New Rules to Meet the Evolving Athletes, Sports Drinks Change it Up

Kawhi Leonard reportedly “swears by” alkaline water. Megan Rapinoe prefers natural sports drinks. And Tom Brady’s diet has been simply described by Men’s Health as “insane.”

From the greatest players in the world down to the pre-commute jogger, athletes’ physical needs will vary widely from person to person. It makes perfect sense; a long distance runner is going to have different nutritional requirements from a quarterback. As scientific understanding of hydration and diet regimens improves, and the dynamics of locker rooms change to hand more power to nutritionists and dietitians, sports drink makers are now turning to innovation to cover all the bases for their ever-evolving consumers.

“What I think we’re seeing currently in the sports drinks category in the U.S. (and probably more broadly across sports nutrition) is the end of a one-size-fits-all approach to isotonic drinks in terms of ingredients and branding,” Howard Telford, head of soft drinks at Euromonitor International, told BevNET. “Innovation in the category is responding to a more diverse consumer type and reaching different potential hydration occasions where we seek different types of replenishment and reach for different ingredients.”

From startups to category leaders like Gatorade, brands are embracing new functional ingredients, expanded use occasions, and low sugar health plays to keep pace with their audience.

Gatorade Stays in the Lead

Brett O’Brien, senior vice president and general manager of Gatorade, has seen the evolution of the athletic consumer firsthand. Through its vast net of partnerships with professional sports teams and its Gatorade Sports Science Institute research arm, O’Brien said the PepsiCo-owned company strives to take a predictive approach to innovation – creating new products for where they think consumers will be in the near future. The rising diversity among athletes has now led the company to focus on broadening its portfolio, providing consumers with a variety of options that can tailor to their personalized regimens.

“Probably 30 or 40 years ago I could have given you a very good description of an athlete at that point,” O’Brien told BevNET. “The reason why the sports drink category, and our Gatorade portfolio specifically, is evolving is because there is no distinct identity now as an athlete.”

Last year saw the release of Gatorade Zero, a sugar-free line sweetened with sucralose. According to O’Brien, Gatorade had long avoided releasing a sugar-free variety because the company believes the carbohydrates from its full sugar core line provides necessary functionality for on-the-field performance. Gatorade has previously innovated with low sugar and better-for-you options, including its G2 line which features only 12g of sugar per 20 oz bottle (compared to 34g for its original line). However, as low-carb diets among athletes have grown in recent years, Gatorade Zero became a needed innovation for the brand to stay competitive against products like BodyArmor Lyte or even its PepsiCo stablemate Propel Water.

In July, speaking to investors during the company’s second quarter earnings report conference call, PepsiCo CEO Ramon Laguarta said Gatorade Zero has already expanded the company’s consumer base and has fueled incremental growth. According to IRI, as of June 2019 Gatorade Zero had reached $277 million in dollar sales within its first year on the market.

The Q2 report came on the heels of Gatorade’s latest innovation announcement – Bolt24. Although it’s being released under Gatorade’s management, Bolt24 is a new brand that aims to give athletes an alternative beverage they can drink “off the field.” Using a watermelon base, the line contains sea salt, antioxidants, and vitamins B3, B5, and B6 with no artificial sweeteners. Set to launch in retail and online this summer, the line will feature Mixed Berry, Tropical Mango, and Watermelon Strawberry varieties.

According to O’Brien, Bolt24’s current line is focused around anytime hydration and antioxidants. However, Gatorade views the brand as a platform play that will allow the company to experiment with new types of functionality.

“Bolt provides a platform for us now in the future to think about what other functional ingredients it will play in going forward,” O’Brien said. “These are things like joint health, blood circulation, and other aspects of recovery that athletes will be looking for to make sure they’re at their physical best. So that’s the future of Bolt, but we wanted to start out with that antioxidant play that was a really easy ‘get’ for athletes.”

One reason for the latest innovation push, O’Brien said, is the changing dynamics of the locker room. Where players – whether professional, collegiate, or high schoolers – used to receive their diet information from their coaches, more sports teams today are relying on the advice of trainers, doctors, and nutritionists who are often advocating for new kinds of functional ingredients. The influx of health professionals has in the past several years led to once obscure products such as kombucha to begin making headway with pro teams. In order to stay on top, Gatorade works closely with its team partners to innovate around the recommendations of the nutritionists.

According to O’Brien, online communities are also having an impact on consumer decision making – a dynamic that can lead athletes to new kinds of sports drinks and supplements, but is just as likely to fuel misinformation.

“As an athlete you may go online and say ‘hey, I’m cramping up, what do I need?” O’Brien said. “And you’re going to get a ton of input. Some of it’s right, some of it maybe not so much. [Athletes have] got to be able to filter through the best information and decide what to take in.”

Gatorade’s innovation wave also comes at a time where its decades-long category leadership is beginning to feel competitive pressure. Last summer, The Coca-Cola Company acquired a minority stake and distribution rights to BodyArmor, giving the conglomerate a second key player in the sports drink category, next to Powerade. According to Nielsen, dollar sales for BodyArmor grew 98.1% between June of 2018 and June of 2019 to about $530 million with a 4.4% market share. In the same period, Gatorade retail dollar sales declined 0.5%. While it controls only a fraction of Gatorade’s 73% market share and $4.46 billion in dollar sales, several convenience channel retailers surveyed by Wells Fargo in the firm’s July “Beverage Buzz” report suggested that BodyArmor is currently one of the strongest brands in the Coke portfolio. One retailer noted that “BodyArmor is trending well and has bit into Gatorade.”

