Dr Pepper Snapple Group Inc. (DPS), Attempting To Make Its Mark

The Coca-Cola Company (NYSE:KO) and PepsiCo, Inc. (NYSE:PEP) have both tried their luck with mid calorie drinks decades back with no success. The former had introduced a mid calorie drink called C2 in 2001 and the latter had launched a similar concept called Pepsi Edge in 2004. Both flopped.

Now Pepsi has again come out with a new mid-calorie drink called PepsiCo, Inc. (NYSE:PEP) Next but this is yet to create a ripple. Recently Pepsi has reported 3% volume decline in the first quarter in its Americas Beverage group. Its soda volumes were down by mid single digits. The company also lost share to Coca-Cola. However Pepsi has its snack business to fall back on, but that is a story for another day.

Coming back to lower calorie drinks, The Coca-Cola Company (NYSE:KO) has recently launched mid calorie Sprite in UK which will permanently replace the sugar containing version. For the US market the company is still testing mid calorie versions for Sprite and Fanta but has not scheduled an official launch yet.

Coca-Cola’s launch of mid calorie drinks will be quite significant as the company is using natural sweeteners and not the high fructose corn syrup and artificial sweetners that Pepsi and Dr Pepper use in their lower calorie drinks.

So Coca-Cola can use this fact to differentiate its offerings and gain a competitive advantage. However stevia, the natural sweetener that it is using is believed to leave a bitter aftertaste so we have to see how these drinks fare on account of taste.

However, the point for Dr Pepper Snapple Group Inc. (NYSE:DPS) remains that now the market is clear in the lower calorie soda segment. So, TEN might just have the early mover advantage. The company has timed its launch well and all that needs to be seen is how well it scores on account of taste and how fast it grows its distribution channels.

Last word

Dr Pepper Snapple Group Inc. (NYSE:DPS) has fared well despite lower sales volumes. It is working hard to move towards a leaner cost structure and trying to improve its distribution channels. It has also stuck to its prices. Now if it can infuse life into its declining soda volumes through the new TEN drinks platform it should see significant long-term growth.

The article Dr. Pepper Is Trying to Make its Mark originally appeared on Fool.com and is written by Eshna De.

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