3rd June 2014
With the World Cup about to kick-off it is worth remembering that it is not all about football as a plethora of big businesses are hoping the tournament will provide them with a significant sales boost.
With the event set to attract on average some 3.6 billion viewers from beginning to end, Trevor Green, manager of the Aviva Investors UK Opportunities fund looks at the stocks which could be big winners…
As brewing giant AB InBev – owner of Budweiser and Becks – recently commented: “This event provides an exciting opportunity to build brand equity and drive volume and revenue, not just in Brazil, but in many of our markets around the world.”
Media giant ITV has the rights to cover the tournament. These rights could prove more valuable than in previous years partly because this will be the first World Cup at which betting companies will offer an “in-play” service. In-play betting takes place after a match has started and continues until its conclusion. Several major betting companies have already increased advertising on ITV in the run-up to the tournament. We expect these companies to ratchet up advertising once the World Cup gets underway which bodes well for advertising revenues.
Betting companies Ladbrokes and William Hill are other possible potential beneficiaries. They view the World Cup as a perfect opportunity to attract new clients and retain them as long-term customers. And with the explosive growth in mobile betting apps, it’s never been easier for punters to bet from the living room sofa, work, or the pub.
Two types of pubs will benefit from the World Cup. Some will want to attract crowds of football supporters, while others will benefit by offering the relative tranquility of a football-free zone. The longer England stays in the competition, the greater the positive effect on both camps. The government has relaxed licensing laws on nights England is playing. Greene King which has invested in outdoor television screens and JD Wetherspoon could both benefit.
Interestingly, there is a close correlation between high-profile televised football matches and pizza sales. I see no reason why this World Cup will be different and Domino’s Pizza is well placed to cash in. Domino’s expects to sell approximately 6 million pizzas in June and July and requires 1,300 extra staff to meet demand. Further increasing Domino’s allure, if Germany stays in the tournament for some time – as they tend to do – this could give Domino’s German operations a big boost. We expect Just Eat, the newly floated online takeaway ordering service, to enjoy a big pick-up in business.
Retailers such as Sports Direct International, the UK’s number one sports retailer which also has a European arm, and recently-floated online electrical retailer AO.com could both benefit. AO.com has recently launched an advertising campaign specifically designed to encourage football fans to eschew the High Street and buy one of its televisions online. If the 2012 Olympics are any guide, the debate about the legacy of the 2014 World Cup could continue for years. But it won’t take long for the real winners and losers to emerge.
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