Jordan Match with Gatorade Dramatizes Growth Potential of Sports Drinks Graphic
Aug. 07, 1991
NEW YORK (AP) _ Gatorade has recruited basketball star Michael Jordan for its advertising, and industry analysts say the move represents a cagey bet by the category leader to keep the sports drink market on a torrid growth pace.
The sports drink market has tripled sales in five years to an estimated $635 million and is expected to surpass $1 billion in the next five.
Gatorade officials have refused to comment on reports that they have signed the Chicago Bulls superstar to a longterm endorsement contract.
But Jordan's first ad for their drink - a splashy eight-page foldout that showed Jordan reaching for a cup of Gatorade - turned up in this week's issue of Sports Illustrated.
Published reports have said Gatorade has agreed to pay Jordan $18 million for 10 years to be its spokesman. Gatorade set a news conference for Thursday in Chicago where it was expected to announce the deal.
Industry experts say that if sports drinks are going to continue double- digit sales growth each year, marketers will have to seek a broader audience for the drinks, which got their start by appealing to athletes.
They say the selection of a high-profile, popular figure like Jordan to represent a brand that accounts for an estimated 90 percent of the sales in the beverage category is a good way to do that.
''It legitimizes the category. It takes it out of its professional athlete foundation and popularizes it as a soft drink,'' said Jesse Meyers, publisher of the trade newsletter Beverage Digest.
Michael Knapik, who markets the sports drink 10-K for the U.S. division of Japan's Suntory Ltd., expressed doubt about the value of celebrity pitchmen.
But he added, ''Anytime you can increase consumers' awareness and add validity to the category, it's good for everybody that makes a sports drink.''
Gatorade has dominated the energy drink market since the late 1960s. It was developed specifically for University of Florida football players who used it to replenish fluids lost during workouts.
Sports drinks typically differ from soft drinks in that they contain fewer calories and sugar and are absorbed more quickly. Some are absorbed as fast as water, but taste better and supply energy.
The category grew to $635 million in retail sales in 1990 from $220 million in 1985, according to Packaged Facts Inc., a market research firm.
Peter Vitulli, president of Gatorade Co., said the category is much bigger than that, with retail sales already pushing toward $1 billion. But Gatorade declines to disclose specific figures for either itself or the category.
In recent years, sports drink makers have targeted a broader audience of active people of all ages by pitching the drinks as a quick way to relieve thirst.
In recent ads for 10-K, football players are shown slamming lockers in preparation for a game.
''You don't have to beat your brains out to drink 10-K,'' an announcer says. ''All you gotta be is thirsty.''
Packaged Facts estimates 10-K, sold in 28 states, captured about 5 percent or sales at grocery stores in the first quarter of 1991.
Close behind is PowerBurst, made by the Powerburst company in Fresno, Calif. Powerburst was created for the San Francisco 49ers football team as an alternative to Gatorade four years ago and is now available in 32 states. The company is partly owned by 49ers owner Edward DeBartolo Jr.
Beverage makers use flavors and packaging to broaden their appeal as well.
Gatorade has expanded its original two flavors to six including tropical fruit and lemonade. It also make Gatorade Light for dieters. It is available in bottles, cans, paper boxes and at fountains.
Its contracts with major sports keep it visible in coolers on the sidelines at major sporting events. It is at 6,000 events a year.
Soft drink makers are showing interest in the category. Their market dwarfs the sports drink category with $46 billion in annual sales but it grew only 2.5 percent last year.
Coca-Cola Co. rolled out a sports drink called PowerAde nationally in April 1990. It is sold only at convenience store fountains.
Pepsi-Cola Co. has been testing All-Sport for three months in three markets. Unlike many other sports drinks it's lightly carbonated.
Packaged Facts said there are about 60 different sports drinks on the market. It expects growth of 12 percent to 15 percent a year in the next five years with category sales surpassing $1 billion in 1994 for the first time.
Beverage Digest's Meyers said getting shelf space in grocery stores is the biggest obstacle to growth of the category.
But he said Jordan's Gatorade contract should help.
''He puts the category through the hoop,'' he said.