Gatorade sweats flat sales

The Baltimore Sun

CHICAGO -- For Todd Magazine, it's as if the Super Bowl, the World Series and the Olympics are rolled into one this winter.

Magazine is head of Gatorade, and the sports-drink titan is in the thick of launching G2, its biggest new beverage in six years.

A caffeinated version of Gatorade's Propel enhanced water also just hit the market, and in March the company plans to bring the ballyhooed Gatorade Tiger to store shelves. Golfing star Tiger Woods helped choose three new Gatorade flavors and will lend his name to the product, which was unveiled in October.

Each offensive comes at an important time for Gatorade, a division of PepsiCo. The sports-drink market slowed over the last year as beverage alternatives, from energy drinks to flavored waters, proliferated. And sales seem to have particularly cooled at Gatorade.

Unit sales of Gatorade were flat in 2007 compared with 2006, after three years of double-digit growth, according to Information Resources Inc., a market researcher. (IRI data does not include sales at Wal-Mart, a big distribution channel for Gatorade).

"They have hit the wall a little bit," Jack Russo, a stock analyst at Edward Jones, said of Gatorade. But, he added, "they have been on a pretty good run for a long period of time."

It is Magazine's job to ensure that run keeps on going. The 43-year-old native New Yorker joined Quaker Oats in 1999, two years before the company was acquired by PepsiCo. Pepsi kept Quaker's headquarters in Chicago, including its Gatorade arm, and Magazine worked his way up in marketing jobs at the company.

After serving as head of Quaker Foods for about 17 months, Magazine, who has a master's degree in business administration from Northwestern University's Kellogg School of Management, was named president of Gatorade in April. He has a particular affinity for the product he's in charge of now.

"I was an athlete growing up: football, baseball, basketball," he said.

Nowadays, he refers to himself as a "committed exerciser," athletics for health, not victory. Well, mostly for health.

"When I'm on the treadmill, I'm still looking at the treadmill next to me to see who's going faster," he said.

Gatorade, which has captured more than 80 percent of the sports-drink market, has positioned itself as the beverage of athletes.

Developed in the 1960s to help the University of Florida's football team fend off dehydration, it long has been marketed as a balm for the rigors of sport, with Gatorade ads chock-full of pro athletes hard at work.

"That's all we've ever shown - people sweating and working out hard," Magazine said.

With G2, Gatorade is making a significant departure. It's not being marketed as a sports drink, nor is it being promoted as enhanced water. It's somewhere in the middle. G2 has 25 calories per 8-ounce serving, compared with 50 for Gatorade and 10 for a conventional Propel. G2 has electrolytes to fight dehydration but not as much as Gatorade.

The company calls G2 an "off-the-field hydrator," something athletes drink in their down time. To foster that image, Gatorade is about to launch an ad campaign that will initially feature Derek Jeter of the New York Yankees and the Miami Heat's Dwayne Wade. But the star athletes will be clad in street clothes, not playing uniforms.

Teaser ads for G2 began running in December, but the kickoff will be during next month's Super Bowl.

"We will have a sizable presence in the Super Bowl," Magazine said, though he declined to say whether Gatorade is buying multiple spots during the game.

The approach has its doubters. An Advertising Age editorial in August said Gatorade risked "hyper extending its brand" by taking its marketing focus off athletes in the heat of battle. Then, there's the specter of Gatorade Light, a low-calorie version that bombed shortly after it was launched in 1990.

"The skeptics are saying, 'It didn't work then, why should it work now?' " said Edward Jones' Russo, who added he's not among those skeptics.

Magazine said G2 "is a completely different proposition" than Gatorade Light, which was marketed as a diet sports drink.

"It's like comparing apples to oranges," he said.

Mike Hughlett writes for the Chicago Tribune.

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