Reality TV has sparked resurgence in competition programming. Whether it’s dating shows, cooking challenges, sing-offs or physical/mental challenges, viewers aren’t at a loss to satiate their competitive appetites. And now, this kind of intense competition has reached a new platform.
According to Elizabeth Sisel, beverage analyst for Chicago-based Mintel, the sports drink category grew 30 percent from $5.4 billion to nearly $7 billion between 2008 and 2013. The growth was driven by advertising and new product lines from brands between 2010 and 2012, she adds. But following these years of strong growth, the category is seeing alterations in the landscape.
“Sports drinks face increasing competition from other beverage categories offering consumers increasingly comparable functionality,” Sisel says.
Howard Telford, beverage analyst for Chicago-based Euromonitor International, notes that the U.S. sports drink market began to slow in 2012 and was essentially flat in 2013. For the 52-week period ending March 23, dollar sales for the sports drink category were up less than 1 percent, totaling more than $5.6 billion in U.S. supermarkets, drug stores, mass merchandisers, gas and convenience stores, military commissaries, and select club and dollar retail chains, according to Information Resources Inc. (IRI), Chicago.
“The category has been subject to a confluence of external pressures, with consumers open to exiting the category … for other hydration-focused packaged beverages,” he says.
Among those pressures are health and wellness topics. “Consumers have shied away from high-sugar, high-calorie packaged beverages over the past two years,” Telford says. “In this sense, the sports drink segment may face the same wellness/nutritional pressures as the [carbonated soft drink] (CSD) sector over the long term.”
Telford notes that sports drinks, which Euromonitor defines as isotonic, hypotonic and hypertonic beverages, have encountered new obstacles from bottled waters, drink mixes such as liquid concentrates, and even energy drinks. But despite the pressure they are facing from these outside categories, sports drinks still have opportunities to re-engage consumers. “There is considerable opportunity for ‘natural’ alternative recovery and hydration beverages,” Telford explains.
Offering a differing opinion, Mintel’s Sisel notes that sports drinks already carry a positive health perception, with 39 percent of sports drink consumers viewing the beverage as a healthy alternative to CSDs or juices. Twenty-four percent of parents also indicate giving their children sports drinks as a replacement for CSDs or juices, she adds. “This suggests positive nutritional perceptions of sports drinks, especially as compared to many other beverages,” Sisel says.
Although some consumers have a positive perception of sports drinks, Sisel says that brands will explore more ways to reclaim consumers.
“Functional claims are expanding across food and drink categories as brands seek to differentiate themselves from the competition and consumers seek added value for their shopping dollars,” she says. “Look for many more variations in flavor, claims, packaging and messaging as ways for brands in this category to grow.”
Breaking it down
When it comes to sports drinks, two brands are synonymous with the category: Gatorade and Powerade. According to Sisel, Purchase, N.Y.-based PepsiCo Inc.’s Gatorade brand and Atlanta-based The Coca-Cola Co.’s Powerade brand accounted for 96 percent of the category for the 52 weeks ending Nov. 3, 2013. For the non-aseptic sports drink segment, the two accounted for 99 percent in IRI-measured channels ending March 23, 2014. Gatorade makes up nearly 78 percent of that share.
Highlighting Gatorade and other brands in its food and beverage portfolio, PepsiCo announced in April that it extended its sponsorship agreement with Major League Baseball (MLB) properties. As part of the partnership, PepsiCo brands will continue to create local and national MLB fan marketing programs; integrate into the MLB’s TV assets; work with the league's mobile and digital properties through MLB Advanced Media (MLBAM); develop retail promotions; and be present at marquee MLB events, including the All-Star Game and World Series.
The companies also announced that Gatorade is working with MLB All-Star Bryce Harper on a new ad supporting the launch of its Fierce subline. Fierce features five varieties — Fruit Punch + Berry, Grape, Melon, Strawberry and Blue Cherry — as well as a limited-edition flavor, Green Apple, that is exclusively available at 7-Eleven stores. The commercial with Harper launched in April.
