[MLB] Is Shohei Ohtani a “burden”？ Ito En’s quarterly financial results show a big drop in profits， not just due to rising raw material costs， but also due to a major campaign with advertising expenses of 3．4 billion yen．
The advertising industry is in shock. Ito En, a major beverage company, announced its consolidated financial results for the May-July 2024 period. Although sales were strong, up about 3% to 125 billion yen, operating profit fell sharply by 28% from the same period last year to 7.2 billion yen. Net profit fell sharply by 35% to 4.4 billion yen. The company has left its full-year earnings forecast for 2025 unchanged, but as net profit is expected to increase 10% to 17.2 billion yen, significant revisions to its earnings forecast are also expected in the future. Economic journalist Takashi Matsuzaki explains it this way: “At ITO EN alone, which operates domestically, sales of our main tea beverages are declining slightly. There are reasons such as rising raw material costs, but the only reason why performance has declined so much is because of heavy advertising and promotion costs. Since April, the company has signed a global ambassador contract with Dodgers player Shohei Ohtani and is running the “#OiLA’s Otani-san” campaign, which has resulted in a 20% increase in advertising costs to 3.4 billion yen. In the short term, it can only be said that the cost-effectiveness of the advertising was poor.” In fact, the amount of advertising that Ito En placed during this period was staggering. First, on April 30th, before the announcement of his appointment as ambassador, a full-page advertisement was placed in 60 national and major newspapers across Japan stating, “Ito En publishes a letter of encouragement to Ohtani.” Furthermore, on May 2nd after the announcement, the first wave of advertisements featuring Ohtani’s statement of intent were launched in national newspapers and sports papers, the LA Times in the United States, the Financial Times distributed in countries around the world, the Honolulu Star Advertiser, a local newspaper in Hawaii, where Ohtani has a connection, and major newspapers in South Korea, where the opening game of the season was held. Furthermore, in the second phase of the “Ohtani Campaign,” human-shaped panels using Ohtani’s image were installed at retail outlets, and digital signage advertisements and large wall posters were displayed in 85 locations, including major domestic terminals, Times Square in New York, downtown Los Angeles, Taipei, and Seoul. Starting July 8th, limited edition bottles with Ohtani’s photo on the label will also be on sale. This limited edition bottle is also on sale overseas.” (Advertising agency source) It goes without saying that expenses will mount if you promote Otani on such a large scale. Matsuzaki, mentioned above, continues: “Sales from the US business were 13 billion yen, up 11% from the same period last year, so it may be that the Otani effect was effective. However, as the exchange rate fell from 140 yen to 157 yen, the yen weakened, so actual sales only increased slightly. Daiso Industries, the 100-yen shop that has been advertising its Daiso brand at Dodger Stadium since last season, has seen its overseas business boom this season, due in part to a significant increase in its name recognition overseas. Ito En may struggle with the “burden” of Shohei Ohtani in the short term, but there’s no denying that the advertising will have an effect in terms of long-term brand recognition.” So they want to support Ohtani even if it means ignoring short-term profits.
>>1 In fact, the exchange rate rose by 12.14%, so it’s a negative figure when you consider advertising costs in the US >Sales from the US business were 13 billion yen, up 11% from the same period last year, so the Otani effect may have been a factor. However, as the exchange rate fell from 140 yen to 157 yen, the yen weakened, so actual sales only increased slightly.
>>1 Following the decline of NHK, Asics, and high school baseball clubs (this has been going on for a long time), is Itoen now on the rise? Is Otani a jinx?
“Sales from the US business were 13 billion yen, up 11% from the same period last year, so there may have been an Otani effect. However, as the exchange rate fell from 140 yen to 157 yen, the yen weakened, so actual sales only increased slightly. Since the yen has weakened (the dollar has strengthened), isn’t it right to sell Japanese products in America? Are you really an economic journalist?
In reality, only grandparents support Otani, so sponsorship won’t have any effect. Even if he wins the WBC, the number of little league players in 2023 is likely to decrease rather than increase.
> Advertising expenses have increased by 20% to 3.4 billion yen. Even if advertising expenses increase by 20% to 3.4 billion yen, that’s only an increase of 700 million yen. It is one of the reasons why profits have dropped significantly, but that’s the problem. It’s a bit of a stretch to say it’s Ohtani’s fault lol.
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