Going for Gold: The Winter Olympics Offer Opportunities and Risks for Supplements

As the world gears up for another celebration of international athletic competition, the consumer health industry’s sports nutrition category is angling to derive the most post publicity possible. While Olympic glory can catapult an athlete – and his sponsors’ brands – into the global spotlight, this massive stage can be a double-edged blade, as fears over banned substance contamination remains omnipresent at the highest levels of sport. With the opening ceremony for Sochi 2014 just weeks away, sports nutrition producers are seeking to capitalize on the frenzy, while simultaneously maintaining an overall healthy image for the category.

A Shining Podium

The Olympics are one of the most-watched events in the world. According to the International Olympic Committee’s report Vancouver 2010 Olympic Winter Games Global Television and Online Media Overview, an estimated 1.8 billion people tuned in to the Games on 235 broadcasters around the world. In the United States – the world’s largest sports nutrition market by far – the Vancouver Games generated 190 viewers. In a broadcast media world increasingly morphed by piracy and time-shifted viewing (through digital video recording devices), athletic competitions have become the gold-standard for television advertising. The Olympics are no exception, as the International Olympic Organisation generated some US$3.9 billion through the sale of broadcasting rights to the 2010 Winter and 2012 Summer Games (which the IOC expects to grow to US$4.1 billion for the 2014-2016 cycle), in addition to US$957 million through the The Olympic Partner Program (TOP), which guarantees category-wide exclusive advertising rights to top bidders, historically a who’s who of global advertising titans like including Procter & Gamble, McDonald’s and General Electric.

While Olympic exposure can be a gold mine for any brand, the Games’ audiences are particularly attractive to the sports nutrition category. According to the same IOC Media Overview, “Vancouver 2010 attracted an audience that was proportionately more male and younger against typical television viewers.” In other words, Olympic viewership, like that of most other athletic competitions, skews strongly sports nutrition’s key demographic of younger men. As a result, media coverage of supplement use generally has a positive impact on year-over-year growth in the host country (comparing the year-over-year growth in the Olympic year versus the CAGR of the previous three years), and can have significant impacts on individual supplement categories that receive extra coverage, as was the case with beetroot juice and tart cherry extract at the London 2012 Games.

Sports Nutrition Growth in Recent Host Nations: Year of Olympics vs. Previous Three-Year CAGR (Local Currency, Current Prices)

Source: Euromonitor International

Note:  *USA sales in 2002 were negatively affected by the ephedra controversy and ensuing ban

Big Rewards Behind a Bigger Gate

However, like the Gold medals awarded in Sochi, media exposure for sports nutrition manufacturers will largely be reserved for the most elite of the global competitors. In an effort to protect the investments of TOP program participants, the IOC places extreme barriers around advertising in the games. The various venues, and even protected advertising areas around them, are no-go zones for unofficial brands. Furthermore, intentionally promoting an unofficial brand during the entirety of the Games can have grave consequences for athletes, including revocation of medals and exclusion from any remaining competitions. For London 2012, promoted as the first “Social Media Games”, these restrictions were extended to the athletes’ virtual personae, as the IOC adopted a social media policy that banned all participants from promoting “any brand, product or service within a posting, blog or tweet or otherwise on any social media platforms or on any websites.”

While many “guerrilla” and “ambush” advertising campaigns, such as Nike’s 2012 “Find Your Greatness” campaign that featured everyday athletes from a number of small towns around the world named London, have proven successful, they nevertheless require substantial media investments beyond the resources of most sports nutrition manufacturers. The only notable example beyond the sports drink brand Powerade is the protein RTD brand Core Power. The upstart challenger to category giants Muscle Milk (Cytosport Inc) and Myoplex (Abbots Laboratories Inc) has been partially owned by Coca-Cola since late 2012. As a result, it has been able to benefit from Coca-Cola’s position as a TOP program member for the non-alcoholic drinks category. In late 2013, it was announced that Core Power would be “the official protein drink” of the Sochi Olympics, making it the first true sports nutrition brand to achieve Olympic sponsor status.

Core Power: The Official Protein RTD of the Sochi Winter Olympics

Core Power Sochi.jpg

Fairlife LLC’s protein RTD brand Core Power (partially owned by Coca-Cola, TOP program participant and exclusive non-alcoholic beverages marketer for the Olympics) was named the “official protein drink” of the Sochi Games in late 2013

Sponsor the Player, not the Games

One way around these restrictions is to focus sponsorships on individual athletes. While the ads of massive sports drinks brands like Gatorade and Powerade (the official sports drink of the Olympics) have long featured some of the world’s most recognizable athletes, a number of smaller brands have benefitted from more targeted athlete endorsements. By focusing on those athletes that closely fit the company’s culture but may fall outside the most viewed sports, producers are able to benefit from the professional athlete ethos without breaking the bank. One company that has followed this mantra with great success is the health-and-wellness-focused Vega. The Canadian company specializes in all natural, vegan weight management and sports nutrition products and has seen its retail distribution and brand awareness explode in recent years. The company maintains a cadre of professional athletes that are top performers in endurance and winter sports, including three athletes that will be featured in Sochi: pair figure skater Meagan Duhamel; downhill snowboarder Michael Lambert; and Paralympic skier Josh Dueck. While none of the stars are household names, each has a passionate following, garners significant attention within their area of competition and lends an air of “real user” credibility to the brand in an era of superfluous and seemingly incongruous endorsements.

Looking closer to the Sochi games, one brand that could benefit greatly is the Russian supplement specialty retailer Vitawin. One of the host nation’s most visible sports nutrition outlets (and owner of a recently opened store in downtown Sochi), Vitawin is the official nutrition supplier of the supremely popular pan-European Kontinental Hockey League and sponsor of the highly visible Russian hockey player Ilya Kovalchuk, who will be joining the Russian national team in Sochi. The company has been touting Kovalchuk – in full Team Russia regalia, of course – in its recent advertising and is expected to host a number of events in its stores throughout the country during the Games. The company could prove to be a major catalyst in building mass appeal for the category in a market with huge growth potential. In addition to stocking many of the world’s leading brands, Vitawin also sells a private label line it advertises as manufactured in the USA and Russia: a key selling point in a market still weary of domestic production standards.

With Great Exposure Comes Great Risks

Unfortunately, the sports nutrition category is no stranger to controversy. The spectre of contaminated products still looms large in the category, and poses a significant threat to elite athletes. Tainted supplements – some of which are not properly labelled – have been a common source of disqualifications recently, with the category’s most recent public enemy number one DMAA accounting for two athletes being sent home from the 2012 London Games. While a positive test may have acutely detrimental effects on a brand, it can also cast the entire industry in a negative light. Concern over mis- or unlabelled products led Athletics Australia, the country’s track and field governing body, to issue draft guidance recommending blanket abstention from the use of sports supplements in December 2013. While Athletics Australia’s stance is admittedly extreme in the context of global sports, and other governing bodies like UK Sport have worked with producers to ensure safe supplement supplies, it is in the category’s best interest to avoid further scandals, which could very much undermine its growing appeal among average consumers.