The sports drink that PepsiCo (PEP) acquired as part of its $13.4 billion acquisition of Quaker Oats in 2000 still holds a dominant roughly 75% share of the sports drink market. Last year, Gatorade sales grew 5.4% according to Pepsi, while the total U.S. isotonic drinks market, which includes drinks that "rehydrate people" such as Gatorade, only increased 4.1% for the 52-weeks ended April 25, according to Nielsen. That means Gatorade is outperforming the market as a whole.
One of the biggest of those memories is the famous 1992 commercial of NBA legend Michael Jordan sipping an ice-cold Gatorade and playing hoops with kids in many ways created an entire generation of Gatorade devotees that wanted to be like Mike. To commemorate its 50th birthday, the brand in April released a technicolor "Be Like Mike" throwback 60-second TV spot.
Whether it's a dose of nostalgia, aggressive sports star marketing, or the actual taste and benefits of the electrolyte-filled product, or all three, it's obvious that Gatorade still dominates the sports drink industry. Doing so is no small achievement as retailer shelves have become cluttered with the likes of caffeinated energy drinks and protein shakes, which also allegedly enhance athletic performance.
Gatorade's biggest rival is Powerade, which has most of the rest of the sports drink market and saw its sales rise 0.5% last year, according to John Sicher, editor of Beverage Digest, which tracks industry trends and data.
"Gatorade is a tough brand to compete with," Sicher said.
But to maintain and even expand that enviable market share even further in the quarters and year ahead, Gatorade will need more than the nostalgia factor in an increasingly competitive sports drinks market. In effect, what defines a sports drink is rapidly evolving. Is it a highly-caffeinated Red Bull that could power in-game performance by an athlete? Or perhaps a protein-packed Musclemilk that an athlete reaches for after a grueling Crossfit session?
TheStreet takes a look at two ways Gatorade can maintain its edge in the market, primarily through package and product innovation. And in the process, continue to be a solid contributor to PepsiCo's bottom line during a time where sales of carbonated sodas continue to be under pressure industry-wide.