Nude Olympian Joins Andy Murray to Sell Hot Sports Drink: Health
Olympian Rebecca Romero, who in 2008 posed nude on her bicycle in an advertisement for Coca-Cola Co. (KO)’s Powerade, signed on to promote Science in Sport gels in March, after years of endorsing the gels by using them on her own. The British gold and silver medalist has said the products have been giving her an athletic edge for more than a decade. Olympic tennis hopeful Andy Murray also regularly uses the company’s gels and asked the Windsor, England-based company for a supply before the Australian Open in January.
It’s the latest example of informal backing from athletes that creates priceless buzz for small companies, enabling them to compete in the high-stakes sports nutrition market against players ten times their size.
“I don’t think the big brands can do elite sports like we can,” Chief Executive Officer Stephen Moon, a former GlaxoSmithKline Plc (GSK) executive, said in an interview. “They don’t have the credibility. You can’t unravel our standing with elite athletes just by spending the cash. We have a small but powerful niche brand.”
Moon knows a thing or two about brand building. Lucozade, the product that Moon oversaw at London-based Glaxo before joining Provexis in 2003, is the U.K.’s biggest-selling sports drink, according to market research company Mintel International.
Science in Sport may never get that big or even close. Provexis is dwarfed by the market leader, PepsiCo Inc. (PEP)’s Gatorade. Science in Sport, acquired by Provexis in June, had sales of 5 million pounds ($8 million) last year for its gels, powders, drinks and bars, compared with about $13.8 billion for Gatorade, which dominates the industry with 33 percent of the market.
Still, the sports and energy drink market is the fastest- growing in the beverage industry, rising 14 percent to $41.5 billion in 2011 from $36.3 billion in 2010, according to Euromonitor International. That means that even small players may have room to break in if they are skilled enough.
Provexis has a plan. Like its much larger competitors, the company is counting on snaring its own piece of the 100 million pounds in extra revenue the Olympics are expected to bring in, as an influx of visitors boosts visibility of local brands, according to Datamonitor.
“You’ve got a month’s worth of free advertising for the sports and sports-related industries,” said Vincent Mitchell, professor of consumer marketing at Cass Business School in London. “You’re likely to see gym subscriptions go up, activity-type holidays go up, sports drinks, athletic shoes, it will be a mass effect.”
Moon has another important asset: his one-time boss at Glaxo, the company’s former consumer-health chief John Clarke, joined the board last month and will tap his industry contacts to help develop marketing strategy.
The company’s sales grew 13 percent last year and its goal is for 20 percent growth, Moon said.
To be sure, Provexis’s investors are not yet convinced that the two former Glaxo men will succeed in winning business from the big brands. The shares have fallen 40 percent in the past year, giving the company a market value of 25.3 million pounds. The stock rose 2.1 percent to 1.72 pence in London today.
’A Bit of Faddism’
“You’re constantly seeing people bring out new products but a lot of them never take hold and it’s increasingly consolidating around the major brands,” said Jonny Forsyth, a global drinks analyst at Mintel.
There’s also the what’s hot, what’s not factor, which can change rapidly in the world of elite sports. While catering to athletes can bring higher margins, such a specialized market can also bring risks because companies are forced to keep up with athletes’ hyper-evolving demands, said Mitchell.
“There appears to be a little bit of faddism in this, so if you look at what’s the best training regime, the best supplements, the best kit to wear, it tends to go in phases,” Mitchell said.
Provexis’s third-biggest investor is more optimistic. Royal DSM NV (DSM), the world’s largest maker of vitamins, bought 9.8 percent of Provexis in 2008 and can envision acquiring the whole company at some point, said Marcel Lubben, managing director of the venture-capital unit at DSM, which is based in Heerlen, the Netherlands.
Provexis says that drinking its 60-milliliter packets of Go gels can help athletes maintain endurance, prevent fatigue and aid recovery. The products include versions with caffeine, nitrates to increase stamina or choline to help the body derive energy from fat. All cost about 1 pound to 2 pounds per tube, the company says. The products are sold on the brand’s website, at cycling shops and in grocery chains including Tesco Plc. (TSCO)
“You’ve got whole communities of athletes who use these products and know exactly what they want from them, the correct type of carbs and not the quick-fix sugars,” Romero, who won a gold medal in cycling at the 2008 Beijing Olympics and a silver in rowing at the Athens 2004 Games, said in an interview.
She started using SiS Go Electrolyte hydration powders and ReGo Protein recovery sachets in 1998. “They were one of the first real brands that looked at the science of nutrition for athletes. It’s not just some generic sugary drink.”
Murray, the world’s fourth-ranked men’s tennis player, regularly uses SiS products, his spokeswoman Louise Irving said by e-mail.
Provexis, which has about 65 employees, last year shelved two drug development projects to shift more cash to Science in Sport and a blood-thinning nutritional additive called Fruitflow. Science in Sport will contribute “the bulk” of sales this year and turning the company profitable “is No. 1 on the agenda.”
For now, Provexis wants to focus on growing, said Moon.
“I imagine as we start to make more noise in the market those conversations will happen,” Moon said of acquisition talks. “I’d like to see some multiples happen in our market cap first.”
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