CHICAGO -- It crushes the competition on sidelines, finish linesand checkout lines. Its name is as synonymous with sports drinks asKleenex is with tissues and Frisbee with flying discs.
Long the thirst-quencher of choice for jocks and other heavysweaters, Gatorade has become a powerhouse product in supermarketsand convenience stores. It has only one real rival.
'The biggest enemy is tap water,' pronounced Robert S. Morrison,chief of Gatorade's parent, Quaker Oats Co., during a recentinterview.
Morrison wasn't joking. Gatorade has effectively declared war onwater.
The company has rolled out more flavors, added multipacks and newbottles and employed a special sales force to expand Gatoradedistribution. Coming off strong debuts for its Gatorade Frost andFierce brands the last two summers, it also has introduced aflavored 'fitness water' called Propel, a lower-calorie Gatoradespin-off.
That aggressive strategy is projected to help pad Gatorade's U.S.sales by two-thirds, or $1 billion, over the next five years. Thebeverage already commands 82 percent of the U.S. sports drink marketand had 1999 worldwide sales of $1.83 billion.
Quaker's stated goal: Make Gatorade available everywhere thatthere's water.
'When we're done, tap water will be relegated to showers andwashing dishes,' Susan Wellington, president of Quaker's U.S.beverage division, boasted playfully to a group of New York analystsrecently.
It may be quietly moving in on Coke and Pepsi, too. Havingconquered the sports drink arena, Gatorade has eased into themainstream beverage market.
'It's disguised as a sports beverage, so as not to anger Coke,'says analyst Nomi Ghez of Goldman, Sachs & Co. 'But in reality it'sa major entry in the general beverage industry. You see kids walkingaround drinking Gatorade they're not sweating.'
Quaker's big push into Gatorade, now its No. 1 product with morethan 40 percent of company sales, might surprise some who rememberits disastrous acquisition of Snapple. That drink never caught onbeyond its core markets on the coasts, costing Quaker $1.4 billionby the time it dumped it in 1997.
Gatorade's deeper roots convinced Quaker that consumers couldguzzle much more of the sports beverage.
It was developed by University of Florida researchers to helpprevent dehydration. Tested on the football team starting in 1965,it was credited with helping to give the Gators a reputation as the'second-half team' for outplaying their opponents in the final half.
Stokely-Van Camp bought the rights and Gatorade soon went near-nationwide. But when Quaker acquired it in 1983, there were stillonly two flavors and modest sales of $97 million.
How it became a dominant consumer brand is described by expertsas nothing less than a marketing coup.
Early on, Quaker took steps to enhance Gatorade's reputation ascertifiably good for performance, founding the Gatorade SportsScience Institute. By the early '90s it locked in most majorprofessional sports leagues to long-term Gatorade contracts,providing immeasurable visibility.
Michael Jordan was signed to a 10-year promotional deal in 1992,giving Gatorade priceless exposure. Budding superstars includingsoccer player Mia Hamm, quarterback Peyton Manning and NBA starVince Carter are currently providing newer marketing clout.
And more than a dozen flavors have been added.
'It's become a mainstream, New Economy product,' says analystJohn McMillin of Prudential Securities. 'They've succeeded inexpanding beyond the male athlete stereotype to reach less seriousathletes, females, kids as young as 5.'
Indeed, a recent visit to a discount warehouse club found men,women and children scooping up cartons of Gatorade.
Shopper Sam Farat said he's become a Gatorade devotee because ofboth the taste and the rehydration benefits. 'I drink it any time,'said the 40-year-old Chicagoan. 'Instead of coffee in the morning,I'll have this.'
Despite marketing costs, sales and profits keep surging. Profitstopped $250 million last year, Gatorade's fastest-growing year everwith a 12 percent rise in U.S. sales.
PowerAde, made by Coca-Cola, and PepsiCo's AllSport are dwarfs bycomparison.
The global frontier remains largely unconquered for Gatorade,although it's sold in 47 countries. Disappointing results in Europe,outside Italy, have slowed its advance.
The prime targets are closer to home. Morrison taps hisforefinger on a pie chart showing Gatorade with only 7 percent ofwhat he says is a $10 billion U.S. 'active thirst' market beveragesconsumed by people when they're hot and sweaty. The biggest share,35 percent, is held by tap water.
'This is the big opportunity,' he says, pointing to the largeslice.
'We're not against water it just has its place,' he deadpans.'We think it's good for irrigation and cooking.'
GATORADE
* WHAT: Sports drink
* MAKER: Quaker Oats Co.
* ORIGINS: Created in 1965 for the University of Florida footballteam
* MARKET SHARE: 82 percent
* 1999 SALES: $1.83 billion
