Post-Coconut Water, Natural Beverages Seek Sporting Chance

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Amid a sustained tilt toward consumption of better-for-you foods and beverages, as well as surging demand for “clean labels” — those products containing only simple, natural ingredients — the market for consumer packaged goods has fundamentally changed. Yet, sports drinks, particularly category leaders Gatorade and Powerade — each of which market products formulated with artificial sweeteners and colors — have yet to be dramatically affected by the new landscape. In fact, both continue to experience growth in their core offerings.

That isn’t to say sports drinks with natural formulations haven’t resonated with consumers, but a big speed bump appears to be prevailing consumer opinion that current options on the market are, on the whole, healthy beverages. In its 2015 Global Health and Wellness Survey, market research firm Nielsen found that while “natural foods with beneficial ingredients are most desirable,” sports drinks are often classified in the same vertical for healthy drinks as water, dairy-based shakes and tea.

Thus while Powerade and Gatorade continue to dominate the overall category, beverage companies promoting natural functionality, particularly with products that are electrolyte-packed and nutrient-rich, often seek to align themselves with the segment. Paving the path is the remarkable success in marketing coconut water as a sports drink that, while subtly shifting, has given way to a range of plant-based and naturally formulated beverages seeking to emulate a similar path.

COCONUT WATER EVOLVES BEYOND THE SPORTS CATEGORY

Ironically, coconut water, which soared in popularity once promoted as a natural and hydrating isotonic, is a category in transition with some brands gradually stepping away from a direct association to sports drinks. Vita Coco and Zico were among the first to market coconut water as a sports drink, positioning the plant-based beverage as a super hydrating liquid naturally laden with electrolytes, including potassium and sodium. The marketing strategy netted droves of buyers, with both Vita Coco and Zico aligning their brands with well-known professional athletes, such as Alex Rodriguez, Kevin Garnett and Marshawn Lynch. The efforts were a key piece of the growth of coconut water into a category worth $400 million in the U.S.

types-of-coconut-waterOver the last year, however, Vita Coco and Zico have gradually placed less emphasis on coconut water as better-for-you sports drink in favor of marketing designed to achieve broader appeal for the beverage. In 2014, Zico placed its “Team Zico” cadre of athlete endorsers on the back burner and reimagined the brand as an everyday thirst-quencher, enlisting actress Jessica Alba as a spokesperson for its new “Crack Life Open” campaign. Meanwhile, Vita Coco, which just 10 months ago had announced a new professional athlete-driven marketing campaign titled “Drafted by Nature,” recently switched gears and is now focusing on a global advertising initiative called “Stupidly Simple,” which is intended to simplify messaging of coconut water to that of a natural, refreshing beverage.

Moreover, Vita Coco Sport, a product line born from a partnership with Target, was short-lived on the market. Heralded as a “coconut water based sports drink that tastes like the sports drink you love, but is all natural,” the beverages were formulated with no artificial ingredients or additives. Vita Coco positioned the products as “a healthy alternative for consumers who are tired of artificial, sugary, laboratory-processed sports drinks,” but they appeared to gain little interest among consumers. Arthur Gallego, a Vita Coco spokesman, stated that the line “was created solely for the first Target ‘Made to Matter’ program, and Vita Coco passed on participating this year, to focus on global expansion.”

Additionally, sports drink brands BodyArmor and Greater Than, which launched promoting coconut water as a key ingredient in their products, are downplaying it. In particular, a series of packaging revamps have gradually eliminated all imagery related to coconut water on the products’ front labels and reduced their mentions almost to an afterthought.

Greater Than, a sports drink brand distributed primarily in the Chicago market, recently underwent a makeover that more prominently describes the product as a sports drink than in previous iterations and now calls out a natural, low-calorie and Non-GMO formulation, attributes that are most in demand among today’s consumers, said Greater Than co-founder Jon Sider.

“If you look at the [old] package, it says ‘coconut water plus electrolytes,’” Sider said. “People… just didn’t know what it was. Coconut water adds to the unique combination of ingredients that we use, but it’s not who we are. And we had to re-evaluate the hierarchy of what was important, and coconut water was not number one, number two or number three.”

Despite his belief that Greater Than finally has the right positioning to achieve wider sales and distribution, co-founder Mark Sider believes that the brand, which contains no artificial ingredients, is ahead of its time. Noting that most consumers haven’t embraced natural products in the sports drink category with the same vigor that they have in other beverage segments, he remarked on the importance of being patient and having the capital to “stay in the game.”

