Eneos and the Big Leagues: Why is Nippon Oil Sponsoring the Boston Red Sox?Economy
China Boom’s Ebbing Tide
The general public is probably unaware of the number of Japanese companies that have operations overseas. According to a survey by the Teikoku Databank, 27% of Japanese firms have either a direct presence or do business abroad. This means that around two-thirds of companies in Japan have no experience, or have no intentions of doing business beyond the nation’s borders. Going forward, however, it seems inevitable that, faced with expanding globalization and shrinking domestic demand resulting from the graying of the populace, Japanese companies will have no alternative but to direct their attention to foreign markets.
Currently, the majority of Japanese corporate expansion is in China, with over 13,200 firms operating in the country, accounting for 65% of Japan’s overall foreign corporate investment. These figures are down 8% compared to 2012, however, with the slowing of China’s rapid growth, rising wages, and greater market instability being pointed to as factors behind Japanese firms pulling out of the market.
As companies grow more dubious about the Chinese economic situation, many are beginning to see opportunity in the mature US market. Factors driving this view include a high rate of personal consumption, which makes up 70% of America’s vast economy, and an outlook for continued population growth. Emboldened by signs that the US economy is on track to fully recover from the 2008 global economic downturn, food manufacturers Ajinomoto, Tōyō Suisan, and Kameda Seika and eyeglass chain Jins have begun full-fledged efforts to enter the market. Cosmetic maker Kose has also been in the headlines over news it was expanding into North America.
Among the different companies crossing the Pacific, JX Nippon Oil & Energy, a major player in the petroleum industry, has drawn attention for its intriguing approach. As part of its strategy the firm has introduced its flagship Eneos brand in Boston, seeing the northeastern US city as key to establishing a foothold for its lubricant products and other aspects of its North American business.
Eneos at Fenway Park
On September 1, 2015, representative director and president of Eneos Sugimori Tsutomu traveled to Fenway Park, the home ground of Major League Baseball club the Boston Red Sox. During the visit, his first to the historical park, the executive paid a courtesy call to the team’s Japanese pitcher Tazawa Jun’ichi prior to the day’s game. This was not the first meeting between the two, with their relationship dating back to when Sugimori headed the division overseeing the company’s amateur baseball club Shin-Nippon Sekiyu Eneos (now JX-Eneos), where Tazawa was a player. As they chatted on the field, the large Eneos sign broadly displayed on the center field scoreboard highlighted the purpose of their confab.
Professional baseball is big business in the United States. Each of the MLB’s 30 teams enjoys strong local support, with sponsorship deals, merchandise sales, and other aspects of business said to generate a total of $8 billion for the league. While Eneos has garnered recognition as a team sponsor on the NASCAR racing circuit, it saw further opportunity to penetrate the North America market by teaming up with the Red Sox, entering into a deal with the club from the start of the 2015 season.
Proud Brand of America’s Conservatives
To get to the bottom of the company’s strategy, I decided to ask Sugimori point blank why he chose Boston and the Red Sox. “It’s a challenge to build a brand in North America,” he explained. “We are focusing first on getting the brand name established in Boston. In the United States Eneos’s name recognition doesn’t hold a candle to that of the Red Sox, but we hope to bridge that gap little by little.” Sugimori stressed the significance of the club, saying, “During my visit I was impressed by the status the team enjoys in Boston. They symbolize the city.”
As Sugimori sees it, Red Sox followers are some of the most avid baseball fans in the country. In addition, they are firm traditionalists and strongly exclusive, leading to some Japanese residents of Boston to even refer to the city as the Kyoto of America for its strong aversion to cultural imports.
New England as a whole boasts a rich history dating back to America’s colonial days and Revolutionary War. The six states making up the area are also home to some of the nation’s most prestigious universities, and subsequently, a significant proportion of the elite class live in the region.
By joining hands with the Red Sox Eneos is looking to gain inroads by establishing a relationship of trust with the established elite that make up some of the team’s most die-hard fans. A similar sponsorship strategy paid dividends for snack maker Morinaga, who saw demand for its taffy-like Hi-Chew soar after signing a deal with the club, and the company is rumored to have successfully negotiated a contract for major retail chain Walgreens to carry the product at 8,200 shops around the country. Sugimori points out that bringing Eneos to Fenway has already begun to pay dividends, with the petrochemical company opening new business channels with various US firms.
Troup Parkinson, the Red Sox’s senior vice president for corporate partnerships, describes the Red Sox’s fan base as being passionate, loyal, and tirelessly dedicated. And as a result, he says there are an abundance of brands looking to join with local sports teams to raise their name recognition and make an impact in the New England area. As the Red Sox have fans all over America, Parkinson explains it makes the club an attractive choice for global companies with a clear vision of where they want to go.
Building a Base
Eneos is aware that succeeding in North America will take more than sponsoring the Red Sox and it has included a strategy of local participation to build trust for its brand. One aspect is volunteer work, with Eneos and Tazawa teaming up to make a donation to a student grant fund each time the pitcher takes the mound.
While Eneos is a household name in Japan, it is relatively unknown in North America and such efforts serve to build the brand’s reputation. Considering Japan’s demographic plight, there is little doubt that growth opportunities going forward will come not from the domestic market, but from overseas. By teaming up with the Red Sox, Eneos is looking to realize a strategy where by first establishing its name in Boston and the rest of New England, it can eventually tap into the entire car-reliant market of North America.
How Eneos’s sponsorship strategy unfolds bears watching as a potential game plan for other corporations hoping to expand across the Pacific.(Originally published in Japanese on October 30, 2015. Banner Photo: The New York Yankees take on the Boston Red Sox at Fenway Park. © Aflo.)