Dr Pepper Snapple Group Inc. (NYSE:DPS) says that its mission is to be the best beverage business in North America. While this does look like a tall order, there is no denying the fact that the company is definitely making its presence felt. It holds six spots out of the top 10 ranking non-cola soft drinks in the US.
Dr Pepper Snapple Group Inc. (NYSE:DPS) is weighing its options well and is balancing well grounded cost cutting efforts with strategic product launches. Amid declining soda sales in the US it has turned in a good quarter with earnings of $0.53 well ahead of $0.46 estimated by analysts at Thomson Reuters. Although volumes were down 2%, the company achieved 1% sales growth driven by pricing.
Presently the most exciting thing about Dr Pepper Snapple Group Inc. (NYSE:DPS) is its new TEN drinks. And I will tell you why.
Demand for lower calorie drinks is growing
By now it is quite an established fact that in the US, which is world’s largest soda market, demand for fizzy drinks is cooling as people become more health conscious.
While this is fueling demand for alternate beverages like energy drinks, sports drinks, juices, etc on one hand, this is also driving demand for soda options with lower calories. The lower calorie soda variants are becoming increasingly popular with people who would like to avoid the calories but do not like the taste of sugar-free diet soda.
The statistics that have emerged are quite exciting. According to Innova Market Insights, lower calorie drinks comprised 17.5% of all global soda launches in 2012. In the US the category outperformed the global trends and accounted for 25% of new product launches.
Dr Pepper has a full range of low calorie drinks
The third largest US soft drink maker has in the offering a new soda variant which contains only 10 calories per serving. Dr Pepper had been testing the concept since 2011 when it first launched its Dr Pepper Ten. It has recently expanded its portfolio by introducing five new flavors: 7Up Ten, A&W Ten, Sunkist Ten, Canada Dry Ten and RC Ten.
For its TEN drinks the company is promising the same full flavor as the original version of the sugar containing drink. One has to keep in mind that the success of any low calorie substitute ultimately depends on the taste. So if TEN can live up to the expectations the possibilities are mind blowing.
The company is spending $30 million on this initiative and has started aggressive television campaigning. The commercials will run all summer.
Aside from the TEN drinks, Dr Pepper Snapple Group Inc. (NYSE:DPS) also has low calorie versions for A&W root beer, 7Up lemon lime, RC Cola, etc, which are moderately successful.
An edge over soda kings
The best thing about the TEN drinks is that they can earn Dr Pepper Snapple Group Inc. (NYSE:DPS) a competitive edge over its heavyweight rivals The Coca-Cola Company (NYSE:KO) and PepsiCo, Inc. (NYSE:PEP).