A Thirst for Competition

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IN A FOUR-CITY FAST BREAK, THE Coca-Cola Co. has made the first move, flooding thousands of stores in the Southern U.S. with cans and bottles, displays and posters, backed by a TV ad campaign, to introduce its newest product, PowerAde. It's a drink made for athletes and, in the words of a Coke spokesman, "anyone who works up a sweat." At PepsiCo, Inc., plans are well under way for a summer rollout of its new drink for jocks and those who aspire to be: All Sport. Other large companies are entering the fray with similar products -- Dr Pepper/Seven-Up with a drink called Nautilus, and A&W Brands, Inc., with a player yet to be named.

What they're all worked up about is the U.S. sports-drink market, a billion- dollar retail segment that has been growing about 10% annually. It will take world-class contenders like these to unseat the defending champion, Quaker Oats Co.'s Gatorade, which accounts for some 90% of nationwide sales. , Like Kleenex in the tissue market and Xerox among copiers, Gatorade has become the generic word for sports drinks.

Simply defined, sports drinks replenish the fluid, minerals and energy lost during exercise. Long familiar to athletes, Gatorade has become highly visible to sports fans, in the form of the ubiquitous large green-and-orange vats of the drink in dugouts or near team benches at major league events. Hardly a postgame interview passes without a shot of the MVP taking a sip from a paper cup labeled "Gatorade," which is, after all, the official sports drink of major league baseball, the N.F.L., the N.B.A. and the National Hockey League. "Gatorade defines the category," says Jesse Meyers, publisher of Beverage Digest, an industry trade publication based in Old Greenwich, Conn. "There is not a beverage category in any country in the world that is so dominated by one producer."

With that kind of clout, Gatorade executives seem unperturbed by the new entries in their field. They note that 50 to 60 brands of competing sports drinks have been introduced -- and have disappeared -- during the past decade. "Competition has been great for us," says Peggy Dyer, Gatorade's vice president of marketing. "Competition makes us better."

Still, Gatorade cannot afford to be complacent; it will be hard-pressed to match the distribution reach of Coke and Pepsi. Besides its grocery- and convenience-store business, for example, Coke has 350,000 vending-machine and fountain outlets in the U.S. alone. And the vending machines, the company says, are perfect "sampling points" for customers to try a new product like PowerAde.

Ironically, Gatorade may be responsible for spawning one of its new heavyweight competitors. With an eye on expansion, especially overseas, Gatorade approached Coca-Cola last January about using Coke's distribution system. But the talks broke off in April, and the next thing Gatorade knew, Coke had pledged a "major commitment" to sports drinks.