Coca-Cola is planning a significant overhaul of BodyArmor to ignite lagging sales.
Sore Throats and Slipping Rank: BodyArmor's Turmoil
After Coca-Cola got its hands on BodyArmor in a whopping $5.6 billion deal in 2021, the goal was simple: dethrone PepsiCo's Gatorade as the top-selling sports drink on the globe. Four years down the line, BodyArmor is still circling the throne, lagging behind its rival and sibling Powerade.
The drink faces a myriad of issues, including stiffer competition, a fuzzy identity, and stagnating sales that even forced Coca-Cola to take a $760 million write-off of the brand last April. According to Howard Telford, head of soft drinks for research firm Euromonitor, "BodyArmor is a bit lost in the middle. It wouldn't surprise me if it hadn't met expectations since it was a massive purchase back then."
In an attempt to breathe new life into the brand, BodyArmor declared a metamorphosis, featuring a revamped logo, fresh packaging, and its largest-ever advertising campaign. Set to debut during the NHL playoffs this weekend, the splashy ads will feature athletes like Joe Burrow and Sabrina Ionescu. Tom Gargiulo, BodyAmor's chief marketing officer, opened up to CNN, "One of our biggest challenges right now is just not a lot of people know about who we are and what we're about. We think there's a massive opportunity ahead of us in terms of really exploding this brand's growth."
Growing Pains
BodyArmor first hit the scene in 2011, marketing itself as a healthier alternative to other sports drinks, such as Gatorade. It started using coconut water and boasting about its use of natural flavors and sweeteners. The drink started catching attention, especially following investments from celebrities like the late Kobe Bryant in 2013 and becoming Bryant's official brand. The beverage巨頭Coca-Cola eventually got on board in 2018 with a 15% stake before fully acquiring it in 2021, making it Coca-Cola's largest brand acquisition ever.
The move into the $300 billion conglomerate hasn't been all sunshine and rainbows. Coca-Cola CEO James Quincey candidly admitted in an interview with the Wall Street Journal that there had been some "bumps" in integrating BodyArmor under Coca-Cola's umbrella and combining it with Powerade, Coca-Cola's budget-minded sports drink.
BodyArmor CEO Federico Muyshondt acknowledged the growing pains as BodyArmor transitioned from an investment to a fully owned company. "Coca-Cola is a company, but it's also a system. So a brand that operates on the periphery and a brand that operates inside of the system are two separate things."
Under Coca-Cola, BodyArmor's portfolio expanded with several variations of the flagship brand, including a lower-calorie version, an alkaline water, and a hydration powder to rival Liquid I.V. Two new additions that have become bright spots for BodyArmor are its sugar-free line and rapid rehydration beverages, similar to Electrolit. These have generated $100 million in sales since their introduction a year ago, Muyshondt shared, crediting marketing and distribution assistance from Coca-Cola for their success.
Competing Corners
The sports drink market has expanded far beyond its initial offerings of lime or cherry-flavored drinks for dedicated athletes. Today, it is overflowing with up-and-coming competitors pushing benefits designed for the less athletically inclined.
"It used to be a fairly narrow category defined mainly around sports and athletic activity," Telford told CNN, but now "hydration isn't particularly about sports". Instead, younger customers are attracted to beverages they perceive as healthy.
The influx of new options, coupled with rising costs, has eroded the success of Gatorade, Powerade, and BodyArmor. Telford estimates that Coca-Cola would have hoped for BodyArmor to be in second place by now, but the acquisition happened during the height of the popularity for Paul's Prime drink, which has since plummeted in sales. This provides BodyArmor an opportunity to reintroduce itself.
"I can understand the need to kind of reset and maybe draw some clear lines about 'Who is our consumer?'" Telford stated, adding that a better differentiation between Powerade and BodyArmor is "probably overdue." For BodyArmor's Muyshondt, having more competitors is a good thing because "you don't see a lot of competition entering categories that are not growing."
In other words, only time will tell who could survive and who won't. BodyArmor's North Star remains steadfast: becoming number one.
- Despite investing a staggering $5.6 billion, BodyArmor, a food-and-drink brand, is yet to overtake its competitor, PepsiCo's Gatorade, in the global sports drink business.
- The financial analyst, Howard Telford, suspects that BodyArmor may not have met initial expectations due to its struggle with identity and stagnating sales.
- To revitalize the brand, BodyArmor is undergoing a metamorphosis, incorporating a new logo, updated packaging, and a substantial advertising campaign featuring athletes.
- The sports industry isn't the only battleground for BodyArmor; the food-and-drink sector is populated with new competitors that offer healthier alternatives, targeting a broader lifestyle audience.
- These new entrants, coupled with rising costs, have created challenges for established brands like Gatorade, Powerade, and BodyArmor, promoting a reevaluation of market positions.
- In the ever-evolving food-and-drink industry, BodyArmor aims to stay afloat and rise to the top, leveraging investing opportunities and strategic partnerships to maintain its North Star and secure its place in the billion-dollar market.
