As Gatorade approaches its sixtieth anniversary, the brand stays vibrant, expanding into new categories, from unflavored waters to energy drink mixes.
Since its founding in 1965, Gatorade has been the dominant sports drink. In 2023, it accounted for 63.5% of the US sports drink market, in accordance with Euromonitor International.
Owner PepsiCo archrival Coca cola ranks second and third with Powerade, Gatorade’s consistent No. 2, and Bodyarmor, a more recent product in its portfolio. But combined, Coca-Cola’s two brands account for only a few quarter of the U.S. sports drink market. Last yr, Pepsi reorganized its portfolio to incorporate Propel, Muscle Milk and other fitness brands under the Gatorade name.
Gatorade’s dominance doesn’t suggest it could possibly rest on its laurels, nonetheless. As more competitors enter the market, the brand tries to reinvent itself.
“There has probably been more change in the industry in the last five years than in the 20 years before that,” said Jim Watson, Rabobank beverage analyst.
Pepsi’s rivals wish to steal its market share by introducing new products. Unilever bought drink mix company Liquid IV in 2020 for an undisclosed amount; Gatorade’s individually packaged moisturizing powders are like those for novices. Nestle Health Science bought hydration tablet maker Nuun in 2021, the identical yr Coca-Cola bought Bodyarmor.
With Coca-Cola’s acquisition of Bodyarmor, it bought a brand that might price its sports drinks higher by marketing it as a healthier option. Coca-Cola’s other sports drink, Powerade, is typically cheaper than Gatorade, which appeals to consumers looking for a bargain.
“It means they have a different, better story to tell to retailers to try to get more shelf space and take some of that from Gatorade,” Watson said. “This is where Gatorade has to come up with all kinds of innovations to have a new story to tell to retailers so they can keep all the shelf space.”
Even smaller brands that do not have the firepower of Coca-Cola or Unilever are putting pressure on Gatorade. PepsiCo CEO Ramon Laguarta named influencer Logan Paul’s Prime Energy as one in all the brands stealing Gatorade’s share.
“The truth is that Prime’s emergence in this category went somewhat to Gatorade, [though] less than other brands in the category or less in proportion to brand size,” he said during the company’s third-quarter conference call in October, adding that Prime’s market share weakened as summer moved into fall.
Gatorade’s market share is expected to increase this year but will likely still decline from a year ago, according to a February note from Citi Research.
Gatorade CEO Mike Del Pozzo told CNBC that overall the competition is good for the category and shows the strength of its brand.
“There are a lot of loud voices trying to make a name for themselves right now,” Del Pozzo said. “It’s a competitive business, and because we’re in the sports business, we love competition. Of course we are winning and I think many of them are spending more time talking about us and less time on their own brand, consumer approach.”
For its part, Gatorade has been mulling over its own offerings to consumers. Del Pozzo said the line between hydration and wellness has become blurred, with more consumers focusing on staying hydrated throughout the day, not just while exercising.
Now they prefer low- or no-sugar drinks, “functional” drinks that tout health advantages such as improved immunity and alkaline water, he said.
In response, Gatorade expanded its business with new products: Gatorade Zero Sugar, an immune-supporting vitamin C and zinc tablet, a Pedialyte-like product called Gatorlyte, a caffeine by-product called Fast Twitch, and the primary unflavored alkaline water to be introduced on market across the country in February.
“We’re off to a great start so far, but we’ve been very patient to get it right,” Del Pozzo said of Gatorade water, which accommodates about one-fifth the electrolytes present in classic Gatorade.
Year-to-date, Gatorade has gained share in every moisturizing category it has, in accordance with market research firm Circana. Propel’s annual sales this yr are expected to exceed $1 billion for the primary time, Del Pozzo said.
According to Rabobank’s Watson, Gatorade’s long history has given the brand the chance to enter new categories and blur the boundaries.
“It’s one of the brands that has the best marketing campaigns, so much brand equity, consumer awareness and consumer love,” he said.
For now, the brand’s bestseller stays the classic Gatorade.
Credit : www.cnbc.com
