Water and sports drinks brands have long competed with one another to offer the best form of hydration on the market, whether it’s through reduced sugar, added electrolytes, or boasting pH levels so high they’re approaching bleach. But beyond liquid, the hydration-focused powdered sports drink mix category has been experiencing a renaissance as independent brands look to compete with mainstream mixes by offering consumers clean label credentials, sometimes with clinical testing to back efficacy claims, while also delivering fun, lifestyle brand identities to bring in new consumers and celebrity influencers.
Though they make up a small portion of the Gatorade-dominated single-serve powder mix space, brands including Nuun, Liquid I.V. and Skratch Labs are growing against a 2.1 percent year-over-year decline of the $79.9 million subcategory. According to IRI, which, due to its channel makeup, provides only a low desnsity reflection of this product category. Nuun’s core Sports line alone grew 55.2 percent to $1.8 million in sales in March. Now new entrants like Cure Hydration are looking to shake up the category more, with millennial-friendly branding and ecommerce focused go-to-market strategies.
“The market is just ripe for disruption, we’re just long overdue for a better solution,” said Cure Hydration CEO Lauren Picasso, noting the dominance of PepsiCo-owned Gatorade in the sporks drink category. According to Nielsen all-channel data, in retail RTD sports drinks are a more than $6.1 billion category, but PepsiCo controls more than 72 percent market share, while BodyArmor and Powerade distributor The Coca Cola Company controls the next 19 percent.
Now, as “hydration” becomes a trend in itself, powdered brands are resonating with consumers by promising a better and more convenient delivery vehicle for replenishment.
The Athletic Culture
A leader in the powdered hydration category – growing 55 percent last year with nationwide distribution in sports stores, natural and specialty shops, and grocery – Nuun has recently undergone a brand revamp by reformulating its tablets to improve taste and reduce dissolve time by half, while also redesigning labels to feature intuitive packaging across its various functional lines. With its focus on clinically-backed sports nutrition, CEO Kevin Rutherford said the brand has found a consistent consumer base in the running community by sampling at more than 1,500 race events in the U.S. and Canada last year and through influencer advertising with celebrities like triathlete Sarah True.
“I think there is a convergence happening right now with the health and wellness world and the sports nutrition active lifestyle space,” Rutherford said. “On a macro level, as people have adopted more organic and natural food diets and clean ingredients in beverages as well, now the next level is where people tend to take a more proactive approach to health and they realize that moving is more important.”
Rutherford told BevNET Nuun, which contains 1-2 g of sugar per tablet, has resonated with athletes due to a growing rejection of sugary sports drinks like Gatorade.
Skratch Labs, which began as a powdered hydration brand but in recent years has added energy bars and chewable snacks, has similarly focused on athletes and sports nutrition. Founder Allen Lim told BevNET many athletes prefer powdered drinks over RTDs due to an ingrained cultural mindset of “filling your own bottle” and avoiding artificial additives and high sugar counts often present it traditional sports drinks.
“Most of these sports drinks make people sick, and create a lot of flavor fatigue, meaning there is a strong aftertaste or a flavor in your mouth you can’t get rid of because the natural flavoring agents are so strong,” Lim said. “So for us the innovation was in simplicity, the innovation was in paring down the product to only the ingredients that replace what athletes lose during exercise.”
Liquid I.V., however, has taken a broader approach. According to CEO Brandin Cohen, “hydration” has emerged as a trend in and of itself, broadening the brand’s base beyond the traditional athlete. The company promotes its own science-backed process – a sodium, glucose, and potassium blend it calls “Cellular Transport Technology” – which claims to deliver water into the bloodstream and hydrate the consumer faster. Liquid I.V. has targeted mainstream retail chains and is currently recruiting high profile celebrity influencers to join the brand as investors, he added.
“We’re not marketing to just cyclists or to just military people,” Cohen said. “We’re marketing to all of them – firefighters, pro athletes, moms who buy it for themselves and for their kids. It’s difficult because there’s so many people who use the product but we’re able to be ubiquitous and universal when it comes to hydration.”
