TIME - Man of the Year/CompactPublishing-TimeMagazine-TimeManOfTheYear-Win31MSDOS.iso/moy/060192/0601200.000

Text File | 1992-09-10 | 5.4 KB | 120 lines

                                                                                BUSINESS, Page 75

A Thirst for Competition


Gatorade, the long-reigning champ of the billion-dollar sports-
drink field, braces for a big-league challenge from Coke, Pepsi
and other contenders

By LEON JAROFF -- With reporting by Susanne Washburn/New York


    In a four-city fast break, the Coca-Cola Co. has made the
first move, flooding thousands of stores in the Southern U.S.
with cans and bottles, displays and posters, backed by a TV ad
campaign, to introduce its newest product, PowerAde. It's a
drink made for athletes and, in the words of a Coke spokesman,
"anyone who works up a sweat." At PepsiCo, Inc., plans are well
under way for a summer rollout of its new drink for jocks and
those who aspire to be: All Sport. Other large companies are
entering the fray with similar products -- Dr Pepper/Seven-Up
with a drink called Nautilus, and A&W Brands, Inc., with a
player yet to be named.

    What they're all worked up about is the U.S. sports-drink
market, a billion-dollar retail segment that has been growing
about 10% annually. It will take world-class contenders like
these to unseat the defending champion, Quaker Oats Co.'s
Gatorade, which accounts for some 90% of nationwide sales. Like
Kleenex in the tissue market and Xerox among copiers, Gatorade
has become the generic word for sports drinks.

    Simply defined, sports drinks replenish the fluid,
minerals and energy lost during exercise. Long familiar to
athletes, Gatorade has become highly visible to sports fans, in
the form of the ubiquitous large green-and-orange vats of the
drink in dugouts or near team benches at major league events.
Hardly a postgame interview passes without a shot of the MVP
taking a sip from a paper cup labeled "Gatorade," which is,
after all, the official sports drink of major league baseball,
the N.F.L., the N.B.A. and the National Hockey League. "Gatorade
defines the category," says Jesse Meyers, publisher of Beverage
Digest, an industry trade publication based in Old Greenwich,
Conn. "There is not a beverage category in any country in the
world that is so dominated by one producer."

    With that kind of clout, Gatorade executives seem
unperturbed by the new entries in their field. They note that
50 to 60 brands of competing sports drinks have been introduced
-- and have disappeared -- during the past decade. "Competition
has been great for us," says Peggy Dyer, Gatorade's vice
president of marketing. "Competition makes us better."

    Still, Gatorade cannot afford to be complacent; it will be
hard-pressed to match the distribution reach of Coke and Pepsi.
Besides its grocery- and convenience-store business, for
example, Coke has 350,000 vending-machine and fountain outlets
in the U.S. alone. And the vending machines, the company says,
are perfect "sampling points" for customers to try a new product
like PowerAde.

    Ironically, Gatorade may be responsible for spawning one
of its new heavyweight competitors. With an eye on expansion,
especially overseas, Gatorade approached Coca-Cola last January
about using Coke's distribution system. But the talks broke off
in April, and the next thing Gatorade knew, Coke had pledged a
"major commitment" to sports drinks.

    PowerAde makes only oblique reference to its primary
target, Gatorade, in its commercials. But Pepsi will take the
champ head on. Touting "gulpability" (achieved by using
wide-necked bottles), All Sport ads will knock Gatorade by
stressing that, in the words of a Pepsi spokesman, "there is no
reason a sports drink can't taste good." The commercials will
also contrast 1960s black-and-white sports scenes with
contemporary color action to emphasize that "our drink was
formulated a generation after theirs."

    A University of Florida nephrologist, Dr. Robert Cade,
concocted Gatorade in 1965 to sustain the school's football
team. The Stokely-Van Camp Co. acquired the formula and turned
the drink into a moneymaker, before being acquired by Quaker in
1983. "Though it may have been developed a long time ago," says
Gatorade's Dyer, "nobody has been able to come up with a way
that will improve how the product works."

    Competitors disagree. Still, while percentages of
ingredients vary from brand to brand, all the drinks contain
water (for fluid replacement), salt and potassium (to maintain
the body's fluid-electrolyte balance), and sugar (for quick
energy and flavor). Do they actually work? Manhattan internist
Peter Bruno, the team doctor for basketball's New York Knicks,
gives a qualified yes. "If you work out more than an hour, you
must replace both water and sodium," says Bruno. "But when you
exercise for less than an hour, you only need to replace the
water." Most medical experts agree that for those who exercise
moderately, plain water will do until the next meal, which
usually replenishes the essential carbohydrates and minerals.

    Even if the Cokes, Pepsis and others make marketing
inroads into the champ's lead, as some analysts believe they
will, you have to wonder if they will ever attain the mystical
status Gatorade reached in 1987, when football's New York Giants
began dousing coach Bill Parcells with a conspicuously labeled
vat of the stuff near the end of every winning game. Since
then, teams at many levels have adopted that ceremony, helping
Gatorade make an ever bigger splash in the market.