The biggest competitors, Coca-Cola’s Powerade and Bodyarmor, account for just a quarter of the market combined. To consolidate its offerings, Pepsi, the owner of Gatorade, brought fitness-related brands like Propel and Muscle Milk under the Gatorade name in the recent years.
In the face of shifting landscape, Gatorade continues to innovate. “The sports drink industry has undergone more changes in the past five years than in the preceding two decades,” according to beverage analyst Jim Watson.
As competition intensifies, brands are branching out into new products, seeking to capture Gatorade’s market share. For instance, Unilever acquired drink mix company Liquid I.V in 2020, and Nestle Health Science purchased hydration tablet maker Nuun in 2021. Coca-Cola’s ownership of Bodyarmor places them in a position to price their sports drinks higher due to their healthier branding.
Watson points out that these moves create opportunities for brands to increase their retail shelf space. He says that this motivates Gatorade “to come up with new innovations so they have a new story to tell the retailers, ensuring they maintain their shelf space.”
But even without the marketing power of big brands, smaller companies are placing pressure on Gatorade. One example is Prime Energy, promoted by influencer Logan Paul, which has managed to chip away at Gatorade’s market share.
According to a Citi Research note, while it is expected that Gatorade’s market share will bounce back this year, it is likely to still be lower than previous years.
Gatorade’s President, Mike Del Pozzo, views the competition as beneficial for the category overall and indicative of his brand’s strength. He shared that many competitors are more focused on talking about Gatorade instead of promoting their own products or approaches.
Gatorade has taken steps to change its approach to customer engagement. As more consumers focus on daily hydration and wellness, preferences are tilting towards low- or no-sugar, health-touting “functional” beverages and alkaline water.
In response, Gatorade has expanded its line of products to include Gatorade Zero Sugar, tablets with immune-supporting elements, a Pedialyte equivalent called Gatorlyte, a caffeinated variant named Fast Twitch and its first unflavored alkaline water, launched nationwide in February.
This new alkaline water offering, coined Gatorade Water, has performed well since its launch. Gatorade’s moves into new hydration categories have led to an increase in market share, according to market research firm Circana. Plus, Propel’s annual sales are expected to exceed $1 billion this year for the first time.
With the backing of one of the best marketing campaigns and substantial consumer awareness and loyalty, Gatorade’s long history has allowed it to venture into new categories and blur the lines, according to Watson. While classic Gatorade still leads sales, the brand’s innovation remains evident.
