PepsiCo Adding Some Latin Flavor to Boost Gatorade
Gatorade is thirsting after the U.S. Latino market.
To quench its thirst, the sports drink division of PepsiCo Inc. is introducing a new line of Gatorade brand drinks into the highly competitive beverage market, which is being sliced into ever smaller segments.
With its new Xtremo line, PepsiCo is looking to broaden Gatorade sales among the nation’s 35million Latinos, who make up about 12% of Gatorade’s market. Gatorade dominates the U.S. sports-drink market, controlling 80% of it, and ended 2001 with $2billion in sales.
“The beverage market has gotten increasingly competitive, and growth has slowed because it is so competitive,” said industry consultant Gary Hemphill, senior vice president of Beverage Marketing Corp. in New York.
“There are so many products that companies are looking for any advantage they can get, particularly within different demographic groups, and Hispanics are definitely among those groups,” he said.
What Gatorade is doing is not unique--or expensive.
To increase sales, many beverage makers are simply taking existing brands and marketing them to different ethnic groups by repackaging products to include Spanish and English labeling, or by boosting advertising in ethnic markets.
In the case of Xtremo, PepsiCo is adding three Latin-inspired flavors--mango, tropical and citrico--and bilingual labels. The product’s ad campaign will include spots on Spanish-language television.
“In general [ethnic markets] are a high-growth area, and they’re always looking to find where lightning will strike,” said Greg Prince, executive editor of Beverage World magazine.
Prince pointed to Coca-Cola Co.’s recent reintroduction in the United States of Fanta, a citrus-flavored soft drink brand popular in Mexico.
Coca-Cola initially introduced the Fanta line in six markets, including Southern California, Texas and Arizona, in 2001 after a 20-year absence from U.S. store shelves. Today, Fanta is available in almost every U.S. market; last year it boosted the division’s sales by $17million, Fanta spokeswoman Maria Perez said.
Hemphill said PepsiCo has done a good job of segmenting its Gatorade products, such as introducing a so-called Fierce line for Generation X consumers and a Frost line that is popular among women and by continuing to market its core Gatorade sports drink to active males.
Gatorade officials would not discuss projected sales for Xtremo, but the Frost and Fierce lines had sales of more than $100 million their first year on the market, according to the company. Xtremo sales are forecast to be considerably less because it will be sold only in 32-ounce bottles, and distribution will be limited.
PepsiCo also is finding success marketing its core soft drink brands to ethnic groups.
Flavored sodas such as Sierra Mist, with ads in Spanish in certain markets, and Mountain Dew’s Code Red, with a strong presence in African American markets, are helping to boost sales, the company said.
Last year, Colombian singer Shakira was seen shaking her hips to a bilingual tune with a Pepsi in hand. In English, she sang of “The joy of Pepsi,” while in Spanish she told TV audiences “Goza el sabor de Pepsi.”
