Mar 31, 2009

Anyone that has a product knows the importance of advertising.  Advertising gives you a chance to explain what your product is, what it does, and hopefully embeds it in the public’s conscience.  Show a famous person using your product and discussing all of its wonderful benefits?  Then you potentially have a very stable long-term revenue source.  But, there are certain obstacles that not even an athlete can overcome, to sell your product.  Firstly, it has to be a product that is actually useful.  If Michael Jordan endorsed a bologna origami machine, not many people would take the time to buy it, because it is a product that has no usefulness or value (I’m lying. some die-hard Jordan fans would buy this, but for the sake of not having to deal with insanity, I’m going to continue).  Secondly, the product has to be something that is at least on a neutral or positive ground with the American public at large (read as: can’t be stigmatized by the public at large at the moment).  Have these two criteria going for you? Along with a high profile athlete to smile and talk about how great your product is?  You’re golden.  Missing one of these two? then even Michael Jordan can’t save your product.

And what product seems to be experiencing a golden-age as far as advertising and market share?  Sports drinks and Enhanced Water.  From Ad Age,

Many beverage segments saw volume declines in 2008, though there were a few notable exceptions. Flavored and enhanced water gained 8.3% volume and energy drinks gained 9% volume. Those two categories, along with bottled water, also gained market share. The beverage category as a whole saw volume decline 2%.

To what do sports drinks owe their rise?  The decline of soft-drinks (due  in small part to the economy, but in larger part to price points and a lean towards more health conscious beverages) and catchy promotions (featuring athletes with nation-wide popularity) by sports drink makers.  As far as a quick return to the status quo?  It may not be as fast as one would think

In 2008, category volume, as defined by cases sold, declined by 3%, according to data released today by Beverage Digest, and declines over the past four years have now eliminated gains made in the eight years prior to that, bringing the category back to 1997 volume levels.

Mr. Sicher [John Sicher, editor and publisher of Beverage DigestEd.] acknowledged that the economy had a modest impact on carbonated soft drinks. High gas prices last summer, for example, caused sales at convenience stores to slow. Still, volume declines in 2008 were more a symptom of ongoing issues within the category, rather than a one-time decline related to economic woes. “We’re not going to see carbonated soft drinks turn around anytime soon,” Mr. Sicher said. “The big challenge for Coke, Pepsi and [Dr Pepper Snapple] is to get their soda business back at least to flat, so it doesn’t drag down the overall industry.”

Lebron James. Attorney. Basketball Player. Vitamin Water spokesperson

Lebron James. Attorney. Basketball Player. Vitamin Water spokesperson

And as far as “catchy” sports drink promotions go,  sports drink producers seem to be breaking their piggy banks and blowing their budgets.  Huge national ads by SOBE and Gatorade scored big with consumers (with that horrendous SOBE dancing football player ad pulling in more than 1.4 million online views right after the Super Bowl) while Vitamin Water had already thrown its Lebron James led Vitamin Water campaign into the fray with much success not to long before.  Sports drink/Enhanced water makers know that this golden age will not last forever, so it is impressive to see them trying to not only capitalize on the craze, but be willing to put forth significant advertising dollars to do so, even in the face of a recession. And for those who think that sports drinks aren’t in a golden age?  Please remember that SOBE had a successful commercial where Ray Lewis transformed into a cartoon lizard.  Can it get more “golden age” than that?

Ad Age — Carbonated Soft-Drink Sales Volume Continues to Decline

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