vitaminwater threatens Gatorade’s hydration dominance

Posted March 20, 2008 3:15 pm

BY MATT CASEY, BEVNET.COM STAFF WRITER

Coke’s vitaminwater poses a market-share threat to Pepsi’s Gatorade, according to a Deutsche Bank analyst, but Gatorade’s G2 may help the hydration drink giant fend off competitors.

Deutsche Bank analyst Marc Greenberg said Gatorade has become increasingly reliant on “heavy users” while more casual sports drink consumers drifted to other brands – particularly glaceau vitaminwater.

Greenberg said during a Thursday afternoon conference call that Gatorade is still dominant, and retailers still consider it a “cornerstone brand,” but the brand’s growth lagged behind that of the category in all four quarters of 2007. Gatorade even saw their volume shrink in the second quarter of last year.

Gatorade, he said, needs to find “ways to leverage the brand in new ways” and “new occasions and ways to broaden in a broadening category.”

G2 – Gatorade’s lower-calorie fortified water -could help. February supermarket scanner data showed that G2 helped Pepsi rally its share of the sports drink market and grow its volume by 11.6 percent over their volume at the same time last year, according to Morgan Staley Analyst Bill Pecoriello.

However, Greenberg had lower hopes for Gatorade’s Tiger line extension, built on a partnership with Tiger Woods. The analyst said he not only feared that aiming a product directly at golfers could divide Gatorade’s product line, but could also divide the hydration drink segment.