"Things are not always as they seem" is an often heard saying and quite appropriate with regard to the sports nutrition market. At first blush this segment of the industry is basking in the sun. Frost & Sullivan released a report titled, "U.S. Sports and Fitness Nutrition Markets," which shows the industry generated almost $2 billion in revenues last year and projects the number to increase to $4.5 billion by 2007. Nutrition Business Journal reported that growth in sports supplements is 80% more than the rate for total supplements and the growth of sports nutrition functional foods is 60% more than all functional foods.

However, to gain more insight into the sports nutrition market, perhaps we should harken to the wisdom of Nicolaus Copernicus, noted 15th century mathematician, physician, theologian and astronomer. It was Copernicus who confounded the scientific establishment of his time through his discovery that the earth revolved around the sun (not the other way around). Forever known as the Copernican Revolution, this insight demonstrates the value of alternative, challenging thinking and analysis.

Copernican thinking leads us to "peel the onion" and gain some perspective on what is really driving growth in the sports nutrition segment, if it is in fact "sports" nutrition that consumers are seeking.


'Actives' vs. 'Athletes'
Consumers are driving the market. And the consumers that are fueling the growth of nutritional products are not athletes. Products designed for athletes have given way to those targeting actives. Sports supplements have a slowing growth rate while bars, beverages and meal replacements are increasing in sales velocity. Sports nutrition and its functional food offspring appeal directly to the core concerns of "Baby Boomers" and "Generation Xers." Looking at product attributes and retail sales of sports nutrition products it becomes apparent that growth is coming from "fitness enthusiasts" and "wellness" consumers. Approximately 56% of Americans are "fitness enthusiasts" while only 1% of the U.S. population has consumed a sports supplement.

Consumers as a whole are looking for lifestyle solutions. At the leading edge of sports nutrition products is a performance utility that can be adapted to a broader consumer segment than athletes. Gatorade was scientifically designed to increase hydration and enhance the performance of the University of Florida Gators football team. It is the broader application of the product's functional benefit that has made Gatorade a market leader with U.S. sales exceeding $1.5 billion.


The Power Bar Paradigm
This point has far reaching effects in the sports nutrition segment. A case study of Power Bar clearly illustrates the detriment of not applying a Copernican insight as a brand gains traction in the market. By most outside accounts, Power Bar is in an enviable position as it holds the number one slot in energy and nutrition bars. Yet Power Bar is a rapidly declining brand with an eroded market position. In only six months Power Bar went from a 30% sub category share to 27% and in a closer look at the IRI 4-week F/D/M sales, Power Bar is trending down to a 23% share. While Power Bar is credited as the "first mover" in the sports nutrition bar category, it has since been a follower with every product introduced.

The reasons for Power Bar's demise are very straightforward. Power Bar management failed to innovate, arrogantly believing consumers preferred its brand. In fact, consumers had little other choice, as the category was so new. Consumers were quick to adopt the convenience and perceived performance-enhancing benefits (validated through athletes), in spite of the poor taste and mouthfeel. But second generation innovators perfected taste and built their brands on a more utilitarian platform, differentiating their brands and providing more consumer relevance (Figure 1). The Power Bar brand neglected the insights of cross impact analysis (how trends interact); otherwise it would have found that the trends for "grab-n-go" products, "wellness" and "food positives" would yield a greater and more sustainable market.


Enhancement Vs. Performance
It is easy to see how faulty logic leads many down a misguided path, particularly in the sports nutrition segment. Looking to rationalize their position, sports nutrition companies cite very real and compelling statistics. Thirty-three million Americans (nearly one in nine) belong to a health club, a 60% increase since 1990; 60 million Americans exercise on a regular basis; nutrition bars are nearly a $1 billion category; the sports nutrition category is growing at a rate of up to 26%. But in reality the growth is almost exclusively driven by non-sports usage. Nutrition bars are growing because they are a convenient delivery system and a healthy alternative to other snacks. Americans are exercising more but are not seeking the same level of athletic utility in their products as true athletes. Protein as a sub-category has been boosted more by the interest in low carbohydrate/high protein diets (such as Atkins) and the increasing awareness of the health benefits of soy.

