PepsiCo Outperforms 3-to-1 Coca-Cola in Sports Drinks

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Coca-Cola has just taken an important step to catch up with leader PepsiCo in the competitive sports drink category, but the move is nowhere near enough to eliminate its rival’s large lead. Coca-Cola announced Monday, November 1, the acquisition of energy drink company Bodyarmor, based in Whitestone, New York, for $ 5.6 billion. The deal values ​​the company at $ 8 billion in total, with the beverage giant already owning 30% of the company, according to a Reuters report, having initially acquired a 15% stake in the company in 2018.

The deal marks the largest brand acquisition in the company’s history, according to MSNBC, and it comes after Bodyarmor took over as the second best-selling sports drink, dethroning Powerade from Coca-Cola. Even with this acquisition, however, Coca-Cola will remain far behind PepsiCo, which takes the lion’s share of the category with the success of its Gatorade brand.

Bodyarmor was founded in 2010, raising millions from the early to mid-2010s. In 2013, Kobe Bryant acquired a significant stake in the company, thereby raising brand awareness.

The context

Sports drink sales were strong for Coca-Cola, but the company lost market share. In a earnings report released on Wednesday, October 27, the company announced that sports drink sales rose 5% in the third quarter of 2021, surpassing 2019 volume, but growing significantly less than many other beverage categories in the brand.

On a call discussing the results, an analyst pressed the company on the performance of these energy drinks, pointing out that emerging brands, especially those supplemented with functional ingredients such as caffeine, have gained share. on Coca-Cola’s own offers and those with which the company operates.

“There have been a few recent competing entries in the United States that appear to both broaden the category and take shares,” conceded CEO and chairman of the company James Quincey on a call with analysts.

In numbers

According to Euromonitor data from 2020, Gatorade’s share of the total sports drink market exceeded two-thirds (68%), while at the time of the report, Coca-Cola retained 14% of the category with Powerade and Bodyarmor 9%. If Gatorade’s share has remained roughly the same and the combined market share of the latter two has remained roughly stable, then PepsiCo continues to outperform Coca-Cola three to one in the category, even after this historic acquisition. .

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