In this case, it's a snap decision about what doctor to choose. Dr Pepper Snapple Group (DPS) is the bottler and distributor of Dr Pepper soda and Snapple drinks. Serving Canada, Mexico, and the US, the company offers a vast portfolio of non-alcoholic beverages including flavored, carbonated soft drinks and non-carbonated soft drinks, along with ready-to-drink non-carbonated teas, juices, juice drinks, and mixers. Among its brands are Dr Pepper and Snapple of course, along with A&W Root Beer, Hawaiian Punch, Mott's, and Schweppes. It has some cult favorites as well, including Vernors, Squirt, and Royal Crown Cola. DPS is the #3 soda business in North America after #1 Coke and #2 Pepsi.
The company primarily serves bottlers (including quick-serve restaurants for syrups) and distributors, as well as retailers. Wal-Mart is DPS's largest customer, accounting for approximately 14% of its 2011 sales. Other customers include Kroger, SUPERVALU, Safeway, Target, McDonald's, Yum! Brands, Sonic Corp., Subway Restaurants, and 7-Eleven. DPS competes head-to-head with Coke and Pepsi in the battle for North American customers. In addition to its flavored carbonated sodas, DPS makes Venom Energy (an energy drink designed to compete with Pepsi's Gatorade), Coke's PowerAde, and a growing list of smaller companies' energy drinks. In addition to its own brands, DPS manufactures and distributes brands owned by third parties in specified licensed geographic territories. Among these brands are Country Time Lemonade and Sunkist and Welch's sodas, which are licensed from Kraft Foods, Sunkist Growers, and Welch Foods, respectively.
Headquartered in Plano, Texas, the company operates about 160 administrative, manufacturing, and distribution facilities across the US, which supply customers in the US and Canada. In Mexico it has more than a dozen sites through which it serves its customers in that country.
Change in Company Type
DPS is doing well on its own. Formerly a subsidiary of Cadbury Schweppes, DPS as it operates today is the result of the 2008 separation of Cadbury's beverage and confectionary businesses. DPS was spun off into a publicly traded company. The split came to fruition in part due to the urging of activist billionaire investor and then Cadbury shareholder Nelson Peltz, who saw the split as a way to improve Cadbury's share price.
Sales at the soda maker rose 5%, from $5.6 billion in 2010 to $5.9 billion in 2011, primarily attributable to price increases. Profit margins slipped, however, from 60% in 2010 to 58% in 2011, as DPS devoted more dollars to packaging materials, sweeteners, apple juice concentrate, and other costly commodities.
The company might be #3 in overall North American sales, but it wins the gold in one category. DPS is the #1 flavored (non-cola) carbonated soft drinks (CSD) company in the US. Its market share in the US for flavored CSDs in 2011 was 21.1%, an increase over the 19.7% share it had in 2008. In the CSD sector as a whole, its market share for 2011 was 40%. In addition to soft drinks, the company manufactures fountain syrups for its foodservice customers in Canada and the US. DPS leverages the strength of its best-selling core brands -- such as Diet Dr Pepper, 7UP, Sunkist soda, A&W, and Canada Dry -- to launch both new products and product extensions. Products that debuted in 2011 as part of this strategic effort include Dr Pepper TEN, BlueRaspberry Crush, Mott's Garden Blend, and Snapple's Papaya Mango Tea and Tea Will Be Loved. The company's Dr Pepper TEN, introduced in late 2011, contains blended sweeteners developed by DPS for a low-calorie version of its regular Dr Pepper. In a strategic partnership, rival Coke and DPS inked a long-term deal in 2010 that made competitor Pepsi perk up. The Coke/DPS alliance involves a 20-year deal worth some $715 million. As part of the agreement, Coca-Cola will distribute the Dr Pepper brand in the US and Canada Dry in the Northeast. Also, the deal has Coke distributing Canada Dry, C'Plus, and Schweppes in Canada for DPS. The distribution deal also puts the Dr Pepper and Diet Dr Pepper names on Coca-Cola's new touch-screen dispenser. In a bid to spur already increasing sales volume of its flagship 7UP drink, DPS in late 2010 launched a reformulated 7UP in the US that boasts a "crisper" lemon and lime taste, thanks to technological advances. The beverage maker hopes to pit the newer 7UP version against Pepsi's Mountain Dew and Coke's Sprite. The two rival sodas have a share of 6.7% and 5.5%, respectively, of the US carbonated soft drink market, compared to 7UP's 1%, according to Beverage Digest. DPS anticipates the crisper 7UP, its best-selling CSD after its namesake Dr Pepper brand, will shake up this niche of the drinks industry. – less