Consumers are seeking "lifestyle antidotes" or solutions to their daily lifestyle needs rather than performance products. In a 1999 DataMonitor study, energy enhancement was the number one benefit sought by consumers. While it is easy to connect "energy" with "sports," the real utility sought by consumers has less to do with performance than with an antidote to stress and time deprivation. It is interesting to note that a nutritional product designed for a wellness utility should not be marketed as a drug because in the eyes of consumers, drugs are for sick people. The bottom line is, sports nutrition is more about enhancement than performance.


Winning At Sports Nutrition
As the Power Bar case study reveals, a company that too closely defines its products by sports performance and cannot apply a broader consumer utility will limit its potential. Consumers have definitive expectations and perceptions and successful products will build from these, not try to change them.

One of the successful strategies in sports nutrition is the application of third party validation. Every nutritional product must be validated by a gatekeeper. The higher the risk of harm, the more the reliance on medical validation (doctors, scientists, academics, regulators, etc.). This is especially true for products designed for a therapeutic application such as OTC remedies. When the utility is more enhancement or wellness oriented (and hence a lower risk of harm), the more reliant upon third-party endorsement the product becomes (advocacy groups, media, friends, athletes, etc.). Both Gatorade and Power Bar were successful in leveraging athletes to validate the science (and utility) behind their products.

When home run slugger Mark McGuire announced his use of creatine, a sports nutrition supplement, sales immediately soared. While creatine may have some scientific validation in muscle building, its real utility is with athletes. However, what fitness enthusiast seeking a shortcut wouldn't welcome more muscle mass. The weak link with creatine is that it is a commodity ingredient, not a branded product.

If our insights are correct, products that can offer a broad base of consumers an enhancement utility without much sacrifice (taste, convenience, etc.) will be in the lead. But these products must also provide the consumer two key points. The successful products will be relevant and differentiated. Relevance refers to the perceived utility of the product: Does the consumer recognize the need for and benefits of the product? Differentiation refers to the unique value of the product and the benefits provided. Power Bar was very successful because it was able to clearly differentiate its product from candy bars and define its performance relevance to athletes in comparison to the carbo-loading meals commonly used at the time.

The sports nutrition market is currently buoyed by the following product sub-categories: bars, protein, creatine, recovery and energy. Our suspicion is that bars will continue to be a robust category with the greatest gains coming from those brands offering a broader utility. Some products will enjoy great success entering a market that is very narrowly defined, providing specific lifestyle solutions, but this segmentation strategy is best applied by a brand seeking to create a "product portfolio" (i.e., Clif launching Luna to target women).

Additionally, the low carbohydrate diet will likely wane in popularity and be replaced by another nutrition movement, but protein will always be a key component in the American diet. Creatine has had its day and scientific advances will likely bring offerings that deliver a proprietary and unique alternative for the masses to build mass.

As the joint health category gets cluttered and commoditized, we see more application-specific products appearing in the recovery segment. Combined with the aging of the fitness generation, you can count on the need for alternatives to analgesics. The greatest growth will come in the energy segment. Contrary to the current regulatory pressures against ephedra, we do not see it going away. In fact, ephedra-based products for general energy needs will expand as will other stimulants and adaptagens.

As far as product forms, the market will seek some of these relevant and differentiated benefits integrated into delivery forms such as beverage, bars and confections. Technological advances in food science are making their way into the market at breakneck speed. From beverage standards such as Gatorade to the advanced hydration technology in Penta or the energy benefits of Red Bull, beverages are an open playing field for sports nutrition. There have been some recent energy gum products entering the market and creatine "poppers" (chewable liquid caps). Following the success of Viactiv calcium chews, several companies have introduced glucosamine chews, as well as glucosamine bars.


About the author:
Peter Leighton is a founding partner of Copernican Associates, a business consultancy based in Lafayette, CA with clients in pharmaceuticals, packaged goods, nutrition and biotechnology. He can be reached at 925-944-9945 or at peter@copernicanassociates.com.