Suntory Japan CEO Says Tokyo Olympics Economic Losses Without Fans Will Be “Huge”

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Suntory CEO Takeshi Niinami told CNN Business on Monday that his company had decided not to sponsor the upcoming Tokyo Games, saying it was “too expensive”.

“We thought we were an Olympic partner … but the economy was not up to par,” said the boss of the Japanese beverage giant, which is home to brands such as Orangina and Jim Beam bourbon.

Instead of signing as an official sponsor, Suntory has charted another path to increase its visibility during the Games, which begin this Friday: The Tokyo-based company planned to partner with restaurants and bars around sports venues to promote its drinks, and open several establishments to serve its products exclusively.

“I thought this opportunity would really be a showcase for us,” Niinami said in an interview in Tokyo. “I expected a lot of spectators from overseas to come and see us.”

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The recent decision by organizers to ban spectators from Tokyo Games venues due to public health concerns has canceled those plans.

“The economic losses will be huge,” Niinami said, estimating that Japanese companies could have benefited from an increase of around 10% in their sales if fans had been allowed.

The absence of domestic spectators could cost the Japanese economy 146.8 billion yen ($ 1.3 billion), according to an estimate by Takahide Kiuchi, an economist at the Nomura Research Institute.

He noted in a June report that “much of the economic benefits expected from the Tokyo Games wore off in March, when a decision was made to ban foreign spectators from traveling to Japan” – a decision Kiuchi said had already caused economic losses of $ 1.4 billion.
Suntory CEO Takeshi Niinami at a panel discussion at the World Economic Forum in Davos, Switzerland, 2020.

“It’s time [when] we have to think about: what is the value of the Olympic Games? Niinami said. “I think the Olympics lost [their] value.”

The Tokyo Games were hugely controversial, with countless protests to cancel the event and thousands of volunteers withdrew.
Despite Niinami’s close ties to the Japanese government – he is Prime Minister Yoshihide Suga’s economic adviser – the executive does not hesitate to criticize him. “I don’t know why the Games weren’t delayed,” he said, noting the delay in vaccine deployment in Japan and the ongoing heat wave in Tokyo. “[They] should be postponed … for at least two months. “

A big bet

This month, Japan confirmed that the Olympics will be held in a state of emergency due to the coronavirus pandemic.

This news came as a blow to those like Suntory, who were banking on increased consumer spending. So far, more than 60 Japanese companies have spent a record amount of $ 3 billion on this year’s Olympics – and now a lot of them are concerned about ROI.

When asked if he thinks the Olympics could give Japanese businesses another boost this summer, Niinami said, “More and more, I don’t think so.”

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Some companies have had to considerably reconsider their involvement.

Akio Shinya, managing director of Tokyo Skytree, the world’s tallest broadcasting tower, told CNN Business his company had deliberated last year “whether we should become a sponsor under these circumstances”.

Although he later decided to enlist, he has since been forced to cancel various events, including a torch relay on the skyscraper’s observation deck intended to “replace the ambience.” for the Games ”.

“Because of Covid, now is not the right time,” Shinya said. “There was no atmosphere to organize such a chic festival.”

Nearly 80% of Japanese say the Olympics shouldn’t be held, according to an Ipsos Mori poll released last week.
Businesses have been aware of these sensitivities. This week, Toyota (MT), one of the Games’ biggest sponsors, said it would not post any advertisements related to the event in Japan, choosing instead to run “regular” advertisements.

According to the North American division of the automaker, the decision was made taking into account “the Covid-19 situation” in the country.

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Michael Payne, former head of marketing at the International Olympic Committee, acknowledged the uphill battle for business. “There’s no point in flirting. You know, it’s not an ideal situation,” he said.

But Payne, who created the global Olympic Games sponsorship program some 40 years ago, predicts that companies could “always be pleasantly surprised by the potential benefits of these very difficult Games.”

“There is still an important opportunity,” he said. “I wouldn’t be counting everything yet.”

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