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PepsiCo's "G" Gatorade Campaign Lackluster

NEW YORK -- Despite a new marketing campaign designed to reposition and rebrand its popular Gatorade brand, PepsiCo has seen sales of the newly labeled "G" sports drink decline -- and drag down second-quarter profits, according to a report by The Wall Street Journal.

PepsiCo reported weak sales of the sports drink contributed to a 6-percent drop in second-quarter volume for Pepsi's Americas Beverages unit, which includes sales in North America and Latin America. By contrast, Coca-Cola Co.'s North American beverage unit posted a 1 percent slip, according to the Journal. Gatorade is its second-biggest selling beverage by volume after Pepsi-Cola and a major driver of its North American beverage profits, the publication reported.

While the company hoped the new name would make the brand appear cooler to young buyers, it appears the change did more to confuse shoppers, according to the report.

The Gatorade rebranding, launched in January, comes six months after Pepsi attempted to change the packaging of its Tropicana juice but then had to go back to the old packaging when consumers objected to the more generic-look of the new design.

However, Gatorade still commands about 75 percent of the sports drink market. The bigger problem appears to be that the sports drink category continues to decline. A Gatorade spokesperson told the Journal the category slipped more than 12 percent this year, and faces competition from a wide variety of new teas, juices and enhanced waters.

At convenience stores, sports drinks sales declined by 2.4 percent last year, according to the Convenience Store News 2009 Industry Report. Meanwhile, sales of alternative beverages (including energy drinks) were up 11.1 percent and bottled waters (including enhanced waters) were up 2.2 percent.

PepsiCo bought Gatorade as part of its $13.8 billion acquisition of Quaker Oats Co. in 2001.
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