The Coca-Cola Company

Author:Rayna Bailey, Robert Schnakenberg, Kevin Teague, Candice Mancini, Cynthia Tokumitsu

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1 Coca-Cola Plaza

Atlanta, Georgia 30313-2499


Telephone: (404) 676-2121

Fax: (404) 676-6792

Web site:


Although the Coca-Cola Company was well known for its carbonated-soft-drink brands, by the late 1980s a different type of beverage was attracting consumers and capturing a rapidly increasing market share: isotonic beverages, or sports drinks. In 1992 Coca-Cola jumped into the sports-drink arena with the introduction of PowerAde. Despite its marketing and promotion efforts, the brand struggled to gain a foothold with consumers. Five years after its launch in 1997, PowerAde had only managed to reach a 15.1 percent market share, far behind powerhouse brand Gatorade, which had a 73 percent share. In 1999 PowerAde eked out just $77 million in sales, while Gatorade claimed $631 million. Adding to Coca-Cola's woes was that, under pressure from its investors, in 2000 the company withdrew its $16 billion bid to acquire Gatorade and its parent Quaker Oats Company, only to see its competitor PepsiCo land the deal for $13.4 billion.

To boost Coca-Cola's struggling PowerAde brand, in 2000 ad agency McCann-Erickson New York created a new marketing campaign that used humorous television spots to send the message that athletes drank PowerAde before, during, and after the game or competition. The campaign featured athletes at all levels, from high school kids to pros, going through pregame rituals and superstitions as they prepared for competition. Each spot included the voice-over "Whatever you do to get up for the game, stay up," and the tagline "Keep playing." A specific budget for the campaign was unavailable, but a report in Adweek noted that Coca-Cola's media spending for PowerAde through November 2000 was $31.2 million.

The television spots were well received by consumers and the advertising industry. One spot, "Bus Ride," featuring high school basketball players on the team bus getting mentally pumped up for their looming game, earned an Adweek magazine Best Spot honor. But the campaign failed to increase PowerAde sales as planned. In 2001 Coca-Cola hired Wieden+Kennedy, a Portland, Oregon-based agency, to create a new campaign for PowerAde. The campaign had the tagline "Very real power," and it featured the Atlanta Falcons football team's quarterback Michael Vick in a series of television spots.


Since its introduction in 1886 of a sparkling beverage sold at drugstore soda fountains, Coca-Cola was best known as a producer of carbonated soft drinks. Its brands included the flagship and eponymously named Coca-Cola (Coke) as well as a list of products added to the company's lines over the years, such as Sprite and Tab, added in the 1960s, and Mr. Pibb, added in the 1970s.

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In 1967 isotonic drinks—sports beverages that were designed specifically for athletes to replace body fluids and some nutrients lost while exercising—appeared on the market with the introduction of Gatorade. The product quickly grew in popularity with elite athletes and eventually gained acceptance among health-conscious consumers who turned to Gatorade as the beverage of choice to recharge after exercising or playing sports. By 1989 some 40 different sports drinks were on the market, including PepsiCo's Mountain Dew Sport. Sales of sports drinks increased 17 percent from 1988 to 1989, with Gatorade earning the lion's share of the sales. Sports-drink sales hit the $500 million mark in 1990 and were growing quickly. At that time Coca-Cola introduced its own sports drink, a powder that the consumer mixed with water. The product, Max, failed to advance past test markets, but in 1992 Coca-Cola began selling PowerAde with greater success. The company supported the new product's launch with an ad campaign that included displays, posters, and television spots. In a Time magazine article Coca-Cola touted PowerAde as "a drink made for athletes and anyone who works up a sweat."