But in the same report, retailers also showed excitement for Gatorade’s latest innovations, with strong early reception for Gatorade Zero and “upbeat” expectations for Bolt24.

Telford, of Euromonitor, told BevNET that while Gatorade as a brand has “stayed very firmly tied to athletics, endurance and performance,” Zero and Bolt24 allow the company to reach more non-athlete consumers as well.

“We aren’t all running marathons every day,” he said. “Sometimes, you might require a product with carbohydrates and electrolytes to replenish after intense athletic activity – but other times, we might want a flavoured, lighter, healthier option with electrolytes to hydrate on a hot day… Or after a long night.”

Outside of Gatorade, PepsiCo has focused on broadening its control of the sports drink space. As protein drinks rise, the company purchased Muscle Milk maker Cytosport in February for $465 million. In April, Propel Water launched a new clean label and vitamin-infused line.

Small Brands Make Health-Based Plays

While BodyArmor is proving itself to be a formidable opponent for Gatorade, an influx of smaller brands are also beginning to gain traction. According to Nielsen, in the same 52-week period that BodyArmor saw 98.1% growth, dollar sales for small brands as a whole grew 148%. Like the innovations at the top of the category, these younger brands are looking to fill white space in the category through nuanced, niche, and personalized formulations for the changing sports drink consumer base.

Earlier this year, plant-based beverage maker WTRMLN WTR released a low sugar (2g per serving) sports drink line, WTRMLN SportWTR. Like Bolt24, the line uses a watermelon base and advocates for a broad on- or off-the-field use occasion.

“As we watch consumers become more and more aware of how what they put in their bodies impacts how they feel in their lives, we know they are seeking out natural food and drinks that are made from plants,” WTRMLN WTR founder Jody Levy told BevNET. “And we know they want to choose brands [like ours] that have integrity in their ingredient choices, sourcing, et cetera.”

While Levy said Gatorade and other sports drinks makers’ embrace of clean label products “validates” WTRMLN WTR’s entrance in the category, SportWTR provides consumers an even healthier option that also creates synergy across the sports, enhanced water, and plant-based water spaces.

HALO Sport, which launched last year in the New York and Miami markets, is similarly making a clean label play. Organic-certified, the drink contains antioxidants and only 2g of sugar per 16 oz bottle. It is additionally sweetened with stevia. HALO Sport co-founder Robin Shobin told BevNET that she viewed her customer as the “modern wellness warrior,” a consumer she identifies as regular fitness enthusiasts who are health-conscious and read nutrition labels. In some cases, Shobin said, this consumer has looked to categories such as coconut water to get natural electrolyte sources, and HALO Sport seeks to make a lifestyle play that folds them back into the sports drink category.

“I think the traditional sports drink market really talks to and shows the competitive athlete as a basketball player or a football player,” Shobin said. “In the new world of modern health and fitness, that modern sports drink consumer is getting up every day, working out, maybe going to SoulCycle. Health and wellness has become much more of a lifestyle and that’s who we talk to.”

While WTRMLN WTR and HALO approach the category with clean label lifestyle plays, others have fully embraced nuanced functionality as a way to fill white space. Founded in 2013, functional beverage brand Kill Cliff initially came to market with a recovery beverage. In 2017, the company began expanding its product portfolio to include additional beverages that met consumers at each stage of their workout, introducing the Ignite energy drink line and Endure for prolonged performance. Speaking with BevNET, Kill Cliff COO John Timar said the company saw an opportunity for “a daypart strategy to building products” that had a functional focus.

Now, Kill Cliff is launching a CBD line, which has become an increasingly popular recovery ingredient for athletes.

“If you look at how people are receiving benefits from CBD today, and you listen to what people are saying, the common use occasions you hear about are pain relief, reducing inflammation, reducing anxiety,” Timar said. “For a company like ours where the nucleus is these hardcore fitness people and military veterans, they have to manage pain, they have to manage anxiety…. That’s where sports drinks and beverages are going to go, because those are the common problems that athletes and people living active lifestyles have.”

In 2018 the World Anti-Doping Agency removed CBD from its list of banned supplements, and in the past year a number of new sports drinks brands have launched CBD-infused products including Defy, OKI, and Aethics’ CBD Water, but Kill Cliff marks the first established brand in the category to announce a hemp line extension.

For Gatorade, O’Brien said there were no immediate plans to explore CBD products, but said he had heard an increasing number of athletes are turning to the cannabinoid for recovery and pain relief. While he would never say never to CBD, O’Brien remains concerned about efficacy and safety, and hopes to see more research done before Gatorade ever considers a hemp-infused line. However, O’Brien said he is interested in the potential for ingredients such as protein and collagen to provide athletes with the ingredients they need to perform and recover.

“Some supplements we’ve got to truly understand from a safety standpoint and right use from functionality standpoint,” O’Brien said. “The world of functionality in sports fuel is massive and we’re going to continue to make sure we’re doing the right thing. “