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Japan’s Suntory CEO says financial losses from non-fan Olympics in Tokyo will be ‘huge’

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Suntory CEO Takeshi Niinami told CNN Business on Monday that his company decided to sponsor the upcoming Tokyo Games, saying it was “too expensive.”

“We thought about being an Olympic partner … but the economy did not match,” said the head of the Japanese beverage giant, which is home to brands such as Orangina and Jim Beam bourbon.

Instead of signing up as an official sponsor, Suntory sold out another route to increase its visibility during the games starting this Friday: the Tokyo-based company planned to team up with restaurants and bars around the sporting venues to promote its drinks and open more businesses to operate its products exclusively

“I thought this apartment would very much be a showcase for us,” Niinami said in an interview in Tokyo. “I expected a lot of spectators from abroad to visit.”

The recent decision by organizers to carry spectators from Games’ Tokyo venues over public health concerns removed those plans.

“The financial losses will be huge,” Niinami said, estimating that Japanese companies could have had an approx. 10% increase in sales if fans had been allowed.

Having no domestic spectators could cost Japan’s 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 expected economic benefit of the Tokyo Games disappeared in March when it was decided to ban foreign spectators from traveling to Japan” – a move that Kiuchi expected had already led to economic losses of $ 1.4 billion.
Suntory CEO Takeshi Niinami during a panel session at the World Economic Forum in Davos, Switzerland in 2020.

“This is the time [when] we need to think about: what is the value of the Olympics? said Niinami. “I think the Olympics have lost [their] value.”

The Tokyo Games have been very controversial with countless protests to cancel the event and thousands of volunteers are withdrawing.
Despite Niinami’s close ties to the Japanese government – he is a financial adviser to Prime Minister Yoshihide Suga – the executive director avoids criticizing it. “I do not know why the Games were not delayed,” he said, noting Japan’s lagging vaccine rollout and Tokyo’s ongoing heatwave. “[They] should be postponed … at least two months. “

A great effort

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

This news was a blow to those, like Suntory, who had profited from an increase in spending. So far, more than 60 Japanese companies have spent a record amount on $ 3 billion at this year’s Olympics – and now many of them are worried about the return on investment.

Asked whether he thought the Olympics could still give Japanese companies a boost this summer, Niinami said: “More and more, I do not think so.”

Top Japanese CEO says hosting the Olympics is a & # 39;  suicide mission & # 39;

Some companies have had to reassess their commitment significantly.

Akio Shinya, CEO of Tokyo Skytree, the world’s tallest TV tower, told CNN Business that his company had discussed last year “whether we should become a sponsor under this circumstance.”

Although it later decided to commit, it has since been forced to cancel various events, including a torch relay on the skyscraper’s viewing platform aimed at “raising the mood for the Olympics.”

“Because of Covid, this is not the right time,” Shinya said. “There was no mood to hold such a fine festival.”

Nearly 80% of the population of Japan say the Olympics should not go ahead, according to an Ipsos Mori survey published last week.
Companies have been aware of these sensitivities. This week, Toyota (TM), one of Games’ biggest sponsors, said it would not release ads related to the event in Japan and instead choose to run “regular” commercials.

According to the carmaker’s North American division, the decision was made in view of the “Covid-19 situation” in the country.

Toyota does not run Olympic ads in Japan and several sponsors & # 39;  CEOs skip the opening ceremony

Michael Payne, former head of marketing at the International Olympic Committee, acknowledged the upward struggle for companies. “There’s no point in sugar coating. You know, this is not an ideal situation,” he said.

But Payne, who set up the Olympics’ global sponsorship program about four decades ago, predicts that companies “could still be pleasantly surprised by the potential hereditary benefit that comes from these very difficult games.”

“There is still an important opportunity,” he said. “I would not count it all yet.”

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