European brands that will benefit from the Games

We are diving into the heart of a summer that promises to be rich in sporting events and entertainment.

This summer, Europe is hosting the Olympic Games in Paris, the UEFA Euro 2020 and Taylor Swift’s Eras Tour. These events will draw crowds of tourists from around the world, generating major business opportunities in the process, from stadiums to concert halls. European companies that are world leaders in luxury, consumer products and travel are not always lauded or acclaimed, but they too will be in the spotlight this summer, and many could be vying for a place on the podium.

As is often the case in the run-up to the Games, the news coming from a France in full preparations for July report disgruntled Parisians, worried about traffic problems and traffic jams, but also recurrent testimonies from sites competition not quite ready. There is also much speculation about whether the Seine will be clean enough to host open water swimming events.

In the face of such hype, it is easy to forget how difficult it must have been for the City of Light to be “almost ready” at this stage, given that it has chosen to use mostly existing or temporary infrastructure. Whether the Seine will meet stringent water safety standards remains to be seen, but the mere fact that there is a possibility of swimming in it seems commendable, given that an estimated €1.4 billion has been invested in this project of almost unprecedented scale and numerous feats of engineering. It may be characteristic of Europe to be reluctant to celebrate success, but here it seems justified.

Similarly, investors often express, wrongly in our view, dismay at the absence of leading companies in key areas of global growth in Europe. Celebrating national champions with global reach and success may seem outdated. Yet the Olympics and other summer events will provide an opportunity for many attractive and globally positioned European brands not only to be showcased, but also to profit from them.

Although it is not an official sponsor of the Games, Adidas is obviously also well placed to maximise the marketing potential of the Paris Olympics.

A sponsor of choice

While European nations are unlikely to dominate the medals table in Paris, the region boasts many of the world’s biggest brands, which are sure to be on display at the event. Last July, LVMH announced that it would be the title sponsor of the Olympic and Paralympic Games. While this partnership may seem a bit like a “national service” to fill a funding gap, it has some strategic merit.

Eleven million spectators are expected in Paris, including some 1.7 million from abroad. Some 4 billion people are expected to follow the competition on television and, according to some sources, LVMH could control almost all advertising space in Paris during the month of July.

After years of growth and development, punctuated by multiple acquisitions, the group has become a master in the art of developing its brands, not only by making them grow, but also by preserving their prestige. The company is also taking care of its long-term strategy and is pursuing major projects for many of its brands this summer, which will strengthen the construction of its brand image over time: the Chaumet jewelry house, founded in 1780, will design all the medals that will be awarded during the Olympiad, Moet Hennessey will provide drinks in all reception areas, Sephora is a partner of the Olympic torch relay and Berluti designed the official outfit of the French team.

Although it is not an official sponsor of the Games, Adidas is obviously also well placed to maximize the marketing potential of the Paris Olympic Games. In April, the company unveiled new shoes suitable for 41 Olympic disciplines. When CEO Bjørn Gulden took the reins of the company last year, his turnaround plan included returning to Adidas’ sporting roots. This Olympic range is therefore in line with this strategy which aims to expand the number of sports represented and, in doing so, to exploit certain disciplines which are experiencing the strongest growth globally.

The experience economy

There has been a lot of talk recently about changing consumer habits, consumers’ appetite for “experiences” and the increasing amounts of money they are willing to spend on them. Events like the Olympics aren’t just an opportunity for consumer product brands. It is estimated that sports tourism now represents around 10% of global tourism spending and could, according to some estimates, experience one of the fastest growths in this market.

The name may not mean anything to you, but we believe Amadeus IT is very well positioned to benefit from this growth. The company is a central link in the global tourism and travel industry. Passenger Service Systems (PSS) developed within its Airline IT Solutions division enable airlines to outsource and automate key processes such as reservations, inventory management and departure control. The company’s 2023 results, published in February, reported a 22% increase in turnover in this division.

While estimates of the size of the global music tourism market today differ, there is little doubt about the industry’s growth potential and the willingness of these particular tourists to spend.

In the Airline Distribution space, Amadeus holds an equally strong position as one of the world’s leading providers of Global Distribution Systems (GDS). The company aggregates airline inventories, expanding distribution for each airline, and then makes this information available to travel buyers – primarily online and physical travel agencies – in real time, comprehensively, securely, reliably and objectively. The company’s 2023 results showed a 24% increase in Airline Distribution revenue, with booking volumes up 14% and average revenue per booking up 9%.

Musical tourism is also poised for good growth. While estimates of the size of the global music tourism market today differ, there is little doubt about the sector’s growth potential and the propensity of these particular tourists to spend. At the beginning of May, the Taylor Swift phenomenon arrived in Europe, with the “Eras Tour” which started in Paris. This tour and many others, but also renowned festivals, attract die-hard fans who are not only ready to travel, but also to spend.

The craze of these superfans is a topic we discussed with Universal Music Group – whose labels represent Taylor Swift and six of the top ten global artists on Spotify in 2023 – during a meeting in March. This audience is a strategic priority for the company, which plans to monetize fan demand through personalized streaming services, with early access to album releases, unique “behind the scenes” content, as well as exclusive access to vinyl releases, merchandise and other collectibles.

CTS Eventim is also well positioned to benefit from the increased demand for spectacular concerts and star tours. The company is number one in the ticketing and live entertainment market in Europe, and number two globally: more than 300 million tickets are sold each year via its systems. Its 2023 results, published in March, show a 32% increase in its EBITDA. Turnover increased by 32% for its Ticketing division and 19% for its Live Show division over the year.

Thanking the creativity of the artists and the organizers of events and unforgettable experiences, the management commented on these results by emphasizing that it intended to continue to invest in its performance halls, and in particular the Waldbühne in Berlin, the LANXESS in Cologne, the Apollo in London and the ARENA in Milan, currently under construction, are premier destinations for artists, organizers and fans. In April, the company also announced plans to buy Vivendi’s international ticketing business, See Tickets, as well as its festival operations. See Tickets is the second largest provider in the UK and is well established in the US, two large markets to which CTS is currently underexposed.

Summer 2024

In his letter accompanying Adidas’ annual results published in March, CEO Bjørn Gulden wrote: “2024 will be a key year to showcase our brand with the Olympic Games, Paralympic Games, Euro 2024, Copa América and all other scheduled sporting events. I’m really looking forward to celebrating live sport with the many fans. I believe that many people around the world are looking forward to these sporting events… and this will undoubtedly support our activity. A summer of sport, music and celebration should also be good news for Greggs, Diageo and Nestlé, among others. Summer is coming, and the biggest European brands are pumped up.