Sports, Energy Drink-Makers

September 1, 2004
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Sports, Energy Drink-Makers

Take on Giants
by Laurie Russo
Once upon a time, “sports drinks” meant one thing: Gatorade. But while the Gator still enjoys a mammoth 80-plus share in the category, other entries continue to hang in there. An increasingly active consumer base, combined with the maturation of the category's credibility, has made it a profitable place to be... even for those bringing up the rear.
Andy Horrow, director of equity communications and professional marketing at Gatorade, says, “Being so dominant in the sports drink category has allowed us to ensure that the category remains highly credible.”
He believes that marketing Gatorade as a highly functional and scientifically proven sports drink has driven competitors to elevate functionality to a higher level as well. Remember, he says, “Gatorade was created for and remains a functional and critical piece of equipment for athletes. If athletes aren't hydrated, they can risk their well being and performance. We've led the way in functional marketing, and [we] like when at least some of our competitors put the needs of an athlete first in marketing their sports drinks.”
There are six sublines of Gatorade beyond the original flavors (Lemon Lime, Orange, Fruit Punch), which remain the biggest sellers. Frost, Fierce, Ice, Xtremo!, X-Factor and All-Stars (see sidebar) cater to different preferences. “Some consumers prefer a lighter, crisper taste, some prefer a bold, intense taste,” Horrow explains. Some don't like colors.” Gatorade X-Factor debuted this year, and “has blown away our expectations,” he says, “driving a good deal of incremental volume for the brand.”
Gatorade’s nearest competitor, Powerade, is by no means cowering in the corner, preferring instead to concentrate on its own success in innovation. “We have been growing robustly for several years, and we see continued growth in the future,” affirms spokesperson Scott Williamson. “The category as a whole continues to grow as does our place within it. Our growth is driven by innovation, and we have been an innovative force within the category for some time.” He cites that Powerade was the first to introduce non-traditional flavors and colors, offer a sports cap and include B vitamins.
Powerade is now leveraging its relationship with the NBA’s LeBron James, and has introduced Flava23, the first sports drink actually designed by a superstar athlete, and the first to be launched in conjunction with a related comic book. James, Williamson says, was “involved in every aspect of the creation of Flava23, from choosing its ‘Sourberry’ flavor profile to selecting the signature burgundy color.” He also helped to develop the package graphics, which feature a stylized comic version of James soaring through the air.
Smaller players have also thrown their hats into the ring, undaunted by the giants. Strength Systems USA, for example, offers Protein Ice in five flavors (Apple-Melon Splash, Arctic Grape, Fruit Punch Freeze and IceBlue Raspberry) that contain 40 grams of ultra-filtered whey protein isolate with no sugar, carbs, aspartame, lactose or fat. The company's Quick Loss “Fat Burning, Thirst Quenching Drinks” in Tropical Breeze, Passion Fruit, Strawberry Kiwi and Mandarin Orange flavors are designed to boost energy and enhance metabolism to burn fat more efficiently.
Running with the Bull
Like sports drinks, the energy drink category is dominated by one product — Red Bull — but that hasn't stopped smaller companies from grabbing their share of the remaining half of the pie. Innovators and mavericks alike have had success in this category, with high profit margins making it an attractive proposition.
Rockstar literally exploded onto the scene a few years ago, giving the Austrian elixir a run for its money. But the company's biggest coup to date, says Executive Vice President of Sales Joe Cannata, is its latest distribution agreement — landing Coca-Cola Consolidated (CCBCC), Charlotte, N.C., Coca-Cola’s second-largest distributor.
“It's a really big deal for a company like ours, especially when you consider Coke has its own energy drink in KMX,” he enthuses. “But CCBCC decided to go with the strongest non-Red Bull brand, and that was us.”
The Las Vegas-based company introduced a diet version last year, and recently came out with Rockstar Energy Cola. Explains Cannata, “We've already built Rockstar and Diet Rockstar to the point where our market share's growing and we're giving Red Bull a fight. We wanted to expand our portfolio, but not by confusing people by putting the same drink in a different can.”
Rockstar figured a cola made sense, realizing that people drink energy drinks for functionality, but don't necessarily like the taste. “We wanted to offer the consumer an energy drink in a traditional, familiar flavor,” he says, “and energy drinks don't exactly go well with food, but cola is something people drink with food every day.”
He figures it will keep people in the category longer, and also bring in some that are outside the usual youthful demographic, perhaps older people looking for an alternative to coffee. And on-premise, Rockstar Energy Cola mixes well with darker spirits.
Another strong contender is Hansen’s, whose myriad product offerings include Monster, Lost and Energade. Senior Vice President Mark Hall isn't running scared, either. “It's no harder competing with Red Bull than it is for Miller to compete with A-B, which has the same share,” he insists. “They are by no means unassailable, and actually we're finding lots of fertile ground.”
It's a young category, he reasons, and it's growing — a lot of new users are coming into the category who don't necessarily see Red Bull as the end-all. It's also a youthful demographic. “That doesn't mean that they're all young in age, but they're young at heart and in mind,” says Hall. “This consumer likes the edgier designs, so some of our current offerings are being retrofitted to [reflect that].”
Hansen’s noticed that one area it wasn’t totally hitting was the youngest end of the spectrum; the youngest males. “They were gravitating toward other entries, so we came out with Lost Energy Drink,” he says. “We licensed the name from an edgy surfboard/clothing manufacturer, and it’s our second-best seller now.”
Hall says it’s not about making another flavor of a current product, but about line-extending energy drinks with personalities. The Hansen’s name isn’t even on Monster and Lost, and it’s similarly restaging Energade because “Hansen’s means healthy, good-for-you, soccer moms and kids, and that really doesn’t play in this category.”
But mom’s territory — the supermarket — is coming on strong in this c-store-dominated category, so Hansen’s designed multipacks (currently Monster and Monster Lo-Carb with more to follow) to meet that demand.
And more than sports drinks, this category has room for the smaller guys. Go Fast, positioned as “The Athlete’s Energy Drink,” set itself apart by using Australian honey instead of high fructose corn syrup, lower sugar and sodium content, and no preservatives.
Vice President of Communications Heather Hill says, “Go Fast is not just another beverage using sports as a marketing tool, but was founded by athletes in the extreme sports scene.” She believes it’s “maintained its authenticity in the sports realm by tapping into the heartbeat of its consumers, and employing people who truly live and speak the brand, and who can relate directly to the consumers’ passions and interests.” Go Fast recently launched Go Fast Light, which tastes similar to the original but is sweetened with honey and Splenda and contains  20 calories and 1 carb per serving.
As an independent brand focusing on a quality product, notes Hill, “the ingredients we use are more expensive, the marketing/sales support required to be successful is very expensive and with so many ‘overnight’ entrants, the category can get diluted.”
This sentiment is echoed by Rockstar’s Cannata, who says a lot of those “overnights” will be gone in a year or two. “They’re already practically giving away their product as it is,” he points out. “They’re in it to make a little money in the short-term, fill their coffers and get out. But they’re compromising the integrity of the category’s pricing.” BI

