MARKETING / SPORTS DRINKS: Power to the people

The current fad for healthy living means record numbers of consumers taking exercise more seriously. That’s great news for sports drinks, says Selwyn Parker

It’s a sign of the times in the sports drink sector when Coca-Cola nominates Powerade as its sponsor brand for the Rugby World Cup in September. Battling falling sales in Britain and North America for its classic carbonate brands, Coca-Cola is looking for growth from a corner of

the beverage market once considered highly specialised, with limited growth prospects and a hard sell. An isotonic drink for replacing minerals lost through sweating, Powerade is hardly a brand susceptible to the usual marketing hype. “The Powerade side of life” just doesn’t sound right somehow.

Yet this functional drink has been one of the company’s star performers in the United States, helping rescue sales overall and offering hope of life after the carbonates in a new, lower sugar world. In Britain, Coca-Cola has clearly identified Powerade as one of its brands for the future as the nation gets healthier by the year, if not voluntarily then by legislation.

No longer niche
Almost overnight, the market has got more crowded in the UK and Europe as beverage companies jockey for position in a fitter future. For evidence, it’s only necessary to look at the rapid growth in entries for road races, triathlons and other events that require competitors to shed litres of sodium and potassium, all of which have to be replaced. Sports drink suppliers are among the main sponsors of these events. It’s why GlaxoSmithKline’s Lucozade Sport – which is investing £8.25 million in its “Get your edge back” campaign – is a main sponsor of the London Marathon, with its 36,000 entrants, and why it has set up its own sports directorate.

Everybody in the industry recognises sports drinks will play a major role in the beverage trade over the next few years, but how big? Euromonitor expects the global “health and wellness” drinks market, of which isotonic drinks occupy a big chunk, to be worth around US$38 billion a year by 2010. So far that prediction looks accurate enough – Zenith International estimated that the consumption of functional drinks, including sports and energy brands, rose 6% last year to some 4.4bn litres.

In short, functional drinks are bursting out of their niche. “[They] are now becoming much more mainstream,” explains Zenith’s Gary Roethenbaugh.

As it grows, the sector is also likely to split into different categories. Although not isotonic, Coke’s Diet Coke Plus, a version that adds vitamins and minerals, and PepsiCo’s pending launch of Tava, fruit-flavoured, fizzy, vitamin-enriched drinks for adults, will probably be classified as a sub-branch of the functional drinks group. Indeed a second generation of more advanced, protein-enriched sports drinks is already starting to show up in the market.

Leadership contest
The industry predicts that beverage companies, anxious to offer a full portfolio of products, will look to acquire sports drinks rather than develop new ones, given the long lead times in gaining brand acceptance in an increasingly crowded market. “We would probably buy,” the marketing director of one beverage company told the drinks business. “We want to cover the spectrum.”

However, the sector certainly didn’t look too promising in 2001 when Powerade was first introduced to the UK. GlaxoSmithKline’s Lucozade Energy was its main rival in the dispensing machines. As for PepsiCo’s Gatorade, the main rival in Coca-Cola’s home market, it wasn’t even available, only being launched last year.

The leader in the sector in America, Gatorade is the original isotonic drink, first developed by sports physiologists for the University of Florida’s football team, the Gators. After decades of barely perceptible sales, Gatorade only began to take off in the mainstream market from the mid-90s. Since then Gatorade has been almost unstoppable – last year it posted double-digit growth in the US.

The industry predicts a three-way contest for leadership of the British market over the next few years between Lucozade Sport, Powerade and Gatorade. Distribution aside, flavour is the key but it’s hard to get it right. If the ingredients produce what the industry calls “off notes” in a sports drink, it won’t sell. In short, although they are meant to be functional, they shouldn’t taste like it.

New brands are emerging all the time. One to watch across the Atlantic is Accelerade, which Cadbury Schweppes American Beverages Distribution bought from Pacific Health Laboratories  last year and has been working up into a full competitor for Gatorade and Powerade. One of the second-generation of sports drinks, it combines muscle-rebuilding protein with electrolyte-replacing minerals. It’s a measure of the importance of the sports drink market that Cadbury Schweppes American Beverages will pump US$50m into an Accelerade campaign this year.

And one to watch in Britain is Go, from the family-owned, cycling-mad SIS labs founded by Jean and John Lawson 15 years ago. An isotonic drink based on maltodextrins rather than fructose, it has sold steadily in specialist bike and running shops, through wholesalers and online, a fast-developing pipeline for sports drinks and their derivatives, such as bars and gels. Star cyclists such as Chris Boardman, Bradley Wiggins and Victoria Pendleton help promote the company’s products. But in yet another sign of the potential of the sports drink market, Tesco has started stocking the product. Although Terry Leahy may not see it exactly like this, co-founder Jean Lawson explains: “We started off at the top and we’ve been working our way down.”

It’s fair to say the British sports drink market lagged way behind the American one, and still does. Even now, there are some interesting developments across the Atlantic that will likely show up on this side of the world in coming years. Milk-based recovery drinks, for example.

The wow factor

Florida-based Bravo Foods International, a company that promotes and distributes vitamin-enriched, flavoured, milk-based products has high hopes for its Slammers Sport Milk. The first milk-based sports drink, it will be released this summer. Already there’s a growing body of clinical evidence that it accelerates post-exercise recovery and rehydration, pretty much like an isotonic drink in fact.

The product is the first of what Bravo, which uses Coca Cola’s delivery pipeline, says will be a line of RDS (replenishment delivery system) drinks. Next up from Bravo? Probably Slammers Energy Milk, currently under development and predicted to deliver twice the punch of standard energy drinks.

People who buy sports drinks expect them to deliver two functions – a nice taste and, to borrow a line from Bravo, “wow in a bottle”. Post-race wow, that is.

© db July 2007