BE AGGRESSIVE! 2000-02-21 (1)

KAREN DeMASTERS

Sales of isotonic drinks have grown by leaps and bounds ever since they were introduced in 1967, and most of those sales can be chalked up to the originator, Gatorade, which still dominates the market.

The pleasantly surprising thing for retailers is that both the leader and its challengers have maintained aggressive marketing policies by continuing to introduce new products and break out new advertising, which keep pushing the sales upward. The challengers, who are still only making slight inroads into the market, are Coca-Cola with PowerAde and PepsiCo with All Sport.

Retailers work with manufacturers to promote the isotonic drinks, which are absorbed quickly into the blood to replace lost body fluids. The product's appeal has grown from its beginnings, when it was invented for the University of Florida football team, to a wide range of people who are health conscious, as well as those who are active in amateur, as well as professional, sports.

"People are on a health kick, they have been for some time now," said Bill Meade, grocery buyer for Heinen's supermarkets based in Cleveland, Ohio.

"Isotonics get a bit of a boost in warmer weather, but it has been coming on stronger as a year-round drink for some time because people are so involved with all kinds of sports. People are just more health conscious," Meade added.

The category has maintained a more than 10% growth record most years, said Ken Harris, a partner in Cannondale Associates, marketing experts based in Evanston, Illinois.

"Gatorade has come out with new products that, much to the retailers' surprise, have been astoundingly successful. The new flavors offered nuances of differences in taste, but they have made a big difference in sales," he said.

"The isotonics made by Coca-Cola and PepsiCo have done better overseas than they have here. Whenever you have an 80% share of the market, like Gatorade, you are the market."

Sales of isotonic drinks in plastic or glass bottles in all outlets reached $801 million for the 52-week period ended Dec. 5, 1999, compared with $712 million for the week ended Dec. 27, 1998 -- a 12.8% increase, according to Information Resources, Inc., Chicago, Ill. The sales jump was not unprecedented.

Sales figures for 1998, compared with 1997, show a 13.6% rise. Most of those sales, $645 million in 1999, were in supermarkets, which saw an increase of 9.1% from $503 million the previous year.

Quaker Oats Company, which purchased Gatorade owner Stokely-Van Camp in 1983, maintained the lion's share of the market in 1999 with $631 million, or nearly 79%, compared to $77 million for the first runner-up, Coca-Cola's PowerAde, and $34 million for PepsiCo's All Sport. A few other manufacturers, such as Snapple, have tiny portions of the market.

"Like any category that comes out on fire, it is impossible to sustain that kind of growth forever, although it is still growing," said Ross Nixon, vice president of merchandising for Dahl's Food Markets, which has 11 stores in the area of Des Moines, Iowa.

In Iowa, isotonics are still somewhat of a seasonal drink, getting a big boost in sales in the summer months when outdoor activity increases.

"We sell some all year, but we really get into the season at the end of May and we promote fairly heavily from then on. We promote one or two types each week throughout the summer," Nixon said. "This is strictly price promotions. Some stores also may use end caps or stack pallets at strategic locations, but a lot of it is straight off the shelf."

At Heinen's, which has 13 stores, there is less seasonal variation.

Promotions using price incentives, end caps and case displays, and advertising in the supermarket mailer are used year round, said Meade.

"The controversy is over where to put them, in the soft drink, water or juice aisles. We put them with the juices; that seems to work," Meade said.

The Mitchell Grocery Corp, which has 160 supermarkets in Alabama, Georgia, Tennessee and Mississippi, solved that problem by having the soda, fruit juices and water on opposite sides of the same aisle and displaying the isotonics with the sodas, said Joel Childress, buyer for the chain, which is based in Albertville, Ala.

"We use whatever displays and promotional materials the manufacturer sends us and we advertise specials in the newspapers and the in-store circular. Sales do have a seasonal pattern, but we experience some year-round and we do promotions during cold and flu season, as well as in the summer," Childress said.

Isotonics manufacturers recently have begun trying to expand their market from young, athletically minded adults and older, health-conscious exercisers to teenagers by introducing new flavors and different-sized bottles.

"Expanding the demographic market is where some of the growth has come recently," said Mona Golub, manager of consumer and marketing services for Price Chopper, based in Schenectady, N.Y.

The 95-store chain, which has stores in New York, Vermont, New Hampshire, Massachusetts, Pennsylvania and Connecticut, displays isotonics in the juice aisle.

"We did some testing in the soda and water aisle, but we left it in juices," she said. "Price Chopper uses end caps and wing displays when there is a special and devotes about eight feet of shelf space to isotonic drinks all year. Price specials usually are multiples -- three for the price of two or four for the price of three.

"We use a large variety of signage and we advertise the price specials in newspapers and in-store circulars," Golub added. "The manufacturers usually don't push offering samples because they say people's taste buds change when they exercise, but we do sampling sometimes anyway."

Bush's supermarkets, which has 11 stores based in Michigan, moves the isotonic drinks around depending on what kind of promotion is being done, although there are few cross merchandising opportunities for this category, according to a spokesman for the chain who asked that his name not be used.

"Isotonics are used in an in-store promotion or circular almost every week and we use whatever displays or themes the manufacturers provide. All Sport is the official drink of the University of Michigan and we play that up because we have stores around Ann Arbor, where the university," the spokesman added.

One theme retailers will be using this summer is the summer Olympics in Sydney, Australia. Coca-Cola in particular is pushing retailers to use the natural tie-in between the athletic events and isotonic drinks by providing contests with prizes of trips to the Olympics as well as "PowerAde Olympic gear."

"Supermarkets will be given retail Olympic activation packages, exciting Olympic graphics and end-aisle displays" for the Olympic Challenge promotion, said Alison Ilg, a spokeswoman for the company.

PowerAde also came out with two new flavors last year -- Dark Downburst, a combination of berry and citrus flavors, and Arctic Shatter, a cherry and peach flavor. The drinks are brightly colored and in blends that the company thinks will appeal to the younger market.

Likewise, Gatorade continues to work with retailers to try to stay out in front of the competition. Starting from nothing, Gatorade rang up $97 million in sales by 1983 when Quaker bought it.

Last year, Gatorade introduced a new line of darker, more intense flavors called Fierce with Fierce Melon and Fierce Lime. Fierce Grape and Fierce Berry will come out in March. Gatorade Frost, an opaque lighter tasting drink introduced in 1997, is the second best-selling flavor, after original Gatorade, which still holds the number one spot, according to Andy Harrow, manager of Gatorade communications.

Gatorade also will be introducing Torq this year, a new energy juice drink designed to provide a long-lasting boost of energy through the use of simple and complex carbohydrates, and Propel, a lightly flavored fitness water that contains four B vitamins and two antioxidants. Unlike the other sports drinks that are high in calories, Propel has only 10 calories per serving, which the company hopes will appeal to those who are exercising to lose or maintain weight.