As Gatorade approaches its 60th anniversary, the brand remains vibrant and is expanding into new categories, from unflavored water to energy drink mixes.
Since its inception in 1965, Gatorade has been the dominant sports drink. It accounted for 63.5% of the U.S. sports drink market in 2023, according to data from Euromonitor International.
Owner PepsiCo rivalry Coca-Cola takes the second and third slots with Powerade, a perennial No. 2 pick from Gatorade, and Bodyarmor, a more recent addition to its portfolio. But together, Coca-Cola’s two brands account for only about a quarter of the U.S. sports drink market. Last year, Pepsi reorganized its portfolio to house Propel, Muscle Milk and other fitness-related brands under the Gatorade name.
But Gatorade’s dominance doesn’t mean it can rest on its laurels. As more and more competitors enter the market, the brand has attempted to reinvent itself.
“There have probably been more changes in the industry in the last five years than there were 20 years ago,” said Jim Watson, beverage analyst at Rabobank.
Pepsi’s competitors are seeking to steal market share by launching new products. Unilever purchased beverage mix company Liquid IV in 2020 for an undisclosed amount; Gatorade’s individually packaged hydration powders are similar to the new kid on the block. Nestlé Health Science bought hydration tablet maker Nuun in 2021, the same year Coke bought Bodyarmor.
With Coke’s acquisition of Bodyarmor, it bought a brand that could sell its sports drinks at a higher price, thanks to its marketing as a healthier option. Coke’s other sports drink, Powerade, is generally less expensive than Gatorade, attracting consumers looking for a bargain.
“That means they have a different and better story to tell retailers to try to get more shelf space and take some of that away from Gatorade,” Watson said. “That’s where Gatorade has to come up with all kinds of innovations to have a new story to tell retailers so they keep all their shelf space.”
Even small brands, without the firepower of Coke or Unilever, are putting pressure on Gatorade. PepsiCo CEO Ramon Laguarta called influencer Logan Paul’s Prime Energy a brand stealing share from Gatorade.
“It is true that the emergence of Prime in the category has taken some share from Gatorade, (but) less than other brands in the category or less proportionate to the size of the brand,” he said during the company’s third-quarter conference call in October, adding that Prime’s market share weakened as summer turned to fall.
Gatorade’s market share is expected to improve this year, but it will likely decline further from a year earlier, according to a February Citi Research note.
Gatorade President Mike Del Pozzo told CNBC that competition is good for the category as a whole — and shows the strength of its brand.
“There are a lot of strong voices right now trying to make a name for themselves,” Del Pozzo said. “It’s a competitive industry, and because we’re in the sports business, we love to compete. Obviously we’re winning, and I think a lot of them spend more time talking about us and less of their own brand”, the consumer approach.”
For its part, Gatorade has thought about its own pitch to consumers. Del Pozzo said the line between hydration and wellness has blurred and more consumers are focusing on hydration throughout the day, not just during exercise.
They now like drinks with little or no sugar, “functional” drinks that tout health benefits, like improving immunity and alkaline water, he said.
Gatorade responded by launching new products: Gatorade Zero Sugar, tablets containing vitamin C and zinc for immune support, a Pedialyte lookalike called Gatorlyte, a caffeinated spin-off called Fast Twitch, and its first water unflavored alkaline, launched nationwide in February.
“It’s a good start so far, but we’ve been very patient in getting it right,” Del Pozzo said of Gatorade water, which contains about one-fifth of the electrolytes found in regular Gatorade.
Since the start of the year, Gatorade has been gaining market share in every hydration category in which it offers products, according to market research firm Circana. And Propel’s annual sales are expected to exceed $1 billion for the first time this year, Del Pozzo said.
Gatorade’s long history has given the brand the ability to enter new categories and blur the lines, according to Rabobank’s Watson.
“It’s one of the brands that has the best marketing campaigns, such brand value, awareness and consumer love,” he said.
For now, classic Gatorade remains the brand’s best-seller.
cnbc
