Pisa Pharmaceuticals has hired former Red Bull marketer Christian Patiño Webb as CEO of the company’s Electrolit “instant hydration” business globally. He will be based in Houston and report to Pisa’s board of directors. His background in the consumer packaged goods industry includes time at Unilever, Johnson & Johnson, and Procter & Gamble. In an interview, Patiño Webb told BD that he expects Electrolit to surpass $1 billion in shipment revenue by the start of 2024. A third of the company’s shipment sales come from the US currently. He added that the US could account for $500 million in retail sales by the end of this year and reach $1 billion in retail sales in a few years. As of July, Electrolit held about a 5 share of the US sports drink market with all commodity volume (ACV) distribution of about 50%, according to Patiño Webb. The brand is distributed in 11 countries from Canada to Chile with a large presence in Mexico, where Electrolit was founded in 1950 to combat childhood dehydration and later expanded to focus on rapid hydration for athletes. “I do see this brand expanding globally in the next three to four years, if not earlier,” Patiño Webb said. Electrolit was introduced in 2015 in the US, where Pisa focused initially on markets with a heavy concentration of Hispanic consumers.
U.S. DISTRIBUTION UPDATE. The brand is now distributed in more than 65,000 retail accounts in the US, up from 30,000 two years ago, Patiño Webb said. About 65% of that distribution is by way of direct store delivery (DSD), including Big Geyser in New York. “I know this from my Red Bull days,” he said. “The name of the game is going to be to expand as much as possible with DSD because we can reach more stores and provide better service to our clients.” Retailers include Walmart, Kroger, HEB and 7-Eleven. The brand is in about half of Walmart’s 4,700 US stores, with more to come, Patiño Webb said. The brand also is in talks with Target and Costco.
BRAND REFRESHER. In the year ending Aug. 7, Electrolit held a 3.4 dollar share of the US sports drink category and was No. 4 behind Gatorade (65.5), BodyArmor (16.6), and Powerade (12.4). Electrolit is sold in a medicinal-looking squared bottle similar to the shape of Abbot Laboratories’ Pedialyte child rehydration drink. An 8-oz serving of Electrolit has more potassium and sodium than even a 12-oz serving of either Gatorade or Powerade. Electrolit is retail priced in the US at $2.99 for a 21-oz bottle. The product is offered as a single 21-oz bottle and in six-packs of the same bottle. The lineup includes nine flavors. Gatorade launched a competing product called Gatorlyte in early 2021. Electrolit sued Gatorade owner PepsiCo to stop the launch, claiming Gatorlyte infringed on Electrolit’s trade dress. The companies settled and Gatorade made changes to its package. Meanwhile, Coca- Cola’s Powerade brand is considering a “rapid replenishment” product of its own.
The following Q&A has been edited for length and clarity:
BD: What lessons will you bring to Electrolit from a global powerhouse like Red Bull?
CPW: The three main lessons learned at Red Bull that I’m looking forward to bringing to Electrolit are, first, to create a global brand with a local face. The way you see Red Bull in Brazil or in Japan, or here in North America, it’s exactly the same, and the execution is the same. But the way they communicate to the consumer has local relevance. Number two is building or evolving the Electrolit brand from a great product to a lifestyle brand. Within CPG, Red Bull may be the strongest lifestyle brand. The third is being agile and non-traditional, paying a lot of attention to the consumer and acting fast. If it takes you two or three years to launch innovation, you’re going to lose market share every single month.
BD: What does it mean for Electrolit to be a lifestyle brand?
CPW: Investing heavily in content and truly being a lifestyle brand means a brand that consumers are proud to wear, proud to use, proud to share, proud to talk about with their friends, versus just a great product. If you have new sports equipment or something really cool like a motorcycle, that’s something you want to show to your friends. It’s understanding the consumer and having a very strong story to tell the cult that is going to be your loyal fan base. You can bring that to life with social, with influencers, with advertising, with content, with athletes, and whatever you want. But it starts by having a purpose and truly understanding your consumer.
