An Exercise in Sports Drinks

Sports drinks have turned the isotonic corner. Sure, the two segment leaders, PepsiCo Inc.’s Gatorade and The Coca-Cola Co.’s Powerade, still dominate convenience store sports drink sections with no signs of letting go. But consumer demographics, new usage and new product formulations are broadening this packaged beverages segment with implications for c-store best practices and forward-thinking retailers and suppliers.

Here are the latest stats in the sports drink arena:

1. Millennials have a significant influence on the growth of sports drinks.

Young adults and the millennial generation are shaping a new breed of morning beverages, which includes sports drinks. The coffee market is even being threatened by the increasing share of sports drinks (and energy drinks) among young adults, according to a 2014 survey by the National Coffee Association.

What’s more, the millennial generation’s affinity for convenience stores opens up opportunities in sports drinks if the channel is paying attention. “Convenience stores are a critical entry point for millennial shoppers, who are often the target of new beverage products,” Jessica Branson, a beverage expert and vice president/general manager at marketing agency Epsilon, told Convenience Store News. “The convenience store provides a great environment to test new beverage products, particularly with the millennial generation as they tend to have larger basket sizes than the average convenience customer because they treat convenience stores as a fill-in trip rather than going to large-format mass or grocery stores.”

She also cited 2014 NACS research that revealed when millennials use convenience stores as a fill-in trip, 60 percent of their purchases will include a beverage.

2. Sports drink usage has a wider range of appeal.

The broadening appeal of sports drinks lately — beyond athletes — has resulted in significant sales increases, according to 2015 Mintel research. “Some 34 percent of sports drink users drink them even when they are not working out — this rises to nearly half of respondents aged 18–24,” stated Beth Bloom, food and drink analyst for Mintel. “Such usage indicates the value of product positioning that moves beyond a sports focus and highlights attributes such as hydration and flavor.” Mintel also finds strong sports drink use for meal replacements and snacking.

Mintel predicts that continued interest in health, convenience and functional products will benefit the segment in the near future. “Opportunity exists to grow sales in the category by increasing usage occasions and establishing relevance in the lives of consumers,” Bloom added. “Promoting products for their proven efficacy in meeting a range of specific consumer needs such as hydration, weight management, sustained energy, etc., will be one means of encouraging consumption. Expanded marketing and in-store positioning that highlights the wider use of products as convenient, nutritious and good-tasting is another.”

3. Sports drink merchandising is taking better aim these days.

Sports drink companies are helping convenience stores display their products in more innovative ways, according to Branson. “Because convenience store shoppers move through the store and make buying decisions quickly, secondary displays are key. Having second, third and fourth interruption points offer more opportunities to upsell,” she said.

Major in-store hot spots include the cold vault, foodservice and deli counters, and near the register. “Many are experimenting with merchandising strategies aimed specifically at shoppers in the checkout line with at-register displays, added incentives and bundled programs with snack partners,” noted Branson.

4. Sports drinks have gone healthier.

“Sports drinks now are geared mo re broadly toward the nutritional needs of physically active consumers before, during and after demanding exercise, and they are formulated with ingredients that range far and wide beyond the salts and sugars found in the traditional versions of sports drinks,” said David Sprinkle, research director for Packaged Facts.

One of the popular fortifying ingredients of late is whey protein, promoting muscle protein synthesis, according to industry research.

Sports drinks are also taking on new compositions as they overlap other segments such as water and dairy. For instance, liquid water enhancers are now being positioned for sports, offering consumers an opportunity to add electrolytes.

Agua Energy Water, founded by Carol Dollard, the former chief operating officer of Glacéau, boasts that it is the first of its kind to provide natural energy from the guarana berry. “This natural energy source offers drinkers of Agua Energy Water an added boost of caffeine, which can help enhance your workout without the dreaded crash that can come from drinking other energy-enhancing beverages,” Dollard said. “Simultaneously, the electrolytes within Agua Energy Water keeps consumers hydrated during their workout.”

In the dairy realm, the Milk Processor Education Program (MilkPEP) is broadening its “Built With Chocolate Milk” campaign, which seeks to raise awareness and improve perceptions of chocolate milk as a post-workout recovery beverage among adult exercisers, according to Miranda Abney, marketing director of MilkPEP.

The campaign is built around the sports, athletes and sporting occasions that are most relevant to the recovery target, and the newest star athlete of the program is Cleveland Cavaliers star Kevin Love. “The new national campaign is part of a long-term, multimillion-dollar, multi-channel strategy to inspire athletes to perform at their best and recover with lowfat chocolate milk,” Abney said.

5. Gatorade and Powerade are price-conscious leaders.

The sports drink icons Gatorade and Powerade have not just sat back amidst the evolution of the segment. “Gatorade went to a smaller bottle, moving from 32 ounces to 28 ounces in an effort to keep the cost low,” reported Cliff Simpler, operations manager at Minute Market, a chain of 13 c-stores based in Medford, Ore. “And consumers are good with it; we haven’t really had any bad feedback on it.” Convenience store chains also report that as sports drink flavors have expanded, two-fer pricing is increasingly popular to drive a higher ring among purchasers.