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Dr Pepper Benefits from BodyArmor Market Positioning

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BodyArmor is marketed as a premium sports drink brand. Its product tagline reads: “Upgrade Your Sports Drink.” BodyArmor is also backed by some big names from the sports and athletics space, including Kobe Bryan, Andrew Luck, Mike Trout, James Harden, and Richard Sherman.

As indicated in the above chart, the sports drink market is dominated by the brands under the Gatorade and Powerade lines. Gatorade is owned by PepsiCo (PEP), and Powerade is owned by The Coca-Cola Company (KO). The number one brand in the sports category, Gatorade Perform, generated sales of $1.6 billion in US convenience stores in 2014.

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But BodyArmor is still in its early growth stage and is expected to rise steadily in popularity. According to BodyArmor co-founder Mike Repole, speaking to the Wall Street JournalBodyArmor posted retail sales of $30 million in 2014 and has registered a growth of 180% in year-to-date sales in 2015.

Dr Pepper Snapple Group (DPS), which purchased an 11.7% stake inBodyArmor in August 2015, plans to expand the distribution of BodyArmor even further. Dr Pepper Snapple started distributing BodyArmor as a third-party allied brand in 2013.

The company is part of the Consumer Staples Select Sector SPDR Fund (XLP). It also makes up over 2% of the portfolio holdings of the First Trust Consumer Staples AlphaDEX Fund (FXG), as well as 0.7% of the iShares Dow Jones US Consumer Goods (IYK).

Is BodyArmor better?

BodyArmor claims to be a healthier choice than its sports drink counterparts because its drinks do not contain caffeine, have no added preservatives, and are gluten-free as well as nut-free. Infused with coconut water, vitamins, and electrolytes, BodyArmor is currently available in seven natural flavors:

  • Fruit Punch
  • Orange Mango
  • Strawberry Banana
  • Tropical Punch
  • Lemon Lime
  • Mixed Berry
  • Grape

Sports and energy drinks have often been criticized for having artificial sweeteners and other harmful ingredients. In 2014, following an online petition by a teenager, Gatorade removed brominated vegetable oil from all its sports drinks. BodyArmor’s image as a healthier beverage should benefit Dr Pepper Snapple as consumers are becoming increasingly conscious of the ingredients in their drinks.

In the next part of this series, we’ll explore a few of the other beverage categories that Dr Pepper Snapple could expand into.

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