The profit opportunity in hard-training ‘weekend warriors’

The ‘greatest Tour de France sprinter of all time’ recently became a penny-share investor.

Mark Cavendish owns 134,250 shares of Science in Sport (SiS), which makes high-tech sports drinks for professional athletes. It’s listed on Aim. SiS offered Cavendish the shares as part of a ‘brand ambassador’ deal.

Cavendish is happy to endorse SiS, because he actually uses the products. And Andy Murray, Sir Chris Hoy and Helen Jenkins use SiS too.

The company began in 1992, and over the following two decades the product range has grown to include isotonic gels, energy powders and bars, hydration tablets and recovery products.

A lot of serious science goes into them. Some products are patented, and there’s heavy R&D (research and development) involving collaboration with sports scientists, research institutions and elite athletes.

SiS is built around the athlete – that’s key to their identity. That goes back to their origin. The company was founded by Tim Lawson, a cyclist and sports scientist who wasn’t happy with the nutritional supplements available. He thought he could do better.

Lawson started the company in his kitchen. And ever since then, SiS has stayed tightly focused on the needs of top athletes.

How to market a great product

Getting this message across to consumers can, of course, be an expensive exercise. In the past, the company relied on word of mouth to get their products to famous athletes. But in recent years it’s been able to invest in new brand ambassadors – like Cavendish, Hoy and Jenkins.

SiS is also the official sports nutrition supplier to another great success story: the GB Rowing Team.

Because of Science in Sport’s product quality and credibility, athletes are happy to use its products without making official advertising deals. For example, Andy Murray doesn’t advertise SiS, but they collaborated to make a tailored sports drink for his needs.

And of course, SiS benefits when Andy Murray is seen using their products. SiS also supplies a couple of Premier League football teams in a similar deal.

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A key brand message is “created by elites, used by elites”. This credibility is a vital element of the Science in Sport story and a crucial message to reinforce if the brand is going to make premium margins.

When it comes to selling the range to mere mortals, SiS needs to tread carefully. Its brand is focused on elite sports people. So it has to be presented as a professional, specialist product.

SiS doesn’t make ready-made drinks like Gatorade or Lucozade Sport. And distribution is important too. Around a quarter of sales come from independent retailers such as specialist cycling shops.

In niche shops, the staff can advise and educate customers about how best to look after themselves while pursuing their hobby. For a small brand, SiS has good distribution ‘reach’: 2,600 distribution points in the UK, including Tesco.

What’s the opportunity?

So, apart from Cavendish and Murray, who are SiS’s customers? SiS points to ‘weekend warriors’ – keen amateurs who take part in serious endurance sports as a pastime.

They are the 10k runners and half-marathon trainers, the 100k cyclists with carbon fibre bikes and plenty of lycra.

Science in Sport estimates that there are over six million weekend warriors in the UK, but only 100,000 are loyal SiS customers so far. So there’s still a big market opportunity to go for. But it will have to be marketed in a way that protects that vital SiS brand image and integrity.

Science in Sport launched on Aim in August in a demerger from Provexis – it’s still early days in its life as a public company. Sales are growing strongly, accelerating to a 23% rate in the first half recently reported. However, they are only forecast to be £6.6m in the current year and we don’t expect to see a profit for a couple more years.

Nevertheless, there can be great value in building a strong niche brand and it will be fascinating to see if SiS can emulate the success achieved by its illustrious consultants.

This article is taken from our FREE penny share investment email Penny Sleuth.
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