GlaxoSmithKline is taking on the big guns of the soft drinks industry by launching Lucozade in the United States, challenging the might of PepsiCo’s Gatorade and Coca-Cola’s Powerade sports drinks.
John Clarke, president of consumer healthcare at GSK, said yesterday that the company was in advanced talks with a prospective distributor to sell the energy drink in America.
GSK is eager to push Lucozade, which made £376 million in sales last year, into more markets as it increases its focus on consumer healthcare. It recently launched the drink in China through a distribution deal with Uni-President China Holdings and is also considering launches in Mexico and Brazil.
But while GSK is already the dominant player in the sports drinks market in Britain, with about a 50 per cent share, the dominance of PepsiCo and Coca-Cola in the US presents a huge challenge. Gatorade is by far the biggest sports drink in America, with $2.6 billion in sales last year. In comparison, Power-ade made $654 million.
Pepsi and Coca-Cola are famously adept at defending their soft drinks from newcomers, as Sir Richard Branson, who launched the ill-fated Virgin Cola in 1994, can attest. Moreover, both the leading brands are already fighting to protect their market share in America, which has been threatened by the downturn in consumer spending.
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Gatorade has embarked on one of the biggest campaigns of its 40-year history, launching new versions for before, during and after workouts and rebranding its bottles with a single G instead of the full name. Powerade, meanwhile, has launched a lowersugar version called Powerade Play and a zero-calorie Powerade Zero.
Mr Clarke said that GlaxoSmithKline was “fairly advanced” in its discussions — “[the United States] is the biggest nutritional healthcare market in the world; if you are globalising, you have to have it in your portfolio” — but a company spokesman said that an announcement was not imminent.
To make its task even more difficult, the company will also face competition from Red Bull, which has been America’s bestselling energy drink since its introduction in the mid-1990s. In the past two years, it has been passed in volume terms by Monster Energy, which is owned by Hansen.
More than four billion cans of Red Bull were consumed last year, making it the world’s biggest-selling energy drink. The privately owned Austrian company, which launched the drink in its home market in 1987, recorded sales of €3.27 billion (£2.7 billion) in 2009.
Red Bull sales in Britain grew by 1.3 per cent last year to £181.5 million. Last year Red Bull Energy Shots — a concentrated version of the drink — went on sale first in the US, followed by European markets.
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GSK yesterday bought the rights to commercialise Xerclear, the cold sore cream made by the Swedish company Medivir, for non-prescription use. GSK, which already owns the Zovirax cold sore cream, will pay about €3 million in milestone payments and will give a slice of sales to Medivir.
Consumer healthcare has been more important at the company since Andrew Witty became chief executive two years ago as it tries to minimise the effects of patents expiring on some of its most lucrative medicines.
Keeping active
• The latest global push of Lucozade will bring it even further from its Newcastle-upon-Tyne origins
• The drink was invented in 1927 by a pharmacist who was intent on giving ailing children a glucose boost
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• Its rebranding, from a drink for the sick to a pick-me-up for the sporty, is the stuff of marketing textbook legend. After more than half a century with a rather unglamorous bottle wrapped in cellophane, an advertising campaign featuring Daley Thompson — then the Olympic decathlon champion and destined to retain his title in Los Angeles in 1984 — training to the sound of Iron Maiden’s Phantom of the Opera, and a repackaging to make it look more like a sports drink, its public image was successfully changed
• Lucozade itself is now available in a bewildering array of varieties, including Alert Plus, a small “mental energy shot”; three flavours of the original Lucozade, now known as Lucozade Energy; and a Lucozade Sport range targeted at athletes