“PepsiCo has been a tremendous supporter of Major League Baseball for nearly two decades,” said Tim Brosnan, executive vice president of business for MLB, in a statement. “PepsiCo will enhance the fan experience at the ballpark and at retail with promotions across its food and beverage portfolio. As one of baseball's great rising stars, Bryce Harper is a perfect selection by Gatorade as a brand endorser.”
But Harper isn’t the only professional athlete Gatorade has partnered with for the subline. The brand also debuted an ad back in March featuring NBA player Paul George.
Although Gatorade makes up the majority of the non-aseptic sports drink category, The Coca-Cola Co.’s Powerade brand accounts for roughly 21 percent, according to Mintel’s Sisel. And experts note that the brand had gained traction over the years.
“Powerade had been successfully taking share over the 2008-2012 period in the U.S. but remains a big distance behind Gatorade in the U.S. category,” Euromonitor’s Telford says. “In 2013, the share picture was fairly stable, with both brands following the flat growth trend experienced in the category.”
However, in its 2014 first-quarter financial report, the company noted that Powerade continued its growth trajectory with 9 percent growth in the quarter coming from both the base business and the new Powerade Zero Drops.
Last summer, The Coca-Cola Co. launched Powerade Zero Drops to enable consumers to turn water into a zero-calorie, electrolyte-enhanced, flavored sports drink, it says. The liquid concentrate drink mixes are available in Fruit Punch, Mountain Berry Blast and Orange flavors and are packaged in 3-ounce squeezable bottles that make approximately 24 8-ounce servings.
“Convenience is key,” said Ilan Sobel, senior vice president of glacéau, in a statement. “Between class, practice, errands and work, our lives are becoming busier and busier by the day. With Powerade Zero Drops, we’re providing athletes with even more options to help hydrate with sports drinks. And, we’re doing it without sacrificing any of the great taste or zero-calorie, electrolyte-enhanced refreshment that people have come to expect from us.”
Although The Coca-Cola Co. reported that Powerade Zero Drops have been performing well, the sports drink mix is not the only water enhancer faring well in this segment.
Northfield, Ill.-based Kraft Foods Group Inc. unveiled its Mio Fit liquid water enhancer during Super Bowl XLVII last year. Touting electrolytes and B vitamins, the drink mix recorded sales of $21.4 million for the 52 weeks ending March 23 in IRI-measured channels. This is an increase of nearly 247 percent, according to the data.
“Mio Fit is positioned as a new kind of sports drink and caters to consumers’ increasing demand for customizable products by allowing consumers to choose the amount of flavor in their sports drink,” Mintel’s Sisel says.
But large players aren’t the only ones making a splash in the sports drink category. Beverly Hills, Calif.-based BodyArmor Nutrition LLC announced that NBA player Kobe Bryant has joined the company in an investor role. Bryant will be the No. 3 investor behind co-founders Mike Repole and Lance Collins.
“I’ve had a long, successful career in basketball — one I’m excited to continue — but I also am planning for a long and successful career as an entrepreneur,” Bryant said in a statement. “BodyArmor is a brand that I wanted to be a part of in a big way. Today’s athletes understand how nutrition impacts performance, and there’s nothing that compares to BodyArmor, which is why I chose to invest and become a partner.
“I was already a fan of BodyArmor, but after a few conversations with Mike, I knew I wanted to be more than just a consumer,” he continued. “There is no other product like BodyArmor in the market.”
Bryant will be involved in all facets of the business, including product development, innovation, marketing, expansion markets, and overall growth strategy, the company says.
The sports drink brand’s sales increased 45 percent to $8.9 million in the 52 weeks ending March 23, IRI notes.
Sports drinks aren’t the only ready-to-drink (RTD) beverages that consumers are turning to in order to support their active, healthy lifestyles.
According to Chicago-based The NPD Group’s “Protein Perceptions and Needs” report, 78 percent of U.S. consumers say that protein is important for a healthy diet. However, they are split on what the best sources of protein are, with half naming non-meat sources and the other half naming meat. Those non-meat sources included eggs, yogurt, nuts and seeds, but consumers also are finding favor in protein drinks.
