Gatorade Water is now a thing. What could this spell for Propel?

#Gatorade has formally planted its flag in the hyper competitive water business, marking a significant shift for the sports “fuel” giant. Will the move take them too far from their roots, or could it be the game-changer they've been seeking?

The decision to anchor on unflavored alkaline water “infused with electrolytes” stems from Gatorade's perception of evolving consumer demands. Gatorade’s internal research revealed a growing preference for premium unflavored water among athletes, driven by the growing desire for quicker recovery and improved gut health. Based on Upland’s research on Gen Z, we see this as a sound move. We predict sugar-based sports drinks will face significant reputation challenges in the next five years given the generation’s escalating avoidance of sugar.

What’s the size of the prize? The enhanced water industry, for starters, is projected to reach $9.6B by 2030. Private equity, too, is pouring money into the space, with a notable $67M investment into marketing darling Liquid Death, $37M into flavored lemon water brand Lemon Perfect, and $10 million into lava-filtered alkaline water brand Hawai’i Volcanic.

Ok, sound value proposition and growing market…what could go wrong?

Gatorade's entry into “enhanced” water marks a significant departure from its historical stance where it sought to differentiate itself from its sibling brand #Propel (also from 百事 ). Gatorade holds a reputation as the “scientifically-backed” drink of competitive athletes, contrasting with Propel's positioning as “enhanced water” for daily fitness. However, by framing the new product as "an all-day hydration option for all active people," Gatorade has effectively pushed into Propel’s sweet spot. While this strategy entails potential risks such as brand equity dilution and market share cannibalization of Propel, it also opens avenues for further innovation within the broader wellness market.

Will the gamble pay out?

As Michael Del Pozzo, president of Gatorade, asserted when the SKU was first announced: “in most cases, the 30 million consumers today that are not reaching for enhanced water are doing so because it’s not from a brand that they know and trust.” By incorporating the G logo and orange bolt, Del Pozzo thinks Gatorade can use its legacy to disrupt the functional water category and evolve Gatorade in the process.

But the big question remains, how will Propel adapt to avoid cannibalization? And, perhaps more importantly, will consumers embrace Gatorade as a water company? Only time will tell.

We at UPLAND are currently obsessing over all things healthy food and beverage, don’t hesitate to reach out if you want to discover what other big movements and opportunities we see in this space.

Sources: https://www.cnn.com/2023/09/07/business/gatorade-water-launch/index.html Enhanced Water Market Size Share Growth and Trends Report 2023-2030 (datamintelligence.com) Gatorade Water hits shelves nationwide | Beverage Industry (bevindustry.com)

?Credit to Anna W. for research and co-piloting this article