Hurdles for sports beverage industry

- Last updated on GMT

Related tags: Olympic games

As the 2004 Olympic Games get under way, Philippa Nuttall
speaks to Frost & Sullivan's Savithri Ramalinga, about the
challenges facing the sports beverage industry in North America.

Sports nutrition has been one of the fastest growing beverage categories in the US in recent years and now represents three per cent of all soft drinks consumption, according to Canadean​. The research company attributes this growth to strong marketing and advertising campaigns linked to high profile images and sports events, led primarily by Pepsi with Gatorade and Coke with Powerade.

Savithri Ramalinga, the team leader of Frost & Sullivan's​ food and beverage group, estimated that the industry would continue to grow at a CAGR of 11.2 per cent through 2010 with potential revenues reaching slightly over $6 billion in 2010.

Despite this fairly healthy forcast, she thought the industry faced many challenges, not least because the considerable number of new products entering the sector has severely limited the creation of any real consumer loyalty.

"Too many companies with too many products are trying to compete for the consumer's attention, leaving the consumer bewildered,"​ said Ramalinga.

And the situation has been made even more confusing as the companies trying to compete range from leading multi-nationals, to tiny one-man shows.

On the one hand, "the market has to continually fight the flow of spurious products marketed by small companies,​ and on the other, "with big companies in the race, the promotion costs have rocketed sky-high, thereby, leading to high production costs"​, said Ramalinga

She believed that a "super brand"​ needed to be created to fill this void and lead the way. This, and other successful products, will, according to Ramalinga, be available in as many delivery forms as possible to give the maximum freedom of choice to customers.

"This will keep the market from stagnating and will also satisfy the consumer by giving him choice of form in which he can consume the product,"​ she said, also noting that "athletes prefer convenient foods that can be carried around and consumed without any extra effort"​.

Those products which manage to stave off the competiton will also have to be more sophisticated than those presently available with improved tastes and textures and with beverages supplying specific nutrients, rather than just "nutrition"​.

"This is expected to pep up the sales in the forthcoming years as these drinks will have an edge over what are called 'health foods',"​ said Ramalinga.

Major sporting events like the Olympics fuel the sports and fitness industry towards growth as food concepts and products that have been around for some time are re-launched or promoted afresh.

For instance, new research carried out in anticipation of the most recent games have shown that athletes prefer salty drinks to sweet ones after working out, although they need glucose to replenish their energy. Coca-Cola's UK division is vying to position its drink Powerade as the sports drink of 2004.

As the Olympics of 2004 take place in Athens, Paris, New York, Moscow, London and Madrid are campaigning to hold the games in 2012. Sports nutrition companies also need to start gearing up their winning strategies to make the most of this golden opportunity. In the meantime, mass-market sales and communication channels need to be improved to generate a loyal non-athletic following for sports nutration drinks.

Related topics: Energy & Sports, Markets

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