Smaller than the sports drinks category, nutritional drinks, including meal replacement beverages, accounted for less than half of the sales of sports drinks in 2013 at $3.2 billion, according to Mintel’s January report “Nutritional and Performance Drinks – US.” Even smaller than that was protein drinks, with $2.1 billion
in sales for 2013; however, this is a 51.2 percent increase from 2011 when sales were $1.4 billion, the report notes.
“Protein RTDs within the sports nutrition category are growing strongly,” says Euromonitor’s Chris Schmidt, consumer health analyst. “Their push into mainstream retailers and an increasing focus on lifestyle and functional nutrition branding — as opposed to hardcore sports recovery — along with the glowing praise heaped on protein by the popular media, is driving growth in both relatively mature and emerging markets.” Schmidt notes that Euromonitor defines protein drinks as beverages that contain 20 or more grams of protein and are positioned for sports performance and recovery.
When it comes to consumer demographics, Mintel’s Sisel notes that millennial consumers seem to be the most likely to drink protein drinks, with an edge to males. “Sixty-three percent of men [aged] 18-34 drink protein drinks, mostly to enhance fitness performance or as part of physical activity,” she says. “Mintel finds 46 percent of women [aged] 18-34 also drink protein drinks for the same reasons.”
Core Power, a brand of fairlife LLC, in which The Coca-Cola Co. has an equity ownership stake, announced at the 2013 National Association of Convenience Stores (NACS) Show the release of its latest protein drink flavor: Banana. Containing 26 grams of protein, the beverage sources its protein from whey and casein.
The brand also has been active in partnerships. “Core Power scored a major coup this winter when it was named the official protein drink of the Sochi Olympics, thanks to its association with Coca-Cola,” Euromonitor’s Schmidt says. “The new bottle featured the U.S. flag and Olympic rings prominently.”
The segment also has seen brand owners release products in shot form. Pro Balance Inc., Clearwater, Fla., released The Original Protein Shot XL last year. The 3-ounce dietary supplement contains 28 grams of hydrolyzed protein in each bottle.
Schmidt notes that although RTD protein drinks have gained a bigger following in the past few years, the segment appeals more to everyday consumers versus hard-core athletes because of the price difference compared with protein powders. “The convenience factor isn’t enough to warrant a four-times premium for someone consuming a protein shake three to five times a week,” he says.
Mintel’s Sisel also notes the importance of convenience relating to this beverage segment. “Everyday consumers drink protein drinks for a broad variety of reasons, including as a convenient meal on the go or for an overall energy boost,” she says.
Recognizing the interest in convenient protein drinks, California Natural Products' CalNaturale Svelte brand released the latest variety in its protein drink portfolio: Banana Crème. Packaged in an 11-ounce carton, Banana Crème is U.S. Department of Agriculture certified organic.
The segment also is seeing milk producers enter the space. Organic Valley, La Farge, Wis., announced it will launch organic milk protein shakes. Organic Valley Organic Balance and Organic Valley Organic Fuel will be available nationwide in natural food stores, food cooperatives, major grocery chains and gyms in June. Organic Balance has 16 grams of protein from organic milk, while Organic Valley Organic Fuel contains 26 grams of protein also from organic milk.
Beyond milk proteins, beverage-makers also could find opportunities with different forms of proteins, experts note. “Mintel data show that companies may want to try expanding beyond just soy protein to new plant protein options,” Sisel says. “Nearly a quarter of protein drink users — 24 percent — like the trend toward greater use of plant protein in protein drinks. However, 12 percent of protein drink users won’t use products made with soy, so companies have room to innovate with newer plant proteins such as pea or hemp.”
Euromonitor’s Schmidt also notes that many of the new product launches for protein drinks have blurred the lines between sports nutrition and general health and wellness, including an increase of natural options.
“I think we will see more all-natural launches; greater advertising emphasis on functional nutrition, satiety and natural energy; and more consolidation,” he says.
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