April 26, 2010

So…what’s G?

Last week PepsiCo launched its new ad campaign in an effort to increase sales for its struggling product, Gatorade.

The hook? Convince athletes that Gatorade helps athletes before, during, and after the game.

The campaign, promoting the Purchase, N.Y., food and beverage giant’s new lineup of “G Series” drinks for athletes, aims to demonstrate that Gatorade isn’t just a sports drink that replaces nutrients sweated out during the game, but a system with three steps: a carbohydrate-loaded “Prime” concentrated liquid before play; the traditional “Perform” sports drink during; and a light, protein-rich “Recover” drink after. (via WSJ Online)

Myself, clearly not being at the pinnacle of athletic achievement, am usually quite complacent just drinking regular old Gatorade at various points during my athletic achievements.  I never really thought about different versions of the drink at different times, personally.  If I had to guess, I would assume that a good number of people would have the same mindset.  With Gatorade sales already struggling and assuming that a large amount of money is needed to change mindsets (am I going to spend $7 to buy pre and post Gatorade along with regular Gatorade instead of just buying two regular Gatorades?) its not surprising that this Gatorade project is big…and probably costly.  We just don’t know how much.

While the company wouldn’t disclose the cost of the new campaign, a PepsiCo spokesman said it is the “biggest spend for a launch in our history.”

PepsiCo has struggled to find its footing with Gatorade, which has been in a sales slump for three years. Company executives say they have been paying the price for expanding too rapidly about five years ago, when the drink enjoyed a sales bump due to a string of hot summers, a construction boom and other factors that encouraged consumers to drink Gatorade for activities other than sports.

Gatorade is PepsiCo’s third-biggest selling global beverage brand after Pepsi-Cola and Mountain Dew, so its 14% sales volume decline in the U.S., its biggest market, last year was a concern for executives, analysts and investors.

PepsiCo’s first-quarter earnings, released Thursday, showed that the company has yet to turbo-charge Gatorade, although sales are improving. The company posted a 26% jump in first-quarter earnings, boosted by the February acquisition of its two biggest bottlers. While quarterly revenue in the company’s Pepsi Americas Beverages business, including North America and Latin America, rose 32%, beverage volumes fell 4%. The company declined to provide Gatorade’s quarterly sales volume.

Whenever a company isn’t willing to mention how much their spending on a particular campaign?  Know that they are spending an exorbitant amount of money.  That being said, it looks like PepsiCo needs to take drastic measures to get Gatorade on track, based on those numbers.  A 14% volume decline on something as large as Gatorade is definitely noticeable when looking at the company’s bottom line.  Combine that with a “What is G” campaign that a lot of people didn’t identify with or understand and what I assume were slumping Tiger-Ade sales (remember Gatorade dropped the Woods drink a few days prior to Woods car accident/crap storm last winter) and you were left with a company that needs to make some drastic changes in its marketing schemes.

The result?  Gatorade for all facets of your sporting day; before, during, and after.

If only it made you play better too.


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