Nike, Adidas in Brand Battle for Brazil World Cup

When soccer teams battle for the World Cup in Brazil next year, another fight for global supremacy will be played out on the pitches - between Adidas (TICKER:ADS) and Nike (NYSE:NKE).

In the next round of their tussle to be the world's biggest sports brand there is everything to play for.

Nike currently owns 14.6 percent of the global sporting goods market to Adidas' 11.4 percent, and is whittling away at the German brand's No. 1 position in Europe. Adidas held 13.2 percent of the western European sporting goods market in 2012 to Nike's 12.4 percent, according to Euromonitor data.

"It's not easy to evaluate (next year's) collections. Adidas is definitely putting a lot of effort into winning lost ground, but a company like Nike won't rest on its laurels," said Hans Allmendinger, head of marketing for German sporting goods retailer Sport2000.

Adidas has for more than 40 years decorated soccer kit and shoes with its distinctive parallel lines logo. It has strong partnerships setting it up well for the coming challenge: a close relationship with German club Bayern Munich, of which it owns 9 percent, and with FIFA, soccer's world governing body, for whom it designs official World Cup kit.

Adidas has forecast record 2014 soccer sales of over 2 billion euros and aims to boost group sales to 17 billion euros ($23 billion) in 2015.

U.S. Nike, meanwhile, only entered the soccer market in 1994. But already it has several major partnerships with clubs, including English champions Manchester United.

The owner of the distinctive 'swoosh' or tick logo, does not give forecasts for individual sport categories, but it is predicting group sales of up to $30 billion by 2015 - suggesting it thinks it can put in a sufficiently strong performance during the World Cup to stretch its global lead over the German company - and maybe beat it at home too.

In Nike's first fiscal quarter of 2013, ended August31, it posted an 8 percent jump in sales in Europe. Over the same period, Adidas' European sales fell 7 percent.

AMBUSH MARKETING

Adidas is pulling out all the stops to make its presence felt in Brazil, where Nike sponsors the national team.

Brazil have won the World Cup a record five times and the country is a byword for stylish soccer, meaning there is a huge buzz around the tournament - and Nike's designs.

Adidas is aiming to make its presence felt with players like Lionel Messi and Mesut Ozil, who play for Adidas-sponsored national teams Argentina and Germany - and the launch of the official match ball, the "Brazuca" - on sale for $160 but free to Brazilians born on its launch day.

Given the scale of the battle however it will also be using what is politely known as "ambush marketing." Soccer watchers cite as an early example in this year's World Cup campaigns the launch of a new soccer top for the Palmeiras club in the yellow, green and blue worn by the Brazil national team.

"That will be ruffling a few feathers," said Berenberg Bank analyst John Guy. "They've certainly got a few tactical moves up their sleeves to consolidate their position against Nike and that's good to see."

Klaus Jost, president of the world's largest sportswear retailer Intersport, said Nike's roster of top soccer players like Frenchman Franck Ribery and Portugal's Cristiano Ronaldo was one of the reasons for Nike's increasing sales in Europe.

"It's much more about creating the right image," he told Reuters. "Stars like Ribery, Ronaldo and (Zlatan) Ibrahimovic have such an attraction that many kids want to copy them."

BIG STARS

Big name endorsements are also responsible for Nike's broader success.

Retailers say the U.S. brand has gained market share this year thanks to well designed, comfortable products such as the top-selling Nike Free sneaker - and getting its performance-enhancing shoes on the feet of the biggest sports stars.

Nike's impressive roster of sponsorship deals includes current names like soccer star Ronaldo, tennis player Roger Federer, golfers Tiger Woods and Rory McIlroy and legendary track and field athletes like Carl Lewis and Michael Johnson.

"Nike has done a really good job of presenting themselves as the true brand for performance," Tammy Smulder, managing director at marketing consultancy SCB Partners, told Reuters.

"Nike says, 'We will be associated with the top athletes, whatever the sport'. You can't dispute that," she added.

Adidas chief executive Herbert Hainer said this week the group had made some mistakes, but added: "We believe we can grow the business by launching a lot of new innovative products. Our pipeline of new products is full."

One of the ways Adidas is hoping to grow sales is by using the cushioning technology in its Boost running shoes for other categories such as basketball. That could enable it to increase sales of Boost shoes to 15 million pairs in 2015, after having only introduced the line earlier this year.

It has signed big names in sports other than soccer in a bid to gain market share from Nike. But its partnership with U.S. basketball star Derrick Rose has run into difficulties as a result of Rose suffering several injuries that have kept him off the court for months.

HOW TO MEASURE COOL?

The biggest challenge in the battle of the brands is to win the crown of cool - something far more difficult than simply designing a new product.

At the moment, say market watchers and consultants, Nike seems to be stealing a march on Adidas thanks to early adoption of new technologies which it is then harnessing to a bigger social media presence.

"They have a good hunch for the next wave that will define a generation," Lea Simpson, strategy director at digital strategy agency TH_NK, told Reuters.

"In the 1980s, it was fitness, now it's tech and sustainability."

Nike has almost 2.5 million Twitter followers to just over 570,000 for Adidas. It also has higher Facebook engagement rates, showing its fans interact better than Adidas fans with posted content.

Its Nike+ Fuelband and other apps track training and can then post results on social media sites - a far more powerful demonstration of brand involvement than a Facebook 'like', Simpson said.

Adidas CEO Hainer said this week that the company would shift "much more money" into digital and social media.

Garth Farrar, global head of digital at Repucom, noted Adidas had already been producing more Vine clips, Facebook posts and tweets over the last months.

He said Adidas' social media campaign looked geared to "give the brand more cultural relevance beyond Europe .. and help protect the brand from any ambush stunts from Nike around the World Cup."

($1 = 0.7323 euros)

(Additional reporting by Keith Weir; Editing by Sophie Walker)