Coverage: Coke buys stake in BodyArmor sports drink

Coca-Cola Co. is acquiring a minority stake in BodyArmor, the sports drink company backed by former NBA superstar Kobe Bryant, as it tries to up its competition against market leader Gatorade.

Zlati Meyer of USA Today had the news:

Financial terms of the agreement were not disclosed Tuesday. As a result of the deal, BodyArmor will have access to the Coca-Cola’s huge bottling system.

Although the Atlanta-based soda giant already competes in the $7.9 billion U.S. sports-drink category with its Powerade brand, the giant in the sector is Gatorade, owned by rival PepsiCo, according to the market research company Euromonitor International. Gatorade has 74.7 percent of the U.S. market, compared to Powerade’s 17.5 percent and BodyArmor’s 3 percent.

PepsiCo acquired Gatorade – developed for football players at the University of Florida in 1965 and named for the school’s mascot – in 2001 with the purchase of its parent company, Quaker Oats. Coca-Cola introduced Powerade in 1988.

“In a fast-moving and dynamic industry, and during a time of unprecedented change at Coca-Cola, we’re challenging the status quo and bringing innovative, boundary-less thinking to our strategic relationships to ensure we are offering the products consumers want,” Coca-Cola North America president Jim Dinkins said in a statement.

Danielle Wiener-Bronner of CNNMoney.com reported that Gatorade’s sales have fallen recently:

Gatorade has controlled the nearly $8 billion US sports drink industry for decades, grabbing about 75% of the market, according to research firm Euromonitor International. But sales ticked down 0.5% last year to $5.9 billion in the United States, according to Euromonitor. And the brand lost market share.

That may be because people are seeking healthier options. Gatorade recently launched a sugar-free drinkfor the first time in its history.

Body Armor has a line of low-calorie drinks that use natural sweeteners, natural flavors and coconut water. They come in flavors like peach mango, blueberry pomegranate and orange citrus. It also makes water with electrolytes and vitamins like potassium and calcium.

The company’s strategy is an “example of the way entrepreneurs are really capitalizing on consumer trends and getting the attention of big players,” Stanford said.

Hallie Dietrick of Fortune.com reported that Coke is now BodyArmor’s second-largest investor:

Coca-Cola is about to become the second-biggest investor in BodyArmor, the sports drink marketed as a healthier alternative to Gatorade and Powerade.

Its acquisition of a minority stake would leave open the possibility of Coca-Cola taking full ownership later, and could give BodyArmor access to Coca-Cola’s distribution network. The move is seen as a bid by Coca-Cola to challenge Pepsi’s stranglehold on the sports drink market. Gatorade, which is owned by Pepsi, currently occupies three-quarters of the market. Coca-Cola’s Powerade has the second-largest market share, and BodyArmor is third.

BodyArmor was launched in 2011 and has enjoyed the backing of athletes, including Kobe Bryant and Andrew Luck, and major players in the drinks industry. It was founded by Mike Repole, who was also behind Glaceau’s vitaminwater and smartwater. Keurig Dr. Pepper was the second-largest investor until Coca-Cola’s buy in. Because it is coconut-water based, includes potassium and vitamins, and doesn’t use high fructose corn syrup or artificial flavors, it is marketed as a healthier alternative to the major sports drinks.