Coca-Cola has exercised its right to acquire full control over BodyArmor in its latest attempt to wrestle complete dominance of the sports beverage industry away from Gatorade, a PepsiCo subsidiary. Coca-Cola, which acquired a 30% stake in BodyArmor in 2018, has acquired the remaining 70% of the company for $5.6 billion, establishing the brand’s total value at $8 billion. When completed, this acquisition will be the largest in the history of Coca-Cola.
BodyArmor has grown dramatically since Coca-Cola first invested in the company in 2018, when BodyArmor was only valued at $2 billion. Since the acquisition, the young enterprise has more than tripled its retail sales, spurred by investments and advertisements featuring many high-profile athletes, including Mike Trout, Mookie Betts, and James Harden. As a healthy alternative to more established competitors, these connections and advertisements have seen BodyArmor vault past Powerade, another Coca-Cola brand, as the second-largest sports drink company in the United States.
This acquisition comes during a relatively aggressive growth period for Coca-Cola. In recent years, Coca-Cola has acquired and invested in multiple companies, such as Costa Coffee, to diversify its portfolio. Coca-Cola has been on the hunt for companies they describe as “explorers,” which are brands that are “emerging, disrupting and gaining traction with consumers.” Once identified, Coca-Cola prefers to make only modest investments until they recognize the company as a challenger to the industry leader, at which point they move to gain full control over the burgeoning enterprise. Coca-Cola’s acquisition of BodyArmor fits this mold perfectly.
Despite Coca-Cola’s clear confidence in BodyArmor, it is unclear if BodyArmor can make a dent in Gatorade’s entrenched market dominance. Backed by decades of pedigree, familiarity, and loyalty, Gatorade has dominated the United States’ sports drink market for decades. Even after BodyArmor’s rise, Euromonitor estimates that Gatorade constitutes 68% of the sports drink market. Gatorade’s position is roughly triple the position occupied by Powerade and BodyArmor combined, a mere 23%.
Coca-Cola clearly sees the acquisition of BodyArmor as a means to combat Gatorade more effectively. Coca-Cola’s decision to invest unprecedented billions in this acquisition likely indicates a shift away from their prior focus on Powerade and toward the development of the BodyArmor brand. The question is, will BodyArmor be successful where Powerade has failed? The founder and current chairman of BodyArmor, Mike Repole, certainly thinks it’s feasible by as soon as 2025, though he concedes that it is extremely unlikely. If BodyArmor and Coca-Cola hope to achieve the incredibly ambitious goal of slaying the Goliath of Gatorade, the plan most likely to succeed would probably mimic Nike’s path to unseating Converse as the king of athletic sneakers.
Prior to the mid-1980s, Converse was the undisputed king of athletic sneakers. From the NBA’s founding through the 1980s, seemingly every game played in the NBA was an advertisement for Converse, America’s leading sneaker brand. The league’s greatest stars—including Wilt Chamberlain, Bill Russell, Jerry West, Magic Johnson, and Larry Bird—all wore and endorsed Converse sneakers. This all changed when Michael Jordan signed with Nike. Almost poetically, Michael Jordan, a Converse-wearer in college, signed with Nike and began the end of Converse’s stranglehold on the athletic sneaker industry. Nike threw the full weight of their advertising muscle behind the young Chicago Bulls’ star and, riding his overwhelming popularity, the company soon saw themselves soaring over their once rival Converse. Nike’s endorsements and innovative products, like their responsive Air add-ins and leather uppers, proved to be too much for Converse to compete with, and the symbolic conclusion saw Nike officially acquire Converse in 2003.
If BodyArmor is to successfully achieve its goal of becoming the number one sports drink seller in the United States, it should look to Nike’s model. Fortunately for BodyArmor, they have already positioned themselves well to do just that. The catalog of professional athletes that already represent the brand contains some of the most popular players within their respective sports. Furthermore, with Coca-Cola’s substantial investment, they should be better able to leverage Coca-Cola’s extensive distribution network to expand their reach and elevate their brand to a higher level. If there ever was a time, it would be now.
If BodyArmor follows Repole’s timeline, Coca-Cola will see the value of their investment sooner rather than later. It is unlikely that BodyArmor will achieve the lofty goal of becoming the number one sports drink in the United States, due to Gatorade’s staggering market share and brand familiarity. However, a Nike-like revolution led by high-profile brand ambassadors and innovative products could position them well. Coca-Cola has deemed BodyArmor worth an extremely costly investment—we shall soon see if it’s the brand that unseats Gatorade, the king of sports drinks.