Gatorade shakes? Pepsi reinvents the sports drink

The beverage brand's parent looks to dominate the $20 billion fitness nutrition market with a new line.

By InvestorPlace Nov 28, 2011 12:12PM
By Jeff Reeves, InvestorPlace.com

Gatorade is one of the most iconic drinks in America, appearing in traditional coach-drenchings and ubiquitous plastic bottles at Little League games and fitness centers.

But after embarking on a rebranding campaign in 2009 -- starting with a relaunch as "G" ultimately resulting in a reformulating of the beverage into a three-tiered line of drinks -- parent company PepsiCo (PEP) seems to be messing with a good thing.


Lest consumers think the flow chart of Gatorade drinks is the end of the reinvention, an in-depth BusinessWeek report reveals this is only the beginning of a shakeup to the iconic sports drink. Chews, bars, shakes and other products are all in development, and Gatorade is using big-name athletes like NBA All-Star Dwyane Wade to test the products in labs to see if they work under real-world conditions.


It's all part of the PepsiCo vision to diversify its product line. Consumers might not be aware, but investors should know by now that the company is far more than just soft drinks. PepsiCo is the parent of Lays potato chips, Quaker granola bars, Cap'n Crunch cereal, Aunt Jemima syrup and Rice-A-Roni -- to name a few.

 

Post continues below:

Gatorade is one of the biggest players in the $7 billion sports drink market. But if you look beyond beverages to the broader category of sports nutrition -- protein bars, supplements and the like -- there is a marketplace about three times the size. If PepsiCo can dominate stores like GNC (GNC) the way it dominates grocery aisles, the sky is the limit for sales.


Making the Gatorade brand palatable to consumers this way is a tall order, however. The three-step drink plan of "Prime, Perform and Recover" has been panned by many industry insiders who think PepsiCo overcomplicated its product line in a grab to boost sales. The initial push was a flop, with sales of Gatorade sliding 11% after the initial G rebranding in 2009 and barely squeaking up at all in 2010.


Hence the return to the lab, the testing of new products with star athletes and what is sure to be a resultant marketing push that takes Gatorade back to consumers with "evidence" of its performance-enhancing abilities. If it works for Dwyane Wade, it surely will help you run the floor in a pick-up basketball game, right?


The only hangup is that PepsiCo doesn't have a very good track record when it comes to rebrandings like this. Pepsi's five worst branding disasters include a redesign of the Tropicana orange juice carton that resulted in a 20% sales decline in 2009, and more infamously the 1993 launch of Crystal Pepsi that was quickly killed about a year later.


Gatorade could be a cash cow if PepsiCo could compete in an ever-growing sports nutrition market. But if the effort flops, it's going to be not just another embarrassing black eye for the company but a serious drain on the balance sheet as Gatorade -- er, I mean G -- struggles to regain its once-dominant position on sidelines and in gyms around America.



Jeff Reeves is the editor of InvestorPlace.com. Write him at editor@investorplace.com, follow him on Twitter via @JeffReevesIP and become a fan of InvestorPlace on Facebook. As of this writing, he did not own a position in any of the aforementioned stocks.




Related Articles


17Comments
Nov 28, 2011 2:56PM
avatar
I was looking for Gatorade at a grocery recently store and couldn't find it. I asked someone where it was, and they said I was standing right in front of it, lots of bottle with G on them. Isn't rebranding a failure when your product becomes invisible?
Nov 28, 2011 3:19PM
avatar
I just wish someone would market a good, healthy sports drink that works.
Nov 28, 2011 3:53PM
avatar

Do they really think anyone is going to walk around with 3 different bottles of any drink?  People who exercise assume Gatorade is as good or (hopefully) better than water - tastes ok - and is most likely more nutritious than any other non-water drink.  Period.

 

No one really thinks their sports drink is going to much of anything - only that it's better than nothing.  So to think one will consciously drink from bottle #1 before bottle #2 and, of course, before bottle #3 has been sitting behind a desk for too long

