Can Poppi Founders’ New Brand Compete Against ‘Not Cool,’ ‘Old School Brands’ Like Gatorade?

After selling their hit Poppi brand to PepsiCo for $1.95 billion last year, the brand’s cofounders – Allison and Stephen Ellsworth – are gearing up to challenge the very same mega-corporation they just concluded a business deal with, per CNBC’s Amelia Lucas.

The Ellsworths are launching Jetty, an everyday hydration beverage that will seek to take on established RTD players such as Gatorade and Powerade, in addition to hydration powder companies already on store shelves in LMNT and Unilever’s Liquid I.V.

“No one has really created a product for just everyday hydration — literally everyday hydration for normal people. Like I woke up this morning, I didn’t run a marathon,” said Allison Ellsworth, now Jetty’s chief brand officer – even as she serves as arms-length advisor to the Poppi brand following the wrap-up of the sale to PepsiCo. Her husband, Stephen, will helm Jetty as chief executive officer.

Some factors backdropping the current market situation as Jetty enters, as Lucas noted:

• GLP-1 medications are making a difference: Given the proliferation of GLP-1 usage among U.S. consumers, and that plain water is often unappealing – and that sports drinks focused on sugar and electrolyte replenishment may not suit all lifestyles – the consumption of “functional beverages” for GLP-1 users is a significant market.

• There’s a steep mountain to climb for Jetty: Currently, PepsiCo’s Gatorade brand commands roughly 60% of the American sports drink market, per Numerator data, even as sports drink unit sales have fallen about 9.1% since 2022. On the other hand, the powder category is worth $1 billion on Amazon alone, not even counting other retail sales. Coca-Cola, meanwhile, has written down BodyArmor’s value by over $1.7 million after picking the brand up in late 2021 for ~$5.6 billion. The overall market is tumultuous – and competitive.

Poppi Founders Believe Jetty Can See Success Strike Twice With New Product and Audience

Jetty’s founders, based on their experience with Poppi and the broader beverage space, appear to feel that there is brand white space emerging – space they can leverage, with a particular focus on hydration and electrolyte products as a whole, rather than the softer sports drink space that formerly comprised the entire category. As Lucas underscored, both Kraft Heinz – via the introduction of Capri Sun pouches and Kool-Aid packets with electrolytes – and PepsiCo itself (via an “overhaul of the Gatorade brand” focused on wider appeal and toned-down occasion appeals such as a “fresh morning start” or “afternoon walk”) have conceded that the previous marketing pitches and product particulars needed a change-up.

“Our core audience is going to be millennial moms and Gen Z,” Allison Ellsworth said. “Gen Z just isn’t relating to these old school brands, the legacy of the Gatorades and the Powerades. They’re just not cool.”

It’s not just about a new brand for a new up-and-coming consumer, though: Jetty is aiming at a more health-conscious consumer, with no artificial sweeteners or dyes in its product lineup. Five flavors are planned, with 100 milligrams of sodium in each 15.2-oz. bottle or 15-gram packet, as well as 310 milligrams of potassium and 100 milligrams of magnesium. Sugar comes in at just 6 grams, with 3 grams of fiber and B vitamins as part of the formulation. This can be contrasted with the 270 milligrams of sodium, 80 milligrams of potassium, and 34 grams of sugar in a standard 20-oz. bottle of Gatorade. One major caveat: Gatorade, Powerade, and other brands boasting zero-sugar formulations are also present in the better-for-you beverage segment.

That doesn’t seem to dissuade Allison Ellsworth, though.

“I don’t think [Pepsi] gets it, but what they do get is that the movement is changing, and they think that just by taking dyes out or doing 90% less sugar, they’re going to capture this audience. But that is very big corporate thinking,” Ellsworth said.

Questions for further discussion:

• Do you believe Jetty will succeed as it enters a crowded market filled with larger players? Why or why not? To what degree will the founders’ previous experience in growing (and selling) Poppi play a role?

• Is the assertion that Gatorade and Powerade have lost brand heat with younger consumers accurate, to your mind? To what degree do you believe appealing to Gen Z and millennial moms will pay off?

• What advice would you offer to Jetty’s founders in terms of gaining share of spend and attention when going up against established competitors? Are there any obvious differentiators or marketing approaches that you might highlight?