As Gatorade approaches its 60th birthday, the brand remains bright, branching out into new categories from unflavored water to energy drink mixes.
Since its inception in 1965, Gatorade has been the dominant sports drink. It accounted for 63.5% of the US sports drink market in 2023, according to data from Euromonitor International.
Owner of PepsiCo arch rival Coca Cola takes second and third place with Powerade, a perennial No. 2 choice in Gatorade, and Bodyarmor, a newer addition to its portfolio. But combined, Coke’s two brands account for only about a quarter of the U.S. sports drink market. Last year, Pepsi reorganized its portfolio to house Propel, Muscle Milk and other fitness-related brands under the Gatorade name.
But Gatorade’s dominance doesn’t mean it can rest on its laurels. As more competitors entered the market, the brand tried to reinvent itself.
“There has probably been more change in the industry in the last five years than there was 20 years ago,” said Rabobank drinks analyst Jim Watson.
Pepsi’s rivals are trying to steal its market share as they branch out into new products. Unilever bought beverage mix company Liquid IV in 2020 for an undisclosed amount. Gatorade’s individually packaged hydration powders look just like hydration powders. Nestle Health Science bought hydration tablet maker Nuun in 2021, the same year Coke bought Bodyarmor.
With Coke’s acquisition of Bodyarmor, it bought a brand that could command a higher price for its sports drinks thanks to its marketing as a healthier option. Coke’s other sports drink, Powerade, is typically cheaper than Gatorade, appealing to consumers looking for a deal.
“That means they have a different and better story to tell retailers to try to get more shelf space and take some of that away from Gatorade,” Watson said. “That’s where Gatorade has to come up with all kinds of new innovations so they have a new story to tell retailers so they keep all the shelf space.”
Even smaller brands without the firepower of Coke or Unilever are putting pressure on Gatorade. PepsiCo CEO Ramon Laguarta has called out Influencer Logan Paul’s Prime Energy as a brand that is stealing share from Gatorade.
βIt’s true that Prime’s appearance in the category took some share from Gatorade, [though] less than other brands in the category or less in proportion to the size of the brand,β he said on the company’s third-quarter conference call in October, adding that Prime’s market share weakened as summer turned to fall.
Gatorade’s market share should improve this year, but will likely still fall from last year, according to a Citi Research note from February.
Gatorade President Mike Del Pozzo told CNBC that the competition is good for the category overall β and shows the strength of his brand.
“There are a lot of loud voices right now, trying to make a name for themselves,” Del Pozzo said. “This is a competitive business, and because we’re in sports, we love competition. Clearly, we win, and I think a lot of them spend more time talking about us and less about their own brand, the consumer approach.”
For its part, Gatorade is thinking about its own offering to consumers. Del Pozzo said the line between hydration and wellness has blurred, and more consumers are focusing on hydration throughout their day, not just during exercise.
Now they like low- or no-sugar drinks, “functional” drinks that tout health benefits like immune boosting and alkaline water, he said.
Gatorade responded with new products: Gatorade Zero Sugar, vitamin C and zinc tablets for immune support, a Gatorlyte-like Pedialyte, a caffeinated spinoff called Fast Twitch, and the first unflavored alkaline water, launched nationally level in February.
“We’ve gotten off to a great start so far, but we’ve been extremely patient about getting it right,” Del Pozzo said of Gatorade Water, which has about one-fifth of the electrolytes found in classic Gatorade.
Year to date, Gatorade is gaining share in every hydration category it has products in, according to market research firm Circana. And Propel’s annual sales are projected to top $1 billion for the first time this year, Del Pozzo said.
Gatorade’s long history has given the brand the ability to enter new categories and blur the lines, according to Rabobank’s Watson.
“It’s one of the brands that has the best marketing campaigns, so much brand equity, consumer awareness, consumer love,” he said.
For now, classic Gatorade remains the brand’s top seller.