Nov 28, 2011 5:43PM
avatar
Original Gatorade did not have artificial sweetener in the non diet drinks. Now all "G" drinks have artificial sweetener regardless of diet status. I no longer drink gatorade since I do not drink artificial sweetener.
Nov 29, 2011 1:14AM
Nov 28, 2011 4:39PM
avatar
It might be Pepsi, But Coca Cola is always best!!!!!
Nov 29, 2011 2:41AM
avatar
Pepsi is going to blow it because their marketing people are nimrods. 
Nov 29, 2011 6:50AM
avatar
I agree with Upset11138. The artificial sweetener has to go. At least give us an option on all sport drinks or protein shakes(which some do). The fake sugar leaves a horrible aftertaste. This isn't rocket science. Just make something with a good protein/ carb balance as well as some of the other necessary ingredients. Maybe I'll make one because I think there is still room in the market for just the right product. Sports drinks, protein, water, etc.... Who's with me???
Nov 29, 2011 4:23AM
avatar
It is odd to me that companies work so hard to gain brand loyalty over time and then suddenly change the name, product or just drop the product altogether reintroduce something new and then wonder what happened to their customers. Sometimes the name is worth more than the product itself. The field of nutrition bars and sport drinks is already crowded to the point that one more won't make any difference. G or what ever it is now will just fade away or get lost in the crowd. 
Nov 29, 2011 11:05AM
avatar

Same thing happened with Hamburger Helper.  At that time, Kraft owned them and wanted to make more market share.  So they took the old tried-and-true brand and added a bewildering variety of new flavors, like Mac 'N' Cheeze and French Onion.  Consumers were overwhelmed by the variety and their sales dropped by a third.  Since then, Hamburger Helper has trimmed their offerings to just three or four, but their sales have never recovered.  You can only mess so much with an icon.  How many New Coke and Pepsi Crystal disasters do we need to prove this?  Heck, Pepsi should know better because not only did they screw up Pepsi, but they already tried the Hamburger Helper fiasco with Rice-a-Roni.  Same story, same results.  I don't drink Gatorade anymore, unless I can find the older brand.  I don't like the taste of the high fructose corn syrup, which was exactly why I never used to drink Powerade either.  Now they taste the same.

 

Nov 29, 2011 2:49PM
avatar
Yeah they need to leave Gatorade alone, I buy the powder so as long as they leave that alone they're cool, however Pepsi, you used to make Diet Pepsi with lime and it's gone, why? It was the best and you pull it off of the market, tell your marketing people to shut the f*** up and start selling the products consumers like!
Nov 29, 2011 4:28PM
avatar
I stopped drinking Gatorade and this season started drinking Warrior Energy during my bike rides.  I never liked the high fructose corn syrup and artificial colors in Gatorade.  Warrior Energy is an all-natural, tea-based drink that actually tastes good!
Nov 29, 2011 3:12PM
avatar
Complicating their lineup of Gatorade drinks to gear towards a specific method of fitness nutrition is akin to a fashion line only carrying sizes 0-4, and then expecting all sizes to buy it. The result may look like a higher-status product, but it cuts out a huge part of your buying public (a fashion-conscious size 8, for the latter example, or a health-conscious non-athlete for the former.)
Nov 29, 2011 2:16PM
avatar

@Crazy Parrot

 

I'm sorry to inform you that Hamburger Helper (a Betty Crocker brand) still sports 40 varieties of Hamburger Helper.  They're divided into the following categories, with several flavors under each variety:

 

Asian Flavors

Chicken Flavors

Cheesy Flavors

Homestyle Flavors

Italian Flavors

Mexican Flavors

Helper Complete Meals

Tuna Flavors

Whole Grain Helpers

 

Most stores probably don't carry the full line -- but they exist and I love all of them!

Nov 29, 2011 2:58PM
avatar
I tasted the Gatorade Shake at the 2011 Chicago Marathon Expo. It was the BEST TASTING protein shake that I've had. Flavor-wise it blew the doors off of Muscle Milk, Special K and Slim-Fast. I can't wait for it to debut in 2012.
Nov 29, 2011 8:16PM
avatar
As long as they don't put Tiger Wood long face on the bottle, I will buy.
Nov 28, 2011 5:08PM
avatar
I like the G flavors that came out. i do a lot of hiking all year and gator- aid works just fine for me.
Report
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
Categories
100 character limit
Are you sure you want to delete this comment?

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

STOCK SCOUTER

StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

105
105 rated 1
271
271 rated 2
420
420 rated 3
633
633 rated 4
492
492 rated 5
532
532 rated 6
725
725 rated 7
515
515 rated 8
343
343 rated 9
140
140 rated 10
12345678910

Top Picks

SYMBOLNAMERATING
UPLULTRA PETROLEUM Corp10
EOGEOG RESOURCES Inc10
SWNSOUTHWESTERN ENERGY COMPANY10
TAT&T Inc9
COPCONOCOPHILLIPS9
More

VIDEO ON MSN MONEY

ABOUT

Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.