We’re always keeping our eyes peeled for aggressive marketing, signs of brand domination and more importantly, changeovers in established hierarchies. Watching the NCAA tournament we were presented with a big one.
Many who have been glued to their TV’s at home, (or the office) during the NCAA tournament have seen what I’m talking about. Behind every bench and at almost every commercial break, the image of Vitaminwater has been clear and unsubtle.
But it’s a coveted spot once held by PepsiCo’s (NYSE: PEP) Gatorade.
Gatorade and sports (professional or college) has been a synonymous relationship almost since Gatorade rolled out. And after its purchase by Pepsi in 2001, the power of one of the world’s largest soft drink companies pushed it everywhere.
But as the soda wars proved, brand dominance is tenuous at best. And the stakes are high.
It’s why Coca-Cola (Nasdaq: COKE) paid a premium for Vitaminwater to compete. In fact, it was criticized over its $4.1 billion acquisition cost of Glaceau – at almost 21 times earnings – as many analysts believe they overpaid for a niche brand.
But with product placements like the NCAA tournament, those costs look appropriate considering the turf won. The mental image to millions that athletes drink Vitaminwater will not be lost on parents and aspiring athletes of tomorrow.
If Coke can keep that dominance up, Glaceau’s purchase price will look like a bargain.
As the cola wars have quieted down, the sports drink/ flavored water wars have begun. Both sides have their weapons, and Pepsi is by no means beaten. It’s Propel and SoBe brands have been quietly gaining steam as well.
Who knows how long Coke will continue to keep its top spot. But like the NCAA tournament, the winner changes year by year – this year’s “Cinderella story” is next years “easy pickings.”
Companies mentioned in this article: PEP and COKE.
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