The enemy of the enemy is the friend, and when Coca-Cola completely took bodyarmor, the gap between them and Pepsi's Gatorade in the sports drink field was greatly reduced.
On November 1, 2021, Coca-Cola announced the acquisition of a 70% stake in Bodyarmor for $5.6 billion in cash. After the acquisition, bodyarmor will operate as a Coca-Cola brand and will continue to use Coca-Cola's filling system.
It was the largest acquisition Coca-Cola had ever made. The previous record was spent $5.1 billion in 2018 to acquire the chain coffee brand Costa.
Back in 2018, Coca-Cola acquired a 15 percent stake in Bodyarmor, but did not disclose the relevant financial terms. In addition, in exchange for the right to use the Coca-Cola filling system, bodyarmor gave another 15% stake. According to the Wall Street Journal, Bodyarmor was valued at $2 billion at the time. With this acquisition, the valuation of bodyarmor has reached $8 billion, which is equivalent to a fourfold increase in three years.
After the first acquisition was completed, Jim Dinkins, President of Coca-Cola North America, spoke to the Wall Street Journal and said more shares could be acquired in the future, depending on Bodyarmor's sales and other performance data.
Obviously, the development of bodyarmor has made Coca-Cola very satisfied. According to The Acquisition Announcement by Coca-Cola, Bodyarmor is now the second-largest sports drink brand in the United States, and retail revenue is expected to exceed $1.4 billion this year, up nearly 50% year-on-year.
Interestingly, bodyarmor co-founder Mike Repole and Coca-Cola can be described as a continuation of the frontier.
Lebray's glacéau was also acquired by Coca-Cola.
Prior to bodyarmor' founding, Raybrey built the vitamin water brand glacéau vitamin water, which was acquired by Coca-Cola in 2007 for $4.1 billion — notably hip-hop artist 50 cent, who was also an early shareholder and spokesperson, and the acquisition put him in the account for $100 million. Many NBA stars are his fans, and it can even be said that NBA stars endorse this trend, thanks to 50 cent.
After selling Coolles, Rebray stayed away from the beverage market until he discovered new business opportunities four years later. In a 2016 interview with Fox Business, Rebray recalled its original intention of founding Bodyarmor: "Consumers want to drink better, healthier sports drinks, but the industry is stagnant, and this is the business opportunity." ”
One of the big things about stagnation is that the recipe and taste have not changed.
Gatorade's recipe was introduced in 1965.
On the other hand, Rebraer wants to see more competition in the sports drink industry. "Gatorade is an iconic brand, but for me, it's weird to have a brand that grew up with me 35 years ago continue to grow up with my kids." Rebray told Fortune.
In 2011, Bodyarmor was born, co-founded by Rebray and Lance Collins. For them, the primary goal of Bodyarmor after its creation was to live more than two years. In a 2015 interview with Fortune, Rebraer said that based on past experience, many sports drink brands would be crushed by Gatorade within two years. (Extended reading: Coca-Cola plus bodyarmor, sports drink triptural becomes a double male competition)
Bodyarmor was not defeated and its market share increased rapidly. According to Euromonitor Consulting, between 2015 and 2020, bodyarmor's market share increased from 0.5% to 9.3%, while Coca-Cola's other major sports drink powerade (endorsed by LeBron James), the market share fell from 18.2% to 13.7%, and Gatorade's market share also fell from 76.6% to 67.7%.
In order to survive under the attack of the two behemoths of Gatorade and Powerade, in addition to the excellent quality of the product, the model of bodyarmor exchanging the company's equity for star endorsement is also a key factor. In this development model, Los Angeles Lakers star Kobe Bryant is a rather critical link.
The announcement of Coca-Cola's acquisition of bodyarmor was chosen to be issued at 8:24 a.m., apparently as a nod to Bryant, as numbers 8 and 24 were the two jersey numbers Kobe had worn. In an interview with CBS, Rebray was even more blunt: "Without Kobe Bryant's vision and belief support, BodyArmor would not have the success it is today." "Kobe's importance to bodyarmor is evident.
In 2013, Bryant spent $6 million to take a 10 percent stake in Bodyarmor, becoming the company's third-largest shareholder, ahead of NBA star James Harden, MLB star Mike Trout and NFL star Rob Gronkowski, whose annual sales were even less than $6 million at the time.
The Wall Street Journal estimates that the Coca-Cola acquisition will generate $400 million in revenue for Kobe Bryant (the stake has been diluted to about 5% with financing), which is even higher than Kobe's salary throughout his career ($323 million).
After the official announcement of the Coca-Cola acquisition, Harden paid tribute to Bryant through social media: "We did it! ”
As the creative director of Bodyarmor, Bryant has been deeply involved in the shooting of brand promotional films. According to Michael Fedele, bodyarmor's vice president of marketing, Bryant was involved in shooting an advertising video in 2018, and Harden was also present at the time. In addition to filming, Bryant and Harden often communicate privately, and the conversation is half an hour. In the 2017-18 season, Harden also won the first regular season MVP of his career.
Contemporary speakers also have the opportunity to communicate privately with Kobe Bryant, which has become an invisible benefit for Bodyarmor and a magic weapon for them to attract other stars. "Bryant is willing to endorse Bodyarmor, a brand we've talked about before. So being a part of Bodyarmor means a lot to me. Atlanta Hawks star Trae Young said in a 2021 interview with British business magazine The Drum.
Kobe's deep involvement not only helps bodyarmor's publicity, but also helps them win the trust of other stars and celebrities. This is far more important for a startup than a temporary revenue ups and downs.
Coconut water and natural flavors, colors, and sweeteners are bodyarmor's main selling points.
In addition to Kobe Bryant, all-natural is another trump card for bodyarmor. Bodyarmor highlights the use of natural flavors and sweeteners, the absence of artificial colors, and sometimes points the finger at Gatorade. They hope to capture the hearts of their parents through such propaganda. "Our products use natural flavors and sweeteners, which are good ingredients and parents can buy them with confidence." Federer told U.S. business media inc.
This publicity model has also forced other sports drink brands to make adjustments. In 2016, PepsiCo launched an organic version of Gatorade without artificial colors and flavors, and in 2018, it also launched gatorade zero, the brand's first sugar-free sports drink.
On the other hand, the emergence of energy drinks containing caffeine or other additives has made the sports drink market more and more crowded, and new beverage categories such as alkaline water and protein water will also take away some consumers of energy drinks. To grab the attention of more young consumers, Bodyarmor launched ba sports nutrition in February 2021, with the addition of natural caffeine as a selling point.
In An interview with CNBC in August 2020, Rebraer said: "We are either going bankrupt or we are the boss of the sports drink market in 2025." Although after the harsh words, Rebray also added that the probability of this being done may be less than 1%, but it can at least show the determination of bodyarmor.
Now that it has been acquired by Coca-Cola, the probability of bodyarmor bankruptcy is not high, so it can only find a way to storm the throne of the largest sports drink in the United States in the remaining three years or so.
According to Euromonitor Consulting, Gatorade still accounts for 68% of the U.S. sports drink market after the acquisition, while Coca-Cola controls about 23% of the market share through bodyarmor and powerade.
From "three-legged standing" to "double dominance", the US sports drink market has entered a new stage, will Gatorade be pulled down this time?
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