November 8, 2011
by Erica Shaffer
The sports nutrition market continues to evolve from a niche category to a mainstream contender for consumer dollars. Consumers’ search for products they hope will help them reach their fitness or weight loss goals has sustained the sports nutrition market through the recession and slow period of economic recovery.
The market for sports drinks has been in the midst of a recovery during the past few years. The category experienced a decline in dollar sales during 2008-2009 before rebounding in 2010 largely because of innovations from Purchase, N.Y.-based PepsiCo, Inc.’s Gatorade, and Powerade, which is owned by the Coca-Cola Co., Atlanta. The two brands accounted for 99.2% of total segment sales in the U.S. in 2010, according to Mintel International Group Ltd.
Sales of nutrition and energy bars continued to grow through-out the recession, according to Mintel. Overall sales of nutrition and energy bars increased 52% between 2005 and 2010 with $857 million in estimated 2010 sales. Driven by demand for fitness-related products in general, sales of athletic bars rose 22% between 2008 and 2010, according to Mintel.
Innovation has resulted in product variety and also has blurred the lines of product functionality, according to Euromonitor. Ready-to-drink products may contain ingred-ients for muscle building or boosting energy. Snack bars may serve as vitamin supplements or be used as meal replacements for weight loss. This sort of innovation, while profitable for food manufacturers, has challenged companies in the sports nutrition segment to more clearly identify their core consumer. The strategy has worked well for Gatorade branded products.
PepsiCo repositioned the Gatorade portfolio as a regimen. The G Series includes Prime, a pre-performance drink in a 4-oz pouch; Perform, a sports drink containing electrolytes to promote hydration; and Recover, a post-performance beverage. Hugh Johnston, chief financial officer of PepsiCo, said during a recent conference call with investors that the company continues to gain traction in its efforts to reposition Gatorade as more than a sports drink to the leader in the larger sports nutrition business.
“G is up 11% in dollar sales year-to-date, and we continue to grow our brand equity and widen the gap between G and our primary competitor in the eyes of the core consumer target,” Mr. Johnston said. “That’s because we’re focused on and committed to meeting the needs of our core athletic consumers.”
Focusing on the core athletic consumer has had a positive impact on the brand. During the first half of 2011, the brand has continued to grow, said Gary Hemphill, senior vice-president of information services for the Beverage Marketing Corp., New York.
Like most sports drinks, Gatorade volumes declined in 2008 and 2009 because of the recession.
“In the case of Gatorade, the brand had probably tried to become too many things to too many people and moved outside of its core target active lifestyle consumer,” Mr. Hemphill said. “The re-launch in 2010 really refocused the brand back to its roots to focus on that consumer.”
Food manufacturers that make products for the sports nutrition market are reaching beyond the traditional customer base of young men by creating products formulated to meet the nutrition needs of women and teenagers. However, in addition to meeting performance and health goals, current trends are leading to natural ingredients. This means using fewer “scientifically engineered ingredients” and using more ingredients straight from nature — herbs, spices and fruit juices, said Kara Nielsen, “trendologist” with the Center for Culinary Development (C.C.D.), San Francisco.
“Now, even if the more ‘functional’ drinks use ingredients taken originally from nature — like guarana in Red Bull — more drinks today are trying to seem more organically/naturally developed,” she said. “Manufacturers are turning to more traditional ingredients used in ancient wellness practices like Ayurveda and Chinese traditional medicine. So the principles behind the drink are older, more traditional, than one concocted in a ‘lab’ so to say.”
Coconut water is most often discussed in this vein, and is slowly gaining acceptance from mainstream consumers.
Consumers of sports nutrition products not only want them to contain natural ingredients, they also want the products to look like food. The C.C.D. worked with PepsiCo to create its G Series Fit Prime Pre-Workout Fuel energy bites, the latest extension of the G Series line of products. The idea behind the energy bite was to create a product that look like real food, Ms. Nielsen said.
“The idea is to offer food/nutrition appropriate to the body’s needs before, during and after a workout,” she said. “The texture and weight of the food is considered, how clean of an eat, if it is more like food and less like a supplement.
“The energy bites were designed to be more like a real food, to be easy and clean to eat, to not be too heavy or leaden and to provide the fuel needed — a little kick — to get a workout going,” Ms. Nielsen added.
Embracing natural ingredients and clearly defining the core consumer will be important to future growth in sports nutrition. But the weak economy and its impact on consumers will remain an ever-present threat to profitability, said Mr. Hemphill.
“Be sure to deliver the value that consumers want because consumers have become more discerning and more value-oriented,” he said. “It’s important to them to get specific benefits from a product if they’re going to pay a little bit more for them. Deliver on the product promises and communicate what the benefits are.”