with Hockey Canada and the Canadian national women’s hockey team.

“For these brands, it’s a smart move,” said Brian Cooper, chairman of Mktg, a firm that helps negotiate sponsorship deals, including Canadian Tire’s Olympic partnership. (Mktg was not involved in the Sobeys deal.) “They’re wrapping themselves in the Canadian flag. There aren’t many [sports] properties you can invest in that give you the national reach.”

Because Sobeys and its sister brands are the first to partner with the COC in the grocery category, the sponsorship was more affordable than in categories with more competition for rights, Mr. Medline said.

“I’ve seen it work,” he added, noting that at Canadian Tire he witnessed how the sponsorship helped create an emotional connection with customers, as well as motivating 123,000 employees across the country.

Empire did not disclose the financial terms of the deal or the number of years on the contract. Mr. Medline said it is a long-term commitment the company intends to renew.

“We consider it forever," he said.

Empire will announce sponsorships of individual athlete in the coming months. The company is mulling different promotional opportunities, including offering discounts on food for athletes in training.

“The connection between food, nutrition and sport is pretty undeniable,” Mr. Shoemaker said.

The first advertising campaign will launch early next year. The deal also gives the company intellectual property rights to use the COC logo with the Olympic rings, which will appear on employee uniforms, in flyers and in stores. Sponsors frequently capitalize on their partnerships to host clients at high-profile events. And it can provide a morale boost for employees, with company contests and rallies tied to the Olympics.

“We struggled,” Mr. Medline said. “Part of my job is to bring the pride back.”

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