What's a Sport? Gatorade Redefines to Broaden Target

It's Crunch Time for Brand -- and CEO D'Amore -- as Sports Drink Looks to Acrobats, Surfers to Reverse 15% Fall

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NEW YORK (AdAge.com) -- The pressure is on Gatorade to perform this year, following a tough 2009 that had analysts, beverage industry watchers and the ad industry believing the granddaddy of sports drinks had lost its mojo.

NEW LINES: G-series drinks cater to pre-, during- and post-activity.
NEW LINES: G-series drinks cater to pre-, during- and post-activity.
The turnaround hinges on a new campaign, an overhauled product lineup including before and after workout drinks, and a broadened definition of sports to include things such as surfing and acrobatics to lift Gatorade, which saw a 15.5% decline in volume last year. Executives have committed to delivering 4% to 6% revenue growth, following a job-led economic recovery, an ambitious target being watched closely by analysts who want to see signs of a turnaround by year's end. It is also being viewed by some industry insiders as an important moment in the career of Massimo d'Amore, CEO of PepsiCo's Americas Beverages Group.

While Mr. d'Amore manages an entire portfolio of brands -- he's been involved in many of the changes in the beverage division over the past 18 months -- he's said that Gatorade has gotten a lot of his "focus and attention." The bets Gatorade is making are high-profile, given it is the leader in the sports drink category and PepsiCo's fourth-largest brand worldwide. And its clear Mr. d'Amore has been intimately involved in the development and execution of the multi-year effort.

"The success of G is closely tied to the future of Massimo's career at PepsiCo," said one executive familiar with the company.

PepsiCo chose not to comment on outsiders' views of the company. But at a recent investor meeting, CEO Indra Nooyi expressed confidence in the direction of Gatorade and Mr. d'Amore.

Waiting for results
This year, 12 products -- some new, some repackaged -- are hitting store shelves; new distribution deals with GNC and Whole Foods have been struck; the target consumer has been tweaked to include action sports, surfers and dancers; and teens are receiving plenty of attention.

Analysts and industry watchers who have been privy to PepsiCo's pitch say it makes sense. But they're still looking for results, and fast.

The first proof point will be a campaign set to launch later this month. While last year's campaign was focused on image, this year's push will need to focus on educating consumers about the changes to the product lineup.

Two new lines, G Series and G Series Pro, offer athletes solutions for pre-, during- and post-activity. Gatorade believes the pre- and post-workout market is sizable and will provide incremental buying occasions, even as some are questioning why consumers would toss three different products in their gym bags.

"The average consumer is already consuming during the before-and-after occasion," said Sarah Robb-O'Hagan, chief marketing officer at Gatorade. "Different consumers have different nutritional needs on game day vs. training days. What we've seen as we've developed these products is different consumers mixing and matching their own regime to meet their needs."

Attracting teens
The G Series' core target is the 13- to 17-year-old high-school athlete, while G Series Pro's target is the 16- to 24-year-old who is in the business of being athletic, whether as an elite athlete or personal trainer.

Capturing the teen consumer has been identified as a priority for the brand, with Ms. Robb-O'Hagan, conceding that teens thought the brand was dated. Last year's shift to G was meant to grab their attention. With that accomplished, she said, the brand has been working with teens to test and promote the new products. Through May, a mobile locker room is making its way to high schools, showcasing the G Series products.

"What we're focusing on this year, from a marketing standpoint, is making sure that the high-school athlete understands the G Series, understands the three-part series," she said. "If we land that strongly with the teen consumers, we have a lot of opportunity."

Gatorade chart
Gatorade is also expanding its idea of who is an athlete, looking to surfers, gymnasts and skateboarders. In the past, the brand has focused on traditional sports and leaned more male than female.

What goes hand-in-hand with that is the elimination of lifestyle users, those who boosted the brand in the earlier part of the decade. "Gatorade did such a great job with its marketing that it attracted consumers who were drinking it because it was cool, not for exercise rehydration," said John Sicher, editor and publisher of Beverage Digest. "Gatorade lost a lot of that volume last year. It should be able to grow from a new base as it engages and re-engages consumers who want an exercise-hydration beverage."

Growth potential
And, despite competition from brands outside the category such as Vitaminwater, Gatorade and the sports-drink category in general both have growth potential, Mr. Sicher said. According to Beverage Digest, the sports drink category was worth $7.5 billion in 2008. Sports-drink volume had been tracking up 17% between 2004 and 2009, according to Beverage Marketing Corp., but fell 12.3% between 2008 and 2009.

But can Gatorade return to its glory days, the days of iconic marketing campaigns such as "Be like Mike"?

"Gatorade's glory days were about athletics, but it was also a lifestyle beverage. What they're saying is it shouldn't go back to that," said Mr. Faucher. "All the line extensions, that's not the way it's supposed to be going forward. That means you're simply not going to get it to grow the way it did."

Execs argue that there is still plenty of room for growth, however. The brand's research shows that it has 27% penetration among the 68 million performance athletes it has traditionally focused on, and just 12% penetration among the 55 million fitness athletes it is now setting its sites on.

"We're segmenting to grow," Ms. Robb-O'Hagan said. "Instead of focusing on only one hydration product, we're really starting to segment it down and meet different needs for different athletes."

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