Alltech claims USD100M business from WEG sponsorship

November 15, 2010

Alltech’s founder expects his company’s investment in the World Equestrian Games to offer quite a profit, leading to $100 million in new business by this time next year.

It’s the endgame of a sponsorship that surprised many when it was announced in June 2006, given Nicholasville-based Alltech’s small number of equine products and relatively low profile. It also was a major learning experience for the company, founder Pearse Lyons told the Herald-Leader.

“It has been absolutely worth it,” he said.

Jack Kelly, who oversaw the Games’ organizing committee until mid-2008, called it the “most unusual and amazing sponsorship” he’s seen over his career of working with events that attracted $200 million in sponsorships.

“It was unique given the amount of the sponsorship for a first-time sponsor and the ability of a company to build all or a great part of their marketing around the sponsorship every day,” Kelly said.

Lyons told the Herald-Leader that the $100 million in new business — at least that much, he says — will come from several of Alltech’s divisions.

Sales of its Kentucky Ale beer have doubled year over year since the 16-day Games, which ended Oct. 10. “We expected there to be a spike during the Games,” Lyons said, “but we didn’t expect there to be another spike after the Games.”

The Games also saw Lyons meet a leader of one of the country’s largest beer distributors, he says: L. Knife and Son Cos. The company doesn’t distribute the Kentucky Ale family of beers yet, Lyons said.

The centerpiece, of course, is the company’s primary business: equine feed supplements, which have seen sales rise since the sponsorship was announced. In 2006, they accounted for 2 percent of Alltech’s roughly $300 million in annual sales. Now they’re up to about 5 percent of $500 million in sales.

One of those that’s spending more is California-based O.H. Kruse Grain and Milling, which buys ingredients from Alltech for its equine products. The company was impressed enough to become Alltech’s “official feed partner” for the Games, said Dave Spaulding, a sales manager.

“They’re going to become a bigger player,” he said of Alltech.

Rick Burton, a professor of sport management at Syracuse University, said Lyons’ estimation that Alltech could yield $100 million in new business from the sponsorship is “very feasible.”

“Even if they would only make $30 million, they could say it’s break-even, and this is something that raised their awareness,” he said.

While the finance people at the privately held company are crunching the numbers — “we have to be a successful business,” Lyons reiterated — the company’s leader focuses primarily on how the Games bolstered Alltech’s image.