PepsiCo Aims to Capture New Markets with Gatorade

PepsiCo’s (NYSE:PEP) Gatorade has athletes returning to the labs for new insights into their bodies and performances.

Gatorade is testing a range of new products including energy chews, which will boost athletic performance, at its IMG Academies boarding school lab. It primarily works with 1000 of IMG’s student-athletes, who pay $60,000 annually for nine months of boarding school that includes covers 50 percent class time and 50 percent sports.

With its new products, Gatorade is looking to expand in the sports nutrition arena with energy and after-workout “recovery” products such as energy bars, gels, and protein shakes. The company has ambitions to go from a leader in the $7 billion U.S. sports-drink industry to a player in the $20 billion sports nutrition market, according to a Bloomberg story.

Changes in Core Products

Expansion can be seen through a core product line repackaging of the G Series, G Series Fit, and G Series Pro. These now have three stages of workout products: pre, during, and post-workout named 01 Prime, 02 Perform, and 03 Recover.

The G Series is for “performance” athletes or almost 25 percent of the U.S. population including a competitive high school athlete to adult basketball league player. The products include a 4-ounce carbohydrate-loaded “pre-game fuel” drink pouch and a flavored recovery water full of protein and carbohydrates.

A notch lower is the G Series Fit, targeted to the approximately 55 million Americans aged 18 to 34 working out three or more times a week to stay healthy. The Fit supplements are less intense and includes a 50-calorie fruit-and-nut bar and a fruit smoothie for recoveries.

G Series Pro appeals to the professional athlete and includes a recovery bar with whey and casein for muscle growth. It also has vitamins and minerals to increase muscle metabolism.

Industry professionals have found the changes confusing and have called this “work in progress.”  Gatorade will need to appeal to a broad audience to move away from their usual snack of choice whether it’s a banana or peanut butter sandwich and go to the new Gatorade products.

Industry professionals also see a need for an overhaul of its distribution system that will require changes in advertising and in-store displays and where the product is sold to include niche sports stores.

Challenges and Changes

Recently, Gatorade has faced slow sales including its collapse during the U.S. recession. In 2009, the company was determined to move away from the consumer who drank Gatorade with a hamburger or for those looking for a hangover cure and go back to the athlete.

Beginning in 2009, Gatorade changed the logo to a letter G and moved to social media to learn about its audience, trends and criticisms about Gatorade products. It is also taking a scientific approach when developing new products through nutrition science.

NBA star Dwyane Wade is currently working with the company for a customized nutrition plan.

Other new products on the horizon for Gatorade includes Pro chews, a Gummi Bear-like product for endurance athletes intended to go up against Gu Chomps and Clif Blok and two all-natural drinks with noncaloric sweeteners. These will come with a higher sticker price.

Gatorade knows they’re facing more challenges with the proposed  changes but with an estimated 20 percent control of the the sports nutrition category, this will be a marathon, not a sprint.