DEPT. OF PROGNOSTICATION
We hate to say we told you so… but it looks like the functional
beverage explosion is starting to eat across categories.
Coke’s vitaminwater, for example, poses the chief
market-share threat to Pepsi’s Gatorade, according to a
Deutsche Bank analyst. But Gatorade’s G2 may help the
hydration drink giant fend off competitors.
Deutsche Bank analyst Marc Greenberg said Gatorade
has become increasingly reliant on “heavy users” while
more casual sports drink consumers drifted to other
brands – particularly vitaminwater.
Greenberg said during a Thursday afternoon conference
call that Gatorade is still dominant, and retailers still
consider it a “cornerstone brand,” but the brand’s growth
lagged behind that of the category in all four quarters
of 2007. Gatorade even saw their volume shrink in the
second quarter of last year.
Gatorade, he said, needs to find “ways to leverage the
brand in new ways” and “new occasions and ways to
broaden in a broadening category.”
G2 – Gatorade’s lower-calorie fortified water –could
help. February supermarket scanner data showed that
G2 helped Pepsi rally its share of the sports drink market
and grow its volume by 11.6 percent over their volume
at the same time last year, according to Morgan Stanley
Analyst Bill Pecoriello.
However, Greenberg had lower hopes for Gatorade’s
Tiger line extension, built on a partnership with Tiger
Woods. The analyst said he not only feared that aiming a
product directly at golfers could divide Gatorade’s product
line, but could also divide the hydration drink segment.
WORST OF TIMES AT COTT
Poor Brent Willis. The erstwhile CEO of Cott Corp. never really had the chance
to earn his salary at the private-label drink maker. Not to say he didn’t MAKE
a nice salary – $3.6 million for about a half-year’s work 2006, according to the
Canadian Broadcasting Corp. – but earn it? If you look at what’s been happening
at Cott lately, not so much.
And the company decided that Willis wasn’t quite worth the investment, either.
He was shown the door in the wake of a disastrous 2007 and an even worse
start of the year, in which the company lost shelf space and merchandising support
at key account Wal-Mart.
By the time Willis was replaced by director David Gibbons, Cott shares were
worth about 1/10th of their 52-week high of $19.70. The company has struggled
in the wake of consumer tastes shifting away from its bread-and-butter CSDs.
While it moved to sign up UFC star Rampage Jackson (pictured) for
an energy drink and attempted to market tea and water, the optimistic view of
Willis – he preached the company’s international tendrils – couldn’t reverse the
gloom and doom that has dogged Cott for years.
TRADING UP SLOWS DOWN
While spirits, wine and beer continue to grow, that
rate of growth is dropping, according to a study by the
Beverage Information Group.
Wine and spirits, which have led a decade-long
overall increase in beverage alcohol consumption,
only went up 4 percent and 3.2 percent, respectively,
in 2007 – way off previous year advances. Beer also
grew, but at 1.2 percent.
The report blamed the weakening U.S. economy
as the major contributor. That slowdown appeared
to be weakening on-premise sales more than off-premise,
but if the country continues to spiral toward a
recession, even the lower-markup off-premise channels
may be affected.
ANHEUSER-BUSCH
ENTERS THE OCTAGON
Talk about moving into the sweet spot. Anheuser-
Busch has signed on as the exclusive
beer sponsor for the Ultimate Fighting Championship.
The move KOs previous sponsor,
Mickey’s Malt Liquor.
Bud Light's three-year deal with Zuffa,
LLC, owner of the UFC brand, moves the
beer into a fast-growing spectator sport.
"UFC has developed a huge following in
recent years and is wildly popular with the
21-34 year old fans we want to reach," said
Tony Ponturo, vice president, global media
and sports marketing, Anheuser-Busch, Inc.
"The number of people attending live events,
buying the pay-per-views and talking about
UFC around the water cooler continues to
grow. It's just a great place for us to be."
But it’s also one of a pair of big deals that
are buoying Mixed Martial Arts as a sport –
competitor league EliteXC will be showing
featured fights during prime time on CBS
television. While the deals are unrelated and
the leagues compete, the overall effect is to
raise the profile of MMA.
"Landing Anheuser-Busch and Bud Light
is huge for us, our fighters and especially
our fans," said Dana White, UFC president.
"We've got the number one selling beer in
the world and one of the top marketers in all
of sports as our sponsor. If our TV ratings,
pay-per-view buys and venue sell-outs weren't
enough, this definitely cements UFC as a major
player in sports business."