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With the introduction of Powerade Option, announced this week, Coca-Cola hopes to challenge PepsiCo's hold on the sports drink market. If Coca-Cola's claim that Option will create new sports drink occasions throughout the day proves true, the product could provide the first real challenge to Gatorade Propel. Broadening the appeal of the sports drink in this way, however, is unlikely to be such an easy task.

Coca-Cola's Powerade Option is the latest addition to its Powerade sports drinks line. The new beverage is a new light version of regular Powerade and, like the regular version, provides electrolytes and B-complex vitamins. Option has two carbohydrates and ten calories per serving - 80% fewer calories than Gatorade.

PepsiCo's Gatorade has long led the sports drink category, accounting for two-thirds of the US market in value terms. Pepsi's Propel Fitness Water, a Gatorade brand launched in the US in 2002, has been joined by other enhanced waters such as Coca-Cola's Dasani Nutriwater, but none have truly challenged Propel's cachet with sports and fitness enthusiasts and those aspiring to an active lifestyle. Coca-Cola is hoping Option will put a dent in Propel's stronghold.

Coca-Cola plans to launch Option with a broad marketing campaign targeting active consumers. The challenge here lies in convincing these consumers that Option provides, firstly, a caloric reduction compared to traditional sports drinks and, secondly, a more appealing hydrating agent than enhanced waters. To do this, Coca-Cola must clarify the need state it seeks to address. For example, Starbucks' Frappuccino targets the indulgent pick-me-up occasion, while Gatorade addresses the high activity occasion. In contrast, Coca-Cola at present merely suggests that active consumers will turn to Option "for any occasion throughout the day" requiring replenishment or hydration.

Positioning Option as expanding occasions for functional drinks is a thoughtful strategy but one perhaps too vague for this competitive market. Functional beverages, which include sports drinks, energy drinks, and enhanced waters, among others, form an attractive market, and one that is forecast to be worth US$6.4bn by 2009. But, to challenge PepsiCo's hegemony in the sports drinks market, Coca-Cola must identify and satisfy a unique need state.

To find out more about the soft drinks market in the USA, click here


Sectors: Soft drinks, Water

Companies: PepsiCo

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