2024 Mass Market Sports & Hydration Product Report

Sports and Hydration drinks are enjoying both a growth spurt and a Renaissance. From a growth perspective, tech and research company Skyquest estimates that the sports drink market is $26.82 billion in size and growing at more than 4% each year. They also cite the effects of COVID-19, as well as consumers' growing enthusiasm towards health and fitness activities at that time, which has had a startling and unprecedented impact on the sports drink market, creating a surge in demand of nearly 8% in 2019. 

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While these growth drivers are real and irrefutable, we believe perhaps the most significant impact comes from something intangible that cannot be measured as easily - how the mass market views and uses sports drinks.

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When most people think of sports drinks, they think of Gatorade. And why wouldn't they? The giant has a considerable market share with over $7 billion in annual sales. When Gatorade was founded way back in 1965, it was created to help replace lost nutrients (electrolytes) when elite athletes, in this case, the Florida Gators college football team, needed a better hydration solution. For decades, their marketing has shown athletes from all types of sports playing hard, sweating, and using Gatorade to rehydrate. However, several trends are starting to influence and morph how even Gatorade views the marketplace and targets its customers.

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The latest trends show that many sports and hydration drinks are being chosen for consumption by those outside their intended target athlete group, often as an everyday beverage option, for a variety of reasons:

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- Consumers like the taste of sports and hydration drinks
- Consumers do not typically want or like plain water due

  to its lack of flavor
- Consumers believe sports and hydration drinks are
  a better source of hydration than water
- Consumers find other options such as juice too sweet
  and soda too bloating
- Consumers believe sports and hydration drinks are healthy
- Consumers want "functional" drinks that deliver benefits
  beyond just quenching thirst
- Due to poor or incomplete labeling, Consumers are unaware of
  some sports and hydration drinks' detrimental ingredients and
  their potential adverse health impact
- Consumers are influenced heavily by social media or athlete
  endorsements, as well as "lifestyle" oriented products

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Many companies have already started to take advantage of these

trends, labeling their product as sports or hydration drinks, even

though they may contain limited functional benefits (such as a lack

of electrolytes), include questionable ingredients, and lean more

toward the soft drink category in general. We believe this trend, or

‘casualization’ of the sports drink market, might be a precursor to

an emerging, yet-to-be-named, new drink category targeted to the

following broad range of needs/activities:

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- Those seeking a daily/everyday hydration solution
- Non-sport physical activities that may cause you to sweat
  (I.e., gardening)
- The unique metabolism and needs of kids and teens
- People undertaking recreational or lower-impact activities
  (I.e., gaming)
- People looking for a new, tasty, refreshing, functional,
  daily soft drink
- Those recovering from drinking excessive amounts of alcohol
- Seniors seeking regular hydration

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While all of the above consumers represent large groups of constituents, the one with the most significant potential mass-market impact that can drive rapid growth is "People looking for a new, tasty, refreshing, functional, daily soft drink."

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In a recent article in the beverage industry trade publication BevNET, there were numerous references to this evolving trend of consuming sports drinks as regular soft drinks (with added health benefits). Drink company principals refer to the trend as "the casualization of the sports drink category" and "...folks consuming these beverages are doing it in just normal consumption occasions". They continue by saying, "They may not be playing basketball. It's a bit more general health and wellness-focused". And admit that their sports drinks are "...living in the leisure space", with the challenge being for the public to see "...how this subset fits into the evolving understanding of sports drinks."

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In another popular trade publication, Beverage Industry Magazine, recent articles have picked up on these same trends, stating, "Sports drinks are starting to be infiltrated by emerging marketing that focuses on hydration, not simply point-of-sweat," and when talking about new entries in the market that more closely resemble soft drinks than sports drinks, add "These aren’t really sports drinks in a traditional sense, but they’re very much kind of playing into similar consumption occasions as traditional sports drinks."

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A tangible example of the trend lies in the recent success of the brand Prime and its namesake hydration drink. In just over a year, it has become the 6th largest brand in the sports drink category (over $1.2 billion in sales this year). But given their audience, is it really being consumed like a sports drink? Although Prime's primary target market is the athlete or fitness enthusiast, its social media presence shows that its audience goes way beyond the typical sports drink user. Prime's founder's massive social media following primarily focuses on teens, many of whom don't even play sports but are into more casual social activities such as gaming. Even though they use the product more as a soft drink than a sports drink, they have been very vocal about the hydration beverage and have aggressively supported the sports drink, driving its viral growth.

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Other companies have started following Prime's lead, going after the broader market with a functional hydration drink to replace soft drinks. For example, another new market entry, Sap's, is a canned beverage offering zero sugar, adaptogens, and electrolytes. Upon visiting the Sap's website, you first see the phrase "a drink for sports & everything else." They continue to say they are "ready to fuel your workouts, late nights, and overall wellness."

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Another parallel trend to consider is the use of sports drinks as hangover cures. The electrolytes and other functional ingredients (not to mention their rehydration benefits in general) help people recover from consuming too much alcohol. Popular sports/hydration drinks like Liquid I.V. have shifted their marketing efforts online, in print, in social media, and on TV to show twenty-something consumers having fun, partying, and drinking Liquid I.V. In fact, during a recent visit to their website, we were hard pressed to find any images or content related to athletes or anyone sweating. However, they speak a great deal about hydration and how soda, coffee, alcohol, and other diuretic drinks can dehydrate the body.

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This all leaves us with some burning questions. Will a new category of beverages emerge? Will sports drinks and soft drink categories become synonymous? While it is unclear where all of this will end up, one thing is clear, consumers want the functional benefits of sports drinks to enjoy at any time, not just when they sweat or participate in physical activity. The market is moving quickly, and social media is a key driver. We expect to see more focus on this evolution in the coming months, with the beverage companies that can take advantage of the trends being the big winners.