Inside BodyArmor, Coke’s new $5.6bn brand
Coca-Cola’s largest-ever acquisition may seem like a curiosity to the casual observer. However, the BodyArmor brand has been a decade in the making. It has been methodically refined by founder and chief exec Mike Repole, who saw opportunity in a sports drink category that others feared. Here’s what you need to know about Coke’s newest big brand.
Coke’s new big player in the sports beverage game
Coca-Cola has anted up $5.6bn for a big bet that the BodyArmor brand will continue to steal share from Gatorade and grow the once-stagnant sports drink category.
The deal is working its way through Federal Trade Commission approvals, but the beverage giant has made its intentions clear all along. Coke took a 15% minority stake in 2018, valued at a reported $300m, and is now completing the purchase of BodyArmor in its entirety.
Under the terms of the deal, co-founder and chairman Mike Repole and president Brett Hastie will stay on at Coke to execute the brand’s 2022 plan and work on its vision and strategy for 2023 and beyond. Repole “will also collaborate on the company’s still beverages portfolio, including marketing, packaging and innovation strategies across multiple brands,” per a statement from Coke.
“Coke is smart in keeping leadership intact,” says Gary Hemphill, managing director at Beverage Marketing Corp. “Too often the beverage companies buy brands and key people don’t come along. Then the people in charge of managing the brand don’t always know how or what the keys to success are. This gives BodyArmor an excellent shot at continuing its growth.”
BodyArmor is currently growing at about 50% and driving more than $1.4bn in retail sales, per Coca-Cola. In the first half of the year, BodyArmor had locked up 16% of US dollars in the category, passing Coke’s Powerade, which owns 13%. However, Gatorade still maintains 68% of the market, per Beverage Digest data.
Strengthening the BodyArmor formula
Coca-Cola is no stranger to BodyArmor co-founder Repole. He was a key part of the leadership team that sold Glaceau Vitaminwater to Coke for $4.1bn in 2007.
“The lesson is never bet against Mike Repole,” says Ken Sadowksy, veteran beverage analyst and US advisor to the global investment group Verlinvest. “In the earliest days [BodyArmor] certainly wasn’t the same brand it is today. Repole continued to refine it and make it ready for prime time.”
Gerry Khermouch, editor of Beverage Market Insights, was one of the first to sample BodyArmor and recalls its initial less-than-desirable taste profile. “It had everything but the kitchen sink when it came to functional ingredients. [Co-founder] Lance [Collins] was like, ‘What could be better? I have all of the bases covered.’ He made the mistake of informing me it had 38 ingredients, so I adjusted for that. I said it was pretty good considering there were 38 disgusting ingredients.”
The brand “had a flavor problem and a price problem and couldn’t communicate what was in there anyway,” says Khermouch. “Repole took a pragmatic view of taking a handful of ingredients that people understood and dispensed with the rest.” BodyArmor is comprised of electrolytes, coconut water and vitamins. It is high in potassium and low in sodium. Comparatively, Gatorade is high in sodium and has artificial colors.
Repole, who wasn’t available at press time, is fond of saying: “Why should our kids be drinking the same product that was invented in 1965, that we were drinking in the eighties? It doesn’t make sense to me.”
The key to the current product’s success is “it is not too far ahead of the consumer,” says Sadowsky, who has invested in Vitaminwater, Vita Coco and many other beverages. “A lot of people in my shoes scouting for the next big thing make the mistake of looking too far ahead. This is an evolutionary take on Gatorade – not revolutionary. The consumer gets confused if you try and do too much. You can’t spend enough money on educating if you’re too far ahead of the consumer.”
Calling in Kobe Bryant and the all-pro team
The BodyArmor team had the opportunity of learning from Vitaminwater. One of the pages of the Vitaminwater playbook was getting athletes to invest in and endorse the product. BodyArmor got none other than Kobe Bryant on its board. Repole has credited Bryant as being a key driver behind the brand.
It also has James Harden, Trae Young and a host of other players who also starred in its $25m summer ad campaign titled ‘One more.’ Leveraging athletes “definitely came from Repole’s days at Vitaminwater,” says Sadowsky. “At one point, they had 52 athletes around the country activated in really intelligent ways.”
Positioning the brand as a younger, better-for-you solution for the athlete of today paid dividends, says Hemphill. “Very few people have the experience of having done it before. BodyArmor used that experience to develop a reason for being and existing ... Most other categories have two or three strong brands. There was room for another player in sports drinks – it just needed to be someone who approached it right. So many others tried and failed.”
Repole told The Drum previously that he viewed building the brand as a “triathalon, not a sprint.” He also said that he knew it was going to be “a billion dollar or bust brand.”
It’s not just BodyArmor that has seen success. The entire sports drink category was up 19% for the first half of the year in terms of US retail dollars, per Beverage Digest. “The adage that high tides raise all boats is definitely true in this case,” says Duane Stanford, editor of Beverage Digest. This rapid growth has also attracted a number of other small players hoping to win big including BioSteel, G.O.A.T. Fuel and Hoist.
Each has their fair shot to make it, but “all you need to know is 97% of beverage startups fail, so for lightning to strike twice is pretty amazing,” says Sadowsky. “Kudos to Repole and the team.”