British invasion: Glaxo seeks share of US sports drinks market

Lucozade sells in excess of $550m – about 90 percent of which is in the UK with smaller returns in Ireland and Hong Kong, but sales have been stagnating in these markets.

The British pharma giant launched the product in China in 2009 as a health rather than sports drink and is eyeing Brazil, Mexico and India for further debuts.

The US non-carbonated, sports beverage space is dominated by Pepsi’s Gatorade which controls about 75 percent of the market despite the best efforts of Coca-Cola’s Powerade, which in 20 years has managed to capture a share of only about 20 percent.

The US is the, “biggest nutritional healthcare market in the world,” ​Glaxo head of consumer healthcare, John Clarke, told Reuters.

“If you are globalizing you have to have it in your portfolio. We're fairly advanced on our discussions [with a prospective distributor]."​

Glaxo was unavailable for further comment about its marketing and formulation strategy at the time of publication.

Differentiation​

Both Glaxo and Pepsi offer variants in glucose provision and electrolyte replenishment products, but details of which products may be introduced first have not been announced.

Lucozade offers a range of formulations promoting hydration, fuel, focus, recovery and strength while Gatorade has ‘before, during, and after’ products that offer B vitamins (niacin, B5 and B6), electrolytes​, carbs and protein in varying formulas.

Staying with Gatorade ​

Beverage market analyst and consultant, Jim Tonkin, of Arizona-based Healthy Brand Builders, said it would take an enormous effort for any player to leverage serious market share from Pepsi’s Gatorade lines, as Coke’s Powerade has found out.

“The thing is Pepsi have been very aggressive with Gatorade anyway – they have been spending big marketing dollars and they definitely won’t sit back and allow Lucozade to waltz onto the market,” ​Tonkin told NutraIngredients-USA. “Pepsi is a tough competitor. They will definitely make Glaxo earn whatever market share they are able to attain.”​

“A lot of companies have tried to knock off the platform and failed. That said, Lucozade is a good product, Glaxo is huge and has the muscle to stick out a long term campaign. But will they have the patience? I see them having to invest 10s of millions of dollars to gain a few percentage points market share.”​

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Tonkin said given Glaxo’s limited experience of the US beverage market, it may be surprised to discover major retailers, “not rolling over” ​and adding levies to gain shelf-share.

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Chris Brock, market intelligence manager at Leatherhead Food Research in the UK, agreed the market was hyper-competitive, especially when energy drinks such as Red Bull were thrown into the mix.

“It is a very ambitious move,” ​he said. “But if Lucozade are going to go global they have to tackle the US market. Maybe consumers will be open to a new product but Glaxo has to know this is a market where it is very difficult to establish a strong position.”​

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He said it was unlikely Glaxo would play up the ‘Britishness’ of the product because, unlike tea or jam, or shortbread biscuits, there was no particular link between sports drinks and British culture.

Lucozade may perform better in markets such as New York City and Florida where there are large populations of British expatriates, Tonkin observed.

Market share​

Glaxo may take heart from recent Beverage Marketing Corporation (BMC) market statistics that revealed Gatorade volumes slumped 15.5 percent to 895.8 million gallons in 2009.

But this should be seen in the light of a category that fell 12.3 per cent in volume for the year, compared to 3.1 percent for the entire soft drinks market, and which was also heavily recession-affected.

Despite the slump, 2009 saw Gatorade launch new products and line extensions including a new natural Gatorade range sweetened with stevia and the expansion of the ‘G Series Pro’ line into less specialist distribution outlets.

Gatorade, launched in the late 1960s, is the fifth biggest-selling US soft drink behind Dr Pepper, Mountain Dew, Pepsi, and Coke.

Datamonitor valued the US sports nutrition market (including bars) at $2.9bn in 2008, and predicted it would grow to $3.5bn by 2013.