Winning market share from sports-drink giant Gatorade proved difficult for Coca-Cola's PowerAde. Sales of isotonic drinks hit $801 million in 1999, up 12.8 percent from $712 million in 1998, but PowerAde had captured just $77 million in sales in 1999, versus Gatorade's $631 million. By 2000 Coca-Cola was reevaluating its struggling PowerAde brand and was considering acquisition of Gatorade and the brand's parent, Quaker Oats Company. When it became known that Coca-Cola was considering a $16 billion stock offer that would involve exchanging 1.9 Coke shares for each share of Quaker Oats, investors fled Coca-Cola, sending its stock into a downward spiral. Coca-Cola executives abandoned the plan to buy Quaker Oats. Competitor PepsiCo acquired the company and its Gatorade brand in 2000 for $13.4 billion. With Gatorade under the banner of Coca-Cola's top competitor, PepsiCo, the company redirected its energies toward revamping and promoting PowerAde.


Isotonic sports drinks first targeted serious athletes. But as the beverages became more familiar, athletes of all ages and at all skill levels were increasingly choosing them over carbonated beverages or drinks such as iced tea or plain water to recharge after a workout or competition. According to Coca-Cola, from the time of its introduction PowerAde's target audience had always been young men in the 18- to 30-year-old demographic. A Coca-Cola spokesman said that the company's consistent youth-focused target market was maintained with the "Keep Playing" marketing campaign. He added, however, that in addition to targeting PowerAde's traditional audience, the campaign also began shifting some of the focus to younger consumers and introduced a multiethnic approach to promoting the product.


Coca-Cola and ESPN/ABC entered a marketing partnership in 2000 that would give PowerAde, Coke's sports-drink brand, an increased presence on ESPN, a cable network owned by ABC. As part of the deal, "PowerAde Break" segments would be included during ESPN's popular show SportsCenter, and PowerAde was also featured during select ABC network sports programming. In addition to traditional television advertising, the deal provided an opportunity for Coke and ESPN/ABC to partner on nontraditional marketing efforts such as promoting their brands in high schools and movie theaters.


PepsiCo joined the sports-drink market in 1994 with its new beverage All Sport. Although the brand, like other sports drinks, targeted athletes of all ages and ability levels, in 1998 the All Sport brand was expanded to include Body Quencher. The new product specifically targeted kids 6 to 15 years old and was offered in kid-friendly flavors such as Fruit Punch, Cherry Slam, and Raspberry Burst. But the All Sport brand failed to attract consumers, and in 1999 its sales slipped 22.4 percent to $31.1 million, or just 3.7 percent of the sports-drink market. By 2000 PepsiCo was reevaluating its role in the sports-drink arena, and the company was considering purchasing Quaker Oats Company and its Gatorade sports-drink brand. Quaker Oats rejected the initial offering of $14 billion that PepsiCo made in November 2000, but one month later Quaker Oats accepted PepsiCo's $13.4 billion offer that included assuming $750 million in debt. PepsiCo's addition of Gatorade to its product mix led the Federal Trade Commission to question whether it violated antitrust regulations, so in 2001 the company sold its All Sport sports-drink brands to Monarch Beverage Company, an Atlanta, Georgia-based company with a drink lineup that included Dad's

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Root Beer and Moxie, a cola-style carbonated beverage popular in America's New England states.

Gatorade, the original sports beverage, was the market leader in 1999, holding a 79 percent share of the sports-drink market with $631 million in sales. The beverage was developed in 1965 by the University of Florida to help its football players finish an entire game under the hot, humid conditions typical in Florida. The new drink was named Gatorade as a tribute to the school's mascot, the Gators, and in 1967 an agreement was reached with Stokely-Van Camp, Inc., to produce Gatorade. At the time Stokely-Van Camp produced canned vegetables and was best known for its canned pork and beans. During the 1967 Orange Bowl the sports drink burst onto the national scene with the Gators' victory over Georgia Tech; Georgia Tech's coach attributed the win in part to the Florida team's use of Gatorade during the game. Quaker Oats Company purchased Stokely-Van Camp, which included Gatorade, in 1983. Gatorade got another national boost in 1987 when Super Bowl fans watching the game saw New York Giants players pour a full cooler of Gatorade over their coach's head in celebration. In 1991 Gatorade signed on basketball legend Michael Jordan as spokesman and launched its "Be Like Mike" campaign. In...

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