Photo: Teejay / Flickr, CC.
At first glance, this chart (below) from Citi drinks and snacks analyst Wendy Nicholson seems to suggest that PepsiCo’s decision to rebrand Gatorade as “G” was a complete disaster: It’s lost nearly 10 points of market share since 2006, while Coca-Cola’s rival brand, Powerade, has gained 10 points.
That’s the kind of story that fuels investors’ anger at PepsiCo CEO Indra Nooyi. Some of them want the company broken up so that executives can prioritise drinks or food, not both at the same time.
But in fact Gatorade (or “G,” or “G Series Pro 03 Recover,” or whatever we’re calling it this week) has turned the corner and is gaining dollar sales despite being priced higher than competing drinks. Gatorade and G2 combined posted $1.3 billion in sales, up 4.1 per cent, in 2011, according to Citi. That’s the vast majority of the $1.8 billion “isotonics” category.Coke’s Powerade brand is only gaining share because it’s being sold at a 19% discount to the category average. Powerade sold just $464 million, up 12.3 per cent—it’s coming off a smaller base.
Here’s what Citi’s Nicholson said about pricing the two drinks:
- “PEP’s Gatorade and G2 were sold at a 7%-8% premium relative to category average. “
- “…a share gain for POWERade (up 1.3 pts, to 24.5%), for which products are priced at a 19% discount to the category average.”
Loss of share is always a problem when you’re reliant on your brand (this is the coloured-water business, after all). But the fact that Pepsi is posting sale gains on a premium-priced product proves that its brand is strong.
Which means that I was wrong when I said last year that the G relaunch had failed.
Apologies, Gatorade management!
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