The Benefits of Powder
Cure Hydration co-founders Lauren Picasso and Alex Sarkissian met while working at ecommerce retailer Jet.com, where they found that bottled water was a top-selling category but a logistical headache as the product is expensive and unprofitable to ship. Picasso had been looking to create an all natural hydration alternative to products like Gatorade and Pedialyte, and the economics and sustainability of the powder format made powdered drinks the ideal category to launch in.
“It’s super lightweight, easy to ship, and there’s just generally high margins throughout the cycle of the business,” Picasso said. “So everything from production to shipping to storage to even just the sales per square foot, all of those metrics look better for powder.”
Liquid I.V. is currently in about 20,000 retail accounts, most recently adding Costco nationwide, but a large portion of its business is ecommerce with direct-to-consumer and Amazon, Cohen said. Because of low costs, he noted, consumers are more likely to make the trial purchase and frequently prefer buying online.
But the category has room to grow in retail too. Picasso said many consumers prefer to carry single-serve packets with them throughout the day and environmentally conscious shoppers are drawn to the reduced plastic waste.
“I think as consumers turn to more sustainable options in terms of their beverages, you’re seeing powders really evolve not just in hydration but in the functional beverage category at large,” Picasso said. “So you’re seeing brands like Moon Juice, Amazing Grass, and other brands like that take a lot of market share.”
Cure is currently sold direct-to-consumer in 14-packs, but will soon expand to additional online retailers including Amazon and Jet, Picasso said. The company is exploring retail and sees space to grow in brick-and-mortar, but Picasso is hoping to secure strong in store placement and is concerned the brand could become lost among hundreds of products if it is lumped into the larger supplements category.
In March, Nuun, which already offered a variety of functional line extensions including vitamins and immunity, introduced Rest, an end-of-day recovery drink made with magnesium, potassium, and tart cherry to calm nerve function and reduce inflammation. The product can be used as a sleep aid but is not explicitly marketed as one, as it can also be used for post-workout or stress reduction. According to Rutherford, the company maintains a strong innovation pipeline to fuel its growth by offering consumers around the clock use occasions.
“The Immunities of the world, the Vitamins of the world, the Rest product, they definitely have a broader appeal but we do look at it always through an athletic active lifestyle lens,” Rutherford said.
In February, Liquid I.V. released its Sleep variety, made with a blend of melatonin, L-theanine, and valerian root. Cohen noted sleep products in particular have gained popularity as consumers find themselves more caffeinated and constantly tuned into their devices, creating disruption in sleep patterns. He added that the line is the first of multiple new functional expansions the company is exploring, which potentially include non-finalized energy and CBD products.
“We really built out the market and found our consumer base and the community around hydration knowing that we also had a way to deliver other nutrients,” Cohen said. “Our whole thing is that there’s really healthy, awesome stuff out there and we have the most efficient way to deliver it into your bloodstream.”
Hydration On the Go
While single-serve powder packets are finding their audience as on-the-go hydration, Oral I.V. is taking advantage of the fast-growing functional shots space to offer the same convenience and hydration function in a liquid format. The brand, which offers 2 oz. “structured water” shots with trace minerals, currently has limited distribution in just a few hundred stores, but CEO Bob Jones says that is by design as the company plots an expansion targeting hospitality, convenience, and grocery accounts.
“The shot category is big and it’s getting bigger in the natural space,” Jones said. “I think a lot of people just want to grab it and go, not have to buy a separate water, open it up, mix it together, and then drink the whole product and get the sugars and all the other things that go with it.”
Jones said he believed part of the growing interest in hydration was tied to the rise of endurance sports and workout trends, like Spartan Race and Crossfit, a development to which he credited the rise of the powdered hydration drinks category.
“All the major sports, if you look at them to me, you only connotate Gatorade because you only see the buckets on the sidelines,” he said. “You don’t see the players and what they’re using, and none of us can compete with that. So now you’ve got all these other sports out there like UFC and Spartan Race that have highlighted them and given us the opportunity to create a category that’s more than just water.”