BD: Do you have that message and purpose yet or is it under development?
CPW: You’re going to see that coming to life next year.
BD: Electrolit’s US presence was built in large part through the Hispanic market. How important is that consumer demographic when it comes to generating growth?
CPW: The brand started in 1950 in Mexico and came to the US in 2015. In the first two or three years in the US, the goal obviously was driving distribution in Hispanic accounts and talking to that Hispanic audience. During the past several years, the approach from a communications and marketing standpoint has been fully general market, not using Spanish at all, truly being a general market brand. The demographic composition of the shopper base for Electrolit indexes a little higher on Hispanic, but there’s a very significant percentage of African American and Caucasian consumers buying the brand. We’re seeing that traction in markets like the Northwest, Seattle and Oregon, and in markets like Idaho, the Midwest, parts of Georgia. We’re getting a lot of traction in Florida and Texas. Obviously, you have high percentages of Hispanic consumers there, but we’re seeing high penetration with other demographic groups as well. So, the brand at this point is already a mainstream brand. What really matters for the consumer is performance hydration and taste. And we’re doing a great job on those two, and the sky is the limit.
BD: Electrolit has differentiated itself as an ‘instant hydration’ product in a market dominated by Gatorade, Powerade and now BodyArmor. Is there room for you and why?
CPW: Consumers are looking for instant hydration. And we were one of the pioneers in that segment, coming in with premium ingredients and a scientific formula. The category has been following us, like Gatorlyte. We even had some legal conversations with them. When the leader copies you, that means you’re doing something well, right? The magic formula is not just throwing in more electrolytes. It’s the right balance of those electrolytes that are going to provide the best performance in your body. And the glucose that we use, it’s medical grade glucose. It’s a very expensive ingredient, it’s not easy to use. Most of our competitors use a cheaper quality sweetener that does not necessarily work as effectively as glucose. Glucose brings energy back faster, provides that instant hydration faster, and helps to move all the electrolytes through your body. Our DNA is being part of a pharmaceutical company. We manufacture in a pharmaceutical-grade facility. It’s very expensive to produce that in a pharmaceutical facility, pharmaceutical grade facility. But we know that the consumer sees that benefit and they come back to us.
BD: Are you in an investment phase in terms of pricing? Are you able to recoup that higher manufacturing and ingredient cost and achieve an appropriate margin?
CPW: We are in a very fortunate position because we’re part of a pharmaceutical company, privately owned by one family. They’re in a very good financial position. We don’t have one piece of debt. The moment that we invest in new manufacturing lines, which we’re planning to build soon in Texas, we basically recover that within three years or so. It’s extremely profitable.
‘INVESTING AGGRESSIVELY IN PRODUCTION’
BD: You are adding production capacity?
CPW: We’re investing aggressively in production. We manufacture everything in Mexico on high-end robotized manufacturing lines. We’re increasing our capacity in Mexico and we’re investing in the US to have our first manufacturing facility outside of Mexico, in Texas. It will open in two to three years to serve the North American market and new geographies.
BD: An influx of marketing dollars into the rapid hydration segment from market leaders such as PepsiCo’s Gatorade and potentially Coca-Cola’s Powerade at some point isn’t a bad thing, correct?
CPW: It helps us tremendously. For example, we launched in Canada last year and Gatorlyte followed us this year. And it’s helping us, one from a consumer standpoint, and two from a buyer standpoint. From a consumer standpoint, the consumer understands that there’s something better for them than the traditional brands with higher calories and bad ingredients. And then, the buyers understand that there is a new opportunity within the category of white space to bring better products with a higher price point. Even Pepsi’s Gatorlyte is way more expensive than a traditional Gatorade. So overall that helps us to continue getting more space on shelf, and getting more priority for this premium segment within the category. Obviously, we have to continue challenging ourselves and bringing more innovation, doing a better job with our clients, better service and so on. And marketing our market brand better. But overall, I think it’s good news.
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