Sports Nutritional Market Executive Summary

Sports Nutritional Market Executive Summary

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Sports Nutritional Category – Executive Summary

Over the past 5 years the market has seen an enormous increase in the sports nutritional product category. These products range from energy drinks and nutritional bars to diet products and nutritional supplements, and each day new products are being introduced into the market. With nutrition and taste being two of the most important aspects of the product, creating and maintaining products in this category is simplified. This has become one of the most exciting new markets not only because it is the beginning of a new wave of a product category but because the market and consumer base is large and ready to be tapped into. The market is increasingly becoming more and more energetic, not because of the energy drinks, but because it is expanding into a new realm in the consumer's life. This is a multibillion-dollar a year industry that at the present time has relatively few competitors, leaving opportunity for new products and brands to enter the market. By assessing how the market looks today, the potential to enter the market, and the outlook of the market in the near future this summary intends to relay appropriate information about this category that may help in product planning.

To begin, only recently has the sports nutritional category become such a strong player in the market. Probably the most recognizable and longest standing product in this category is Gatorade. The nutritional drink has come to be the staple sports nutritional drink on the market. However, within the past five years or so, Gatorade's position as the number one sports nutritional drink has been threatened. Today there are a multitude of companies producing the products in this category. This category of products has become a huge market. As of 2003, the sports nutritional product category topped over $3.1 billion dollars. That is an 11% increase from the $2.9 billion dollars in 2002. Even more exciting is the five-year overall category growth rate. Between the years 1999 and 2003 the market for sports nutritional products has annually grown at a rate of 19% which is very optimistic of the category.

Even more enticing then the annual figures are the percentages of consumers that use sports nutritional products on a regular basis. According to the fall 2003 Simmons Market Research Bureau Data 36.

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6% of all adults use sports drinks. That's over one-third of the entire adult population. In the same study, males were found even more likely to consume sports drinks with 45.6% of all male adults using sports drinks – almost half! Women on average were found to consume less sports drinks (28.4% of women consume sports drinks) but consumed more energy/diet snacks than men; 15.6% versus 10% (women and men respectively). This information reflects that there is already a huge market of consumers in this category and that there is even more room to expand. The increase in sales and consumers is an indication not only of increased consumption, but also of the new producers and product categories that are entering the market.

Today the market is in transition as new companies are attempting to take away shelf space from larger competitors. The major marketers in this category include: PepsiCo (Gatorade), Coca-Cola (PowerAde), Nestlé (PowerBar), and Kraft Foods (Balance Bar). The balance of market share is extremely weighted to PepsiCo which still controls a majority of the market (56.0% as of 2003). Do not let this information sound intimidating because there are also a lot of private companies that have done extremely well in this category. Red Bull energy drinks and Clif Bar are two extremely successful and private companies that have caused the major conglomerates to reevaluate their strategies. Also, there is the supplement category that is mostly dominated by Metabolife which is almost completely alone in a huge market that is waiting to be tapped.

Although the market may seem to be controlled by a very select few conglomerates, there is plenty of opportunity to expand into the sports nutritional market. A promising characteristic of consumers in this category is that many of them tend to prefer smaller, trendier, and ‘cooler' companies. There are lot of these consumers that would much rather give their money to an independent/private company than to a large corporation. Companies such as Red Bull and Odwalla have come to be some of the strongest brands in the sports nutritional category simply by being ‘renegade' brands. Because the parity of products that are in this market, success requires building a strong brand around the product. There are not too many variables with which to work (mostly taste and nutrition) which can cause some companies distress. This however is not a flaw but a benefit of the category because it does allow for a strong brand building that can create strong consumer loyalty.

After discussing the make-up of the consumers of sports nutritional products and the organization of the marketers and companies in this category, it is time to look to the future of sports nutritional products as an industry. It seems as if each day more and more people are searching for ways in which to live healthier and improved lives. This can be seen in the increase of consumption of health-related nutritional products. As new studies reveal important health benefits of certain foods (i.e. soy, ginseng, calcium) there are increased outlets for integrating these foods into sports nutritional products. Women are becoming ever more watchful of their diets and health which can be seen through their higher consumption of health and energy bars. Also, because these products are intended to be healthy and safe to the consumer, marketing many sports nutritional products to children will be less risky than if a company were to be marketing candy bars. Perhaps the largest group of consumers that has, until only very recently, been ignored is the Hispanic population. With a population of nearly 37 million and almost no companies taking a stand to market to them, the Hispanic population is a potentially huge market just waiting to be targeted to.

To culminate, the sports nutritional market is in a state of flux as new and exciting companies begin to enter the market. Consumers of sports nutritional products are becoming increasingly loyal in building their brand preferences so it is crucial that any company wishing to get into this market do so with a powerful statement behind their brand. Because the variation involved in these products is relatively low, consumer loyalty is essential to survive in this market. However, marketing to the appropriate consumer group with a strong message and reliable product will prove success in this industry. This is the beginning of a new era in sports nutritional products that hopefully will see the rise of fresh and exciting companies ready to tap into the abundant market.

Information compiled from:
Sports Nutritional Products. Packaged Facts Co. May 2004.
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