Top Sports drinks by brand
Brand DOLLAR
SALES
% change vs.
prior year
Market
Share
% change vs.
prior year
GATORADE $511,339,072 8.6% 44.9 -1.5
POWERADE $146,309,856 17.6% 12.8 0.6
GATORADE FROST $121,652,184 -7.3% 10.7 -2.2
GATORADE FIERCE $93,002,944 1.3% 8.2 -0.9
GATORADE ICE $67,494,600 5.4% 5.9 -0.4
GATORADE ALL STARS $56,617,028 70.2% 5.0 1.7
CAPRI SUN SPORT $33,533,472 134.4% 2.9 1.5
GATORADE X FACTOR $31,030,712 NA 2.7 NA
GATORADE DRINK MIX $21,798,776 -2.1% 1.9 -0.3
GATORADE XTREMO $19,071,392 41.3% 1.7 0.3
GATORADE ASEPTIC $9,125,213 -25.5% 0.8 -0.4
PRIVATE LABEL $7,463,518 -18.0% 0.7 -0.2
GATORADE FROST ASEPTIC $6,859,705 -22.5% 0.6 -0.3
GATORADE FROST DRINK MIX $4,556,954 -19.3% 0.4 -0.2
GATORADE FIERCE ASEPTIC $2,903,826 -31.0% 0.3 -0.2
CATEGORY TOTAL $1,139,067,904 12.1% 100.0 0.0
Source: Information Resources Inc., Total food, drug and mass merchandise, excluding Wal-Mart for the 52 weeks ending July 11, 2004.
Top energy drinks by brand
Brand DOLLAR
SALES
% change vs.
prior year
Market
Share
% change vs.
prior year
RED BULL $120,330,056 68.4% 59.2 4.7
ROCKSTAR $15,742,497 128.2% 7.7 2.5
SOBE ADRENALINE RUSH $14,051,204 12.2% 6.9 -2.7
AMP $13,032,334 12.8% 6.4 -2.4
MONSTER ENERGY $9,367,802 253.2% 4.6 2.6
SOBE NO FEAR $7,506,167 944.8% 3.7 3.1
HANSEN’S ENERGY $3,546,663 -0.9% 1.7 -1.0
KMX $3,437,564 -44.6% 1.7 -3.0
BLUE OX $1,473,845 -28.1% 0.7 -0.8
EAS PIRANHA $1,110,173 115.0% 0.6 0.2
BAWLS $1,017,352 77.8% 0.5 0.1
HYPE $993,144 206.4% 0.5 0.2
POWERADE $886,398 7.5% 0.4 -0.2
RUSH ENERGY $842,228 508.1% 0.4 0.3
180 $785,026 -27.4% 0.4 -0.4
CATEGORY TOTAL $203,295,104 55.1% 100.0 0.0
Source: Information Resources Inc., Total food, drug and mass merchandise for the 52 weeks ending July 11, 2004.

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