Sports Drinks Shifting Ingredients, Marketing Strategies

By Max Rothman

When Kevin Garnett’s endorsement contract expired with Gatorade in December, 2011, he chose to go in a different direction. Garnett, one of the most prestigious and accomplished forwards in NBA history, wanted to partner with a brand that he felt better represented his healthy, yoga-dependent lifestyle. A few months later, Garnett signed with ZICO, the coconut water brand.

“He believed in his lifestyle,” said Bill Lange, ZICO’s VP of marketing, “And his diet was a better fit with what we were all about than who he was with before us.”

Garnett told reporters that ZICO is light on his stomach because of its low acidity, preventing cramping and allowing him to keep up with the younger stars of the NBA. Garnett’s avowed interest in ZICO also signified a shift – not just regarding the changing perspective of many athletes toward beverage consumption, but also regarding the gradually changing landscape of the sports drink category.

“It comes down to all-natural,” Lange said. “That’s the biggest thing.”

While the initial combination of hydration-oriented ingredients certainly played a vital role in the evolution of sports drinks, it’s an ongoing move toward segmentation – the meshing of a product with an occasion – that seems to be propeling the category forward and broadening the field beyond the traditional two-horse race with Gatorade and Powerade. With products that suit any hour of the day and pack a wider range of ingredients, consumers are now seeking sports drinks during times once reserved for water, juice or carbonated soft drinks. It’s this versatility that is maturing the category and widening its scope and marketability.

And even the big dogs are paying attention. Gatorade, for example, created the G Series to complement this need-specific trend. Gatorade Prime uses a blend of carbohydrates and B vitamins to deliver energy before athletic activity. Gatorade Perform supports athletic activity with carbohydrates and electrolytes. Gatorade Recover follows this activity and supports muscle growth with 16 grams of protein and electrolytes.

The increasing demand for all-natural products has influenced many other developing brands, aside from ZICO, that also market themselves toward active consumers. Lance Collins, founder and CEO of BodyArmor, dubs sports drinks “a flawed category” because of what he identifies as artificial flavoring, a lack of nutritional benefits and high sodium content.

“Sports drinks sell themselves on bright artificial colors,” Collins wrote to BevNET in an email asking to not be included in any sports drink roundup.

BodyArmor, which Collins calls a “superdrink,” claims to contain double the electrolytes of the leading sports drink, also one banana worth of potassium, 50 blueberries worth of polyphenols, and A, C and E antioxidant vitamins. And in case there was any confusion that BodyArmor isn’t a sports drink, the brand has completely wrapped its bottles in packaging, providing the opposite of the colorful, clear bottles of Gatorade and Powerade.

Despite Collins’ nearly manic insistence on categorical individuality, his company certainly favors athletes as endorsers: Buster Posey, the catcher for the San Francisco Giants, Mike Trout, the outfielder of the Los Angeles Angels, and Rob Gronkowski, the tight end of the New England Patriots are among those hawking the brand, and the product is catching on. In April, BodyArmor announced that the Dr Pepper Snapple Group will start distributing its products in New Jersey and Northern California.

Garnett’s role with ZICO helped put coconut water directly at what marketers call the “point of sweat,” but it’s the natural qualities of coconut water overall that serve as a point of differentiation and a possible indicator of the future direction of sports drinks. While still providing hydration via five electrolytes, potassium, sodium, magnesium, calcium and phosphorous, ZICO itself has been heavily marketed toward sports occasions — more so than its two largest competitors, Vita Coco and O.N.E.

ZICO’s pitch has also paid off in the marketplace. Lange said that the company has nearly doubled in sales each year of its existence. And while that will likely become a challenging goal as ZICO continues to grow, Lange feels confident that the still-encouraging growth will be sustainable. As of February, Coke started to distribute ZICO nationally, opening the once-miniscule company to a wider range of consumers.

“That just opens doors to the power of the red truck system,” Lange said.

To comply with this national launch, ZICO had to make a few adjustments in its business plan. When Mark Rampolla founded the company in 2004, he focused exclusively on targeting the Bikram Yoga crowd. Once the product gained some steam, he widened his marketing scope toward endurance athletes. Now, as a national brand, ZICO markets toward what Lange called “try-athletes,” which includes cyclists, distance runners, yoga practitioners and more. This broader demographic fits ZICO’s rapidly growing business.

“It’s much more mainstream,” Lange said. “We don’t want to be just about that hyper-competitive group. We want to be about anybody who sees the value in living a healthy lifestyle.”

This approach coincides with the overall category’s aim for occasion-based consumption; a goal that overlaps other categories, as well. Caffeinated, coffee-flavored coconut waters, such as ZICO Latte, Coco Cafe and a variety of RealBeanz, offer consumers an alternative to a sugar-filled canned coffee. Lange said he’s been told that some consumers choose ZICO chocolate instead of a candy bar; it craves the sweet tooth, but contains less sugar and less calories than standard desserts.

“When you make healthy choices for yourself, you just feel better,” Lange said. “And it’s kind of a self-fulfilling prophecy.”

On the smaller side of things, Golazo serves as an example of another beverage marketed toward active consumers, but one that banks on soccer (futbol, for all you purists) as its key branding hook. This also follows the idea of occasion-based marketing. A soccer ball sits on the front of Golazo bottles and cans below the brand’s slogan: “born to score.” Even the title, Golazo, has a soccer connection; it’s what some Spanish players scream after scoring a goal.

“We’re not just going after the soccer mom. We’re going after any soccer fan and soccer player. This is the passion brand for soccer,” Golazo co-founder Richard Tait told BevNET. “We live it, breathe it, we want to fuel football.”

Golazo throws another twist into the shifting web of sports drinks; it’s all-natural and contains coconut water, but also uses non-GMO ingredients, offers less sodium than the leading sports drinks, and offers both energy and sports hydration options. It’s this versatility and functionality that seem to be hallmarks of the future of beverages for active consumers.

Golazo has focused on refined markets that have clearly expressed an interest in soccer. Perhaps the company will go national if the U.S. ever fully embraces soccer. Until that unlikely event occurs, Tait has helped place his products in 1,600 stores in eight states throughout the West Coast, including all Safeway and Whole Foods stores in the region. He also believes that because soccer is the world’s most popular sport, in time, Golazo has the potential to become an international brand.

While ZICO and Golazo both source natural electrolytes from coconuts, A-GAME uses sea salt minerals as its alternative to replenish the body’s water and electrolytes. It also offers eight vitamins, minerals and carbohydrates, furthering its role as a functional sports drink. A-GAME, which is based in Orlando, Fla., announced in April that it secured national distribution across 3,000 GNC locations.

A-GAME’s expanding distribution results from the growing demand for products catered toward another kind of consumer; the kind that doesn’t win gold medals or consistently pass finish lines. Similar to ZICO – and to Body Armor – A-GAME markets itself as a cross-functional product compatible for both the health-conscious consumer or the sports enthusiast. These aren’t new kinds of consumers. It’s simply the genesis of brands targeting them in a direct manner.

“You don’t want to just be about elite athletes,” Lange said. “And you look at some of those sports drinks, they feature elite athletes on the TV commercial, but you know that the construction guys and the hungover kids and people are drinking it for all uses.”