Despite Coca-Cola’s Largest-Yet Brand Acquisition, PepsiCo Outpaces Competitor 3-to-1 in Sports Drink Category

Coca-Cola just made a major move to catch up to frontrunner PepsiCo in the competitive sports drink category, but the move is far from enough to eliminate its rival’s wide lead. Coca-Cola announced Monday (Nov. 1) that is acquiring Whitestone, New York-based energy drink company Bodyarmor for $5.6 billion. The deal values the company at $8 billion total, with the beverage giant already owning 30% of the company, per a Reuters report, having initially acquired a 15% stake in the company in 2018.

This deal marks the largest brand acquisition in the company’s history, according to MSNBC, and it comes after Bodyarmor took over as the second-highest selling sports drink, unseating Coca-Cola’s Powerade. Even with this acquisition, however, Coca-Cola will remain well behind PepsiCo, which holds the lion’s share of the category with the success of its Gatorade brand.

Bodyarmor was founded in 2010, raising millions throughout the early- to mid-2010s. In 2013, Kobe Bryant acquired a significant stake in the company, raising the brand’s profile.

The Context

Sports drink sales have been strong for Coca-Cola, but the company has been losing share. In an earnings report shared on Wednesday (Oct. 27), the company announced that sports drink sales grew 5% in the third quarter of 2021, surpassing 2019 volume, but growing significantly less than many of the brand’s other beverage categories.

On a call discussing these results, an analyst pressed the company on these energy drinks’ performance, highlighting the fact that emerging brands, especially those supplemented with functional ingredients such as caffeine, have been gaining share from Coca-Cola’s own offerings and those with which the company works.

“There have been in the U.S. some recent competitive entries which seem to be both expanding the category and taking some share,” conceded the company’s CEO and Chairman James Quincey on a call with analysts.

By the Numbers

According to Euromonitor data from 2020, Gatorade’s share of the total sports drink market exceeded two-thirds (68%), while at the time of the report Coca-Cola retained 14% of the category with Powerade, and Bodyarmor accounted for 9%. If Gatorade’s share has remained around the same, and if the latter two’s cumulative market share has held roughly steady, then PepsiCo continues to outpace Coca-Cola three-to-one in the category, even after this historic acquisition.