Trendspotting: Niche Brands Make Gatorade Play Defense

NewsWire: 3/5/21

• Sales of Gatorade, once the undisputed giant of the sports-drink world, are sliding. The brand now faces many more small competitors, including performance energy drinks and protein waters. (Advertising Age)
• NH: According to recent research by Euromonitor, Gatorade has seen its market share shrink for the last five years. In 2015, the PepsiCo (PEP) owned brand made up 76.6% of all sports-drink sales. But by 2020, that share had fallen to 67.7%.
• As Gatorade's market share shrinks, other companies are stepping in to fill the gap. Analysts have noticed a rise in niche high-end companies selling performance energy drinks, alkaline waters, protein waters, and coconut waters. BodyArmor, a premium sports drink partially owned by Coca-Cola (KO), has quickly become Gatorade's biggest competitor. In 2015, the company only accounted for 0.5% of sports-drink sales. But by 2020, it accounted for 9.3%.
• Part of BodyArmor's rise has been due to the company positioning itself as a meticulously engineered beverage based on nutrition science. Its branding highlights technical-sounding ingredients. And its packaging claims to add “no artificial sweeteners, flavors, or dyes.” 
• Gatorade, on the other hand, still has an image of a sports drink that tastes good but isn’t optimally created--in other words, that pays more attention to fancy branding than to what's best for your body. There are plenty of anecdotal stories of pro-athletes secretly watering down their Gatorade to dilute the high sugar content. To its credit, the company has tried to shed that image with “healthier” products like Gatorade Zero. 
• The long-term trend in bottled drinks is towards beverages that promise health and authenticity. This trend originated long ago with Boomers who wanted drinks that were healthy and natural. Xers then added an emphasis on performance, energy, a competitive edge, and unplugged marketing. Today, the trend is being pushed by Millennials and Homelanders looking for science and technology. They care less than Xers about the jagged-edge survival branding. But they care more that the drink provide some sort of empirical evidence that its "hydration technology" actually works. (See “Thirsty for a Change.”) 
• Gatorade remains undisputedly the most prominent player in the sports-drink world. But it should expect to keep losing market share to niche companies that promise organic ingredients and recipes backed by science.