Gatorade is like the athletes it sponsors – feeling the competition

If the sports drink industry was modeled after Game of Thrones, Gatorade would be like Prince Oberyn (Pedro Pascal) at the start of his last fight – on top of the Mountain… at least for now.

The Pepsi-owned brand currently owns 63% of the US sports drink market, with Coke-owned brands Powerade and Bodyarmor coming in second and third, respectively (they account for ~25% combined).

But there’s a chance the order doesn’t stay that way much longer, as large conglomerates invest and branch out into new products:

• Unilever, a multinational consumer goods company, bought hydration-mix company Liquid IV in 2020 for an undisclosed amount.
• Nestle Health Science bought hydration tablet maker Nuun in 2021.
• Emerging brands are also taking aim at the king. On Pepsi’s Q3 earnings call in February, CEO Ramon Laguarta called out influencer Logan Paul’s Prime Energy as one brand stealing market share from Gatorade.

In response: Gatorade has branched out with new products: Gatorade Zero Sugar, immune support tablets, a Pedialyte lookalike called Gatorlyte, a caffeinated spinoff called Fast Twitch, and an unflavored alkaline water, which launched in February. The company is currently gaining share in every hydration category it has products, per market research firm Circana.

🥊 Zoom out: Gatorade is currently in the final stage of The Consolidation Curve, where companies must defend their market-leading positions, within a company that’s also in the final stage of the curve (Pepsi) – a Russian nesting doll or Inception-type situation that also brings BoJack Horseman to mind.