Plus, Exclusive Interview With New Gatorade GM Michael Del Pozzo.
Says, ‘There’s Still So Much Runway for Us.’
PepsiCo’s Gatorade, the fourth-largest liquid refreshment beverage brand in the US, is preparing to launch a caffeinated energy drink formulated specifically for athletes. The product, called Fast Twitch, could rightfully be described as a cross between an energy drink and a sports drink. However, Gatorade will position Fast Twitch within the energy category on store shelves and in marketing, Gatorade Performance Portfolio President and GM Michael Del Pozzo told BD in an exclusive interview. Fast Twitch, headed for national US distribution next year, will target consumers who settle for existing carbonated energy drinks before a workout or avoid them altogether because of unwanted ingredients, he said. “It’s how Gatorade does energy,” Del Pozzo said of Fast Twitch. “The energy category is this $16 billion category in which nobody has really focused on sports. And we know there’s something like 35 million athletes who don’t engage in caffeinated energy today. We think Fast Twitch taps into a new segment. That’s the goal, getting to this new segment.”
DETAILS. “Fast Twitch” is a reference to human muscle fibers that contract quickly during high-intensity exercise. The product is uncarbonated, contains no sugar, and has no artificial colors or flavors. It is sweetened with sucralose and contains five to 10 calories per 12-oz bottle. Each bottle includes 200mg of caffeine. (A 16-oz can of Monster Energy contains 160mg of caffeine.) Electrolyte levels will be in keeping with Gatorade sports drinks. The PET bottle includes a resealable cap. The drink will be priced at a premium to Gatorade. Flavors at launch will be Strawberry Watermelon, Glacier Freeze, Orange, Strawberry Lemonade, Cool Blue, and Tropical Mango. The bottle graphics will include the words, “From the Makers of,” set above a Gatorade “G” logo that includes the brand’s lightning bolt icon (as seen on PepsiCo’s Propel fitness water).
ENERGY AISLE. At retail, Fast Twitch will be positioned within the energy set. “You wouldn’t see it in the Gatorade section,” Del Pozzo said. “You’d see this over in this new energy space that we are creating within an energy subsection.” He added that the product will “come to life” on the perimeter of the store as well. Del Pozzo said Gatorade anticipates “high incrementality” to the core sports drink business as Gatorade consumers are pulled into the energy aisle. “We’ll watch really closely out of the gate and make sure that’s what happens and probably iterate as we need to,” he said.
DISTRIBUTION. Gatorade will seed Fast Twitch with National Football League players during the current NFL season before the drink becomes available at retail nationally in early February, around the time of the Super Bowl. “Our expectation is this is a big bet launch,” Del Pozzo said. “We would scale out similar to how you would see us scale one of our big launches on Gatorade or across our PepsiCo business. We anticipate scaling pretty quickly.” In May, PepsiCo renewed its multi-year sponsorship with the NFL covering Pepsi, Gatorade, and Frito-Lay. The product formulation incorporated input from the NFL and sports performance experts, Del Pozzo said. “We found that a lot of athletes weren’t touching caffeine but wanted to because they know it can ignite both mental and physical performance,” Del Pozzo said. “Or they were engaging in a product that wasn’t designed to be associated with sports.”
PERSPECTIVE. Traditional energy drink brands have long found it difficult to win wide acceptance on the sidelines of major professional sport leagues due to high sugar content, carbonation, and other ingredients. Fast Twitch may now be able to jump that hurdle with a sports drink-like offering that includes the Gatorade imprimatur and that removes the barriers for athletes to high-caffeine drinks.
ANALYST VIEW. In a report this morning, Consumer Edge Analyst Brett Cooper said Fast Twitch “speaks to a further increase in competition in both energy drinks and sports drinks.” He said fitness energy drinks haven’t depressed sales of core energy drinks, adding “at some point that has to change.” Cooper also said, “the success of Gatorade could make a turnaround of BodyArmor and Coke’s sports drink portfolio more challenging.” He added: “Net, the Gatorade extension has significant implications for multiple players in the industry.”
