Dr. Pepper Case Analysis

INTRODUCTION

Dr. Pepper Snapple Group Inc is a soft drink company based in Plano, Texas (America). The first Dr. Pepper drink was invented in 1885 by a pharmacist – ‘Charles Alderton’ who used to work at a drugstore (Morrison’s Old Corner) in Waco, Texas. Alderton named the first original drink as the “Waco”. However, it was later named as Dr. Pepper. It is the prime brand owner, producer and wholesaler of non-alcoholic beverages in the United States, Mexico and Canada.

The company offers a wide variety of carbonated soft drinks like Dr. Pepper, Squirt, 7UP, Sunkist, A&W and Canada Dry as well as non-carbonated beverages like Snapple, Hawaiian Punch, Mott's and Clamato. According to www.drpeppersnapplegroup.com, Dr. Pepper and Snapple Inc deals with more than 50 brands which come under the beverage category. They have 7 of the top 10 non-cola soft drinks, and 9 of our 10 leading brands are No. 1 or No. 2 in their flavor categories.

BACKGROUND

Nature of the Industry

An Energy drink is a beverage which boosts energy and provide mental and health stimulation. The main ingredient in the energy drink is Caffeine. According to BeverageDaily.com, the global energy drink sales reached $49.9 billion in 2014. The energy drink industry is one of the fastest growing industry in the world. People consume energy drinks as it improves the mental and physical performance. The consumption of the aerated drinks has declined since the energy drinks are launched even in terms of sales and revenue.

According to Heller (2007), “Energy drinks last year stormed the US beverage market, outperforming all other categories, while one sports drink inched its way into the nation’s top five trade marks by displacing a popular soda brand”.

The Company

Dr. Pepper Snapple group participated primarily in the flavoured carbonated soft drink (CSD) market segment. In 2007, 89% of company net sales are generated in the US, 4% in Canada and 7% in Mexico and the Caribbean.

In the non-CSD market segments in the US, the company participates primarily in the ready-to-drink teas, juice drinks, and mixer categories.

Vision Statement: To be the best beverage business in America

SWOT ANALYSIS

ANALYSIS OBJECTIVES

Assessing whether or not a profitable market opportunity existed for a new energy beverage brand to be produced, marketed and distributed by the company. Dr Pepper and Snapple Group Inc is the only major domestic non-alcoholic beverage company in the US without a significant branded energy drink of its own.

INTERNAL FACTORS

STRENGTHS (+) WEAKNESSES (-)

• Strong portfolio of CSD as well as non-CSD brands

• Integrated business model

• Strong relationship with the customers

• Attractive Positioning within a Large, Growing and Profitable market

• Broad Geographic Manufacturing and Distribution Coverage

• Strong Operating Margins with stable Cash Flow

• Experienced Executive Management Team

• Strong Business Strategy

• No or less global exposure

• No own brands which means excessive dependency on other market players

• Smaller in size as compared with other competitors like Pepsi Co. and Coca Cola.

• Products may not comply with the health and safety standards

• Doesn’t have a complete network of bottlers and distributors

• Continued focus on CSD rather than the alternative and functional beverages

EXTERNAL FACTORS

OPPORTUNITIES (+) THREATS (-)

• New Distribution channels

• Increased health consciousness

• Growth opportunities due to exposure in international markets