“By no means are we a well-capitalized beverage brand,” Sider said. “But if we were poorly capitalized, we would have gone out of business in 2011; we were too far ahead of the curve. And the packaging was so wrong. You’re bound to make mistakes, so you need to have capital to survive. It’s been five years for us, and we’re just coming out with a package now that we feel confident in enough to launch outside of the Midwest.”

While it’s still a long way from household name status, Greater Than has picked up a number of significant distribution wins, having landed national, chain-wide placement in specialty grocer The Fresh Market and gained shelf space at Wegmans stores in the Northeast and Mid-Atlantic. Jon Sider credits the recent success to a more solid foundation for the brand, one rooted in its embrace of the word “sports drink,” which he says does not have as negative a connotation as it did in recent years.

SPORTS DRINKS PICK UP STEAM… AND LIKE-MINDED BEVERAGES

Screen-Shot-2015-07-22-at-3.53.23-PMIndeed, growing negative sentiment toward the sports drinks drove a three-year decline in volume sales before the category embarked on an upswing in 2013. Recent data compiled by global analyst firm Beverage Marketing Corporation showed 2014 sports drink volumes reaching 1.4 billion gallons, up 3 percent from the year prior. It was the first time that the category had exceeded 1 billion gallons since 2011. The shift in momentum has elicited greater activity from brands wanting to play in the category, particularly from plant-based and juice beverages.

The emergence of maple water is one example. Since late 2013, maple water brands, including Happy Tree, Seva, Vertical Water and Drink Maple, have come out of the woodwork (so to speak). Each uses maple tree sap, a liquid said to have significant nutritional content, including manganese, calcium along with several other minerals and vitamins. While the threat of class-action lawsuits has kept most health claims at bay, brands tout hydration qualities and nutrients in the liquid as beneficial for athletes.

Drink Maple co-founders Kate Weiler and Jeff Rose cite maple water’s superior hydrating effects as a key part of their diet as triathlon competitors and one of the primary reasons for launching the brand. Drink Maple, which debuted in a single-SKU 8.4 oz. Tetra Pak carton, recently added a new 12 oz. HDPE bottle that is contoured for grip, a package designed to meet the needs of active consumers. Noting that consumers “immediately draw the comparison” between coconut water and maple water, Weiler said that as a result they more easily grasp the idea of a plant-based hydration beverage.

“We have a lot of consumers that don’t like the taste of coconut water, but love the idea of natural one-ingredient, plant-based hydration,” Weiler said. She believes that the sparingly sweet essence of maple water is an edge that will let it win new consumers.

SportsDrinksTableBeet juice, on the other hand, has a much more divisive flavor, but it’s a beverage that is also chasing sports drink consumers. Although the segment is — as might be expected — tiny, beet juice has gained a following among athletes who praise its reported benefits, which include increased endurance and improved blood and oxygen flow to the muscles. Auburn University’s football team has been drinking beet juice before games since 2013, and like Drink Maple’s co-founders, the beverage is growing in popularity among triathletes as well as marathon runners, cyclists and body builders. The category currently counts Beet Performer, Red Ace and Love Beets as players in the nascent space.

Unlike maple water, some in the beet juice arena are quick to share claims about the drink’s efficacy.

“Beet juice is one of the first all-natural sports beverages backed by real science,” says Matt Herzog, the president of Beet Performer. “It’s been found to not only boost oxygen availability to muscles during moderate- and severe-intensity activity, but also increase time to exhaustion during high-intensity activity by 16 percent. “The stamina and strength benefits of beet juice have convinced college and pro sports teams as well as professional runners and cyclists.”

Perhaps an even smaller category is cherry juice, a segment that has nonetheless attracted widespread interest for its anti-inflammatory properties. The category is dominated by Cheribundi, which markets several lines of tart cherry juice beverages, and, in addition to retailers throughout natural and conventional retail channels, sells product to over 100 professional and college teams, which covet the beverage based on studies that have linked regular consumption of tart cherry juice to an acceleration of post-workout recovery and reduced muscle pain.

Cheribundi, which is endorsed by N.F.L. players Devin McCourty and Jason McCourty —  the twin brothers are also equity shareholders in the brand — doesn’t pull any punches when it comes to its association with well-known sports teams. The brand’s website opens to a page showing logos of the U.S. women’s soccer team, Duke University, New England Patriots, University of Virginia and Chicago Blackhawks, asking “What do these champion teams have in common?” and answering with the brand’s “Powered by Cheribundi” tagline.

With sports diversifying, and consumers seeking specific functionalities that fit with their diets, more championship claims could be on the way.