SPORTS CAFFEINE. PepsiCo already markets a Fast Twitch caffeinated pre-workout powdered supplement under Cytosport, which PepsiCo acquired in 2019 to get protein shake brand Muscle Milk. The new Fast Twitch ready-to-drink beverage will hit the consumer market two years after BodyArmor launched its first caffeinated sports drink called Edge. That product followed Gatorade’s caffeinated variant of Bolt24, an “all-day” hydration beverage. Bolt24 (with 75mg of caffeine per 16.9-oz bottle) has since been discontinued to make room for Gatorade Fit, launched in February of this year. Meanwhile, Cliff Bar markets an energy chew containing caffeine for athletes. Gatorade’s sports chews are not offered
in a caffeinated version. According to BD data for the first half of 2022 at US retail, the Gatorade portfolio grew +9.8% by dollars on +15.0% higher pricing and volume that declined -5.2%.
NO CELSIUS CONFLICT. Meanwhile, PepsiCo has been working to enhance its position
in energy drinks. The company recently agreed to pay $550 million to distribute Celsius nationally as it also works to turnaround Rockstar Energy, acquired in 2020. A distribution deal with Bang Energy fell apart and ended, which opened the door for the Celsius deal. A PepsiCo spokeswoman confirmed that Fast Twitch presents no contractual conflicts with Celsius.
NEW LEADERSHIP. Del Pozzo started his more than 20-year PepsiCo career in Chicago as a Gatorade account executive, shortly after PepsiCo took on the brand after the company’s acquisition of Quaker Oats. In July of this year, Del Pozzo took over as President and GM for the Gatorade Performance Portfolio, succeeding Brett O’Brien, who became CMO of Frito-Lay’s US unit. Del Pozzo was most recently SVP of sales and chief customer officer for Frito-Lay North America. Two goals since taking over Gatorade have been to increase collaboration between functions ranging from marketing to manufacturing, and to reconnect with Gatorade’s roots, Del Pozzo told BD. In a few weeks, he will spend time with the family of Dr. Robert Cade, who led the University of Florida scientific team that invented Gatorade in the late-1960s. “We could have all the innovation in the world, and we could have great consumer rationale and science behind it,” he said. “If we’re not adding capacity to support that. If we’re not building infrastructure to support that. If we don’t have the right selling tools, it doesn’t really matter. So, for us, connecting all those parts in a streamlined, integrated way is a big opportunity to stay ahead of our competition.”
INNOVATION FOCUS. Gatorade, which holds about a 70 share of the US sports drink market, has faced increasing competition from brands such as BodyArmor and a host of startups such as Electrolit (see page TK) and BioSteel now looking to replicate BodyArmor’s success as a challenger brand. Del Pozzo said innovation will be key to fending off the challenge. “There’s still so much runway for us, even just in the innovation products we’ve launched,” he said, citing the recently launched Gatorlyte as an example. “Gatorade Fit is another one that we think we’ve gotten right.” He said the next step for Gatorade Fit is to scale the brand further, especially in small-store and up-and-down-the-street accounts. Meanwhile, Gatorlyte’s all commodity volume (ACV) at retail has reached more than 70%. “We’re still not where we need to be,” Del Pozzo said. When asked whether the brand’s growth has been concentrated in Hispanic markets and city centers, Del Pozzo said progress started there and has expanded. “What we’ve seen is that the product has done quite well everywhere as we scale it,” he said. “It’s a unique product.” Gatorade also will look to add flavors to both Gatorade Fit and Gatorlyte, he said.
GATORADE CAPACITY. When asked about persistent Gatorade product supply shortages since 2020, Del Pozzo said, “We have improved our supply position versus a year ago and continue to add capacity consistent with what we need to grow in the category.”
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