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 Coca-Cola makes a bid for the sports drink market with $5.6 billion acquisition
business

Coca-Cola makes a bid for the sports drink market with $5.6 billion acquisition

by Robin Gonnella December 3, 2021 0 Comment

In an attempt to challenge PepsiCo’s dominance in the sports drink arena, Coca Cola has splurged $5.6 billion on full control of Gatorade rival Bodyarmor

On November 1st, Coca-Cola announced it would be bolstering its sports drink portfolio by acquiring the remaining stake in Bodyarmor for $5.6 billion, its largest brand acquisition to date. This comes as no surprise, with Coca-Cola previously purchasing a 15% stake in Bodyarmor in 2018 and filing a pre-acquisition proposal with the Federal Trade Commission in 2019.`

Coca-Cola’s acquisition of Bodyarmor expands their presence in a market dominated by Gatorade, with a market share of around 70%, owned by rivals PepsiCo Inc. By purchasing full control of Bodyarmor, Coca-Cola aims to chip away at Gatorade’s monopolistic-like market share. Coca-Cola now holds around 23% of the sport drink market, after combining Bodyarmor’s new market share with that of older brand Powerade, placing the company in a strong position to challenge Gatorade’s dominance. 

Coca-Cola’s initial 15% investment in Bodyarmor in 2018 enabled the brand to access  Coca-Cola’s global infrastructure, leading to the accelerated growth needed to meet the surging demands for premium sports and hydration beverages. As a result of this growth, Bodyarmor has overtaken Powerade as the second-largest player in the sports drink category, with retail sales up around 50% year on year, totalling more than $1.4 billion. 

Fast-changing consumer demands for sports drinks, including a growing demand for lower sugar content and ‘healthier’ drinks is further driving the appeal of the Bodyarmor brand. Mike Repole, co-founder of Bodyarmor described the company’s initial vision to “create a better-for-you sports drink”.

Coca Cola are also actively reviving their Powerade brand in the pursuit of greater market share through zero-sugar innovations, which offer a range of hydration needs beyond traditional sports.  

The future of the sports drink market will be an interesting one. Although currently a much smaller market than soda, the category is “growing at a much faster rate” according to Duane Stanford, editor and publisher of Beverage Digest. 

The coronavirus pandemic has also impacted the sports drink market, placing an increased emphasis on health and well-being. Coca Cola has a great opportunity to challenge the dominance of PepsiCo’s Gatorade by channelling the demand for healthier sports drink alternatives through new asset Bodyarmor and continuing to offer personalised solutions to all level athletes through Powerade. 

This move comes at a time when Coca Cola has been overhauling its portfolio, killing off under-performing products and striving to offer a wide array of new beverages.

Image Credit: BevNet

Tags: business coca-cola drinks Robin Gonnella sports
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