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Is This Beverage Company a Better Investment than The Coca-Cola Company (KO)?

Dr Pepper Snapple Group Inc. (NYSE:DPS) is doing everything it can to keep up with industry trends. However, it might not be doing enough to keep up with its peers.

Dr Pepper Snapple Group Inc. (NYSE:DPS)

Industry trends

The American consumer is more health-conscious than ever before. You have probably heard or read that statement more than a dozen times over the past several years. If you dissect that statement, however, there’s a problem. If the American Heart Association estimates that approximately 33% of the population is obese, then that segment of the population obviously isn’t very health-conscious. You’re still going to find scores of people walking out of the grocery store with cases of soda. From a business and investing standpoint, the problem is simply that growth for carbonated beverages has slowed.

Fat and sugar are out for the health and image-conscious. It has been “discovered” that an overconsumption of sugar can lead to health risks. Of course, overconsumption of anything can lead to health risks, but hey, the trend is the trend, and that’s where you want to be. Carbonated beverages are taking it on the chin.

This industry trend has led to Dr Pepper introducing its “TEN” low-calorie drinks, including 7UP TEN, A&W TEN, Sunkist TEN, RC TEN, and Canada Dry TEN. All of these drinks have only 10 calories per 12 fluid ounces and use non-calorie sweeteners.


The Coca-Cola Company (NYSE:KO) is also going along with industry trends by focusing more on healthier alternatives like Minute Maid and its Simply juice line. Likewise, PepsiCo, Inc. (NYSE:PEP) offers PepsiCo, Inc. (NYSE:PEP) Next — a low-calorie and low-sugar drink with natural sweeteners. PepsiCo, Inc. (NYSE:PEP) Next did over $100 million in sales last year.

Of the three companies mentioned here, Pepsi has the best head start on the health angle as it also sells Quaker products, Tropicana juices, and Gatorade.

According to Beverage Digest, The Coca-Cola Company (NYSE:KO) owns 34% of the soft drink market share, Pepsi owns 26.3% of the market share, and Dr Pepper owns 11% of the market share.

For Pepsi, not owning as much soft drink market share is no big deal, simply because it’s such a massive player in the snack category. For Dr Pepper Snapple Group Inc. (NYSE:DPS), it proves that the company is well behind peers. It’s also behind peers in an area that isn’t often looked at, which we’ll cover next.

Company culture

Company culture is much more important than investors realize. When you see a strong company culture and great leadership, you will almost always find a company with long-term stock appreciation. It also works the other way around. When the company culture is strong and the leader is trusted, then employees will work more effectively; this leads to increased production.

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