Who Knew Dr Pepper Snapple Group Inc. (DPS)’s Returns Were This High?

The Coca-Cola Co (NYSE:KO) has a market cap of $172 billion. PepsiCo, Inc. (NYSE:PEP)’s market cap is $136 billion.

By comparison, Dr Pepper Snapple Group Inc. (NYSE:DPS) is tiny.  The company has a market cap of ‘just’ $14.7 billion – less than one-tenth the size of Coca-Cola. Cedar Rock Capital invested one quarter of its assets in the stock and owns a large percentage of Dr Pepper’s outstanding shares. DPS is also very popular among quant hedge funds. AQR Capital, Renaissance Technologies, and Gotham Asset Management are among top 10 hedge fund holders. Interestingly short seller Jim Chanos also has a large position in the stock which indicates that the company is one of the best in its industry.

Unlike its larger rivals, Dr. Pepper Snapple Group does not have a global presence.  The company operates in the United States, Canada, Mexico, and the Caribbean.  In 2014, sales broke down geographically as follows:

• United States generated 88% of sales
• Mexico & the Caribbean generated 8% of sales
• Canada generated 4% of sales

The company’s smaller geographic area allows it to better focus its advertising messages and spending.  The United States is by far the company’s most important market.

Dr. Pepper Snapple Group was created in 2008 when the company was spun-off from Cadbury Plc.

Two well-known investors have positions in Dr. Pepper Snapple.  Mario Gabelli owns 1.9 million shares, and Joel Greenblatt owns over 500,000 shares.

Dr. Pepper Snapple Group Brands

The image below gives a quick glance of the company’s brands.

The company’s most recognizable brands include:

• 7 Up
• Sunkist
• Penafiel
• Snapple
• Clamato
• Dr. Pepper
• Canada Dry
• Schweppes’s
• A&W Root Beer
• Deja Blue water
• Hawaiian Punch
• Mott’s apple juice
• Crush Orange Soda
• Country Time Lemonade

Dr. Pepper Snapple’s most successful brand is Dr. Pepper.

The company also has its ‘Core 4’ consumer soft drink brands (shown below).