If you've recently taken a trip down the beverage aisle in your supermarket, you may have noticed something funky going on with Gatorade. It's not only that there are plenty of bottles of the sports drink on the shelves, but under the auspices of parent company PepsiCo (PEP), the bottles themselves -- labeled merely with the letter "G" -- appear to have fallen victim to a questionable and confusing rebranding effort.
Unfortunately, PepsiCo is starting to make rebranding missteps a habit. Last year, it unveiled a rebranding of the Tropicana orange juice brand. The new concept was so hated by consumers that PepsiCo scrapped the redesign and went back to the old packaging. However, the Tropicana failure was a success in one aspect: it deflected attention away from the questionable redesign of Gatorade, which thus far, PepsiCo has refused to abandon.
Instead, the company is charging forward with the campaign, creating new ads and adding to an ever-expanding list of options on the shelves (Let's see, do I need a Perform 01 or a Recover 03?).
Trying to Revive an Aging Sports Drink
The sports-drink's woes began a few years ago. As younger, hipper competitors hit the market, Gatorade battled an increasingly stodgy image. Some consumers shifted to products like Glaceau's VitaminWater brand, while specialty "pro" sports drinks, such as Hammer Nutrition, stole the attentions of some hard-core athletes.
"Inevitably, some of those (Gatorade) consumers have migrated away to other beverages, partly driven by fickle tastes and partly because of the recession," says John Sicher, editor and publisher of Beverage Digest, a publication tracking the non-alcoholic beverage industry.
After sales volume slipped 1% in 2008, Gatorade began its rebranding efforts. In 2009, it redesigned the drink with "G" as its new symbol. The result? Sales dropped even further. According to Sicher, sales by volume slumped 13% last year. Yet rather than abandoning the new design, as PepsiCo did with Tropicana, it decided to continue to push the new Gatorade look.
A User's Guide to Buying Gatorade?
As a result, a visit to the supermarket today presents the consumer with several choices for buying Gatorade. Not only must they choose a flavor, but they need to decide which variety they want: Prime 01, Perform 02, Recover 03, each of which is designed for drinking before, during or after an athletic event. The options will become even more expansive once Gatorade rolls out yet another G variety called the "G Series Pro," a line targeting college and pro athletes that will be available at specialty stores such as GNC and Dick's Sporting Goods.
In order to explain all of this to consumers, the company released a commercial called "Gatorade Has Evolved."
So aren't more choices better? Not always. More options can create paralysis, prompting people to avoid choosing at all, as The Paradox of Choice author Barry Schwartz wrote.
Gatorade says it's trying to explain the changes to consumers. "As with any new product launch, a key focus of our marketing efforts has been to educate athletes," a spokeswoman wrote in an email. "The new TV spot is one example, but we also have comprehensive digital, grassroots and PR activities under way as well." As for the commercial, Gatorade says that while it's too early to track its impact on sales, there are indications it's helping consumers understand the brand's new message.
According to Beverage Digest, Gatorade sales by volume slipped 4% in the first quarter of 2010, which Sicher says indicates a slower rate of decline. PepsiCo executives have been more bullish, with Chief Executive Indra Nooyi noting during the company's first-quarter conference call that Gatorade has seen a "tremendous volume improvement," although she didn't disclose details.
The true verdict likely won't be in for several more months. In the meantime, Gatorade needs to step up and make it clear to consumers what "G" is all about. "The challenge for PepsiCo is going to be execution," says Sicher. "They have to explain to consumers what these products are about and how to use them." And,possibly, why sports drinks need to be so complicated.
Introduction to ETFs
The basics of Exchange Traded Funds and why ETFs are hot.View Course »