Dr.

Pepper Snapple Group,

Inc.

By: Laura Peters, Justin Miller, Maisa Ryerson

 Case Overview

• In 2007, Andrew Barker is charged with assessing whether or not a profitable market
opportunity exist for a new energy beverage brand to be produced, marketed, and
distributed by the company in 2008

• Energy beverages are broadly defined as “drinks that provide a consumer with a boost
of energy”

• The decision to explore a new energy beverage is part of a corporate business strategy,
which aims at focusing on opportunities in high-growth beverage businesses. As part of
this strategy, Dr Pepper Snapple Group, Inc. has previously launched the Accelerade
RTD brand, a ready to-drink sport drink.
 Business Strategy
6 Key elements

• Build an enhance leading brands

• Focus on opportunities in high-growth and high-margin categories
• Increase presence in high-margin channels and packages
• Leverage the company’s integrated business model
• Strengthen the company’s route-to-market through acquisitions
• Improve operating efficiency
 Strengths
• Owns a diverse well known portfolio of CSD and non-CSD brands.
• This provides bottlers, distributors, and retailers with a wide variety of products
and provides foundation for growth and profitability.
• #1 flavored CSD company in U.S.
• Strong Customer relations, with many top customers from bottlers, distributors,
and national retailers.
 Strong Operating Margins and Stable
Cash Flow
• The strength of the Dr. Pepper Snapple Group, Inc. product portfolio
have enabled the company to generate strong operating margins
which, combined with relatively modest capital expenditures have
delivered significant and stable cash flow.
 Energy Beverage Market
• Excluding coffee, energy beverages are the fourth largest nonalcoholic
beverage category in the U.S.
• This comes after carbonated soft drinks, sports drinks, and bottled
water.
• The Energy Beverage market produced a estimated retail dollar sales
of $6.2 billion in 2006.
• 71% of total retail sales came from off-premises sales through
convince stores, supermarkets, and mass merchandisers in 2006.
 Energy Beverage Consumer
• The heavy users of energy beverages usually consist of males between
ages of 12 and 34.
• Energy drinks are often consumed in the middle of the day usually at
home, work, car, and school.
• Energy drink consumers drink energy beverages include energy boost,
mental alertness, refreshment, and taste.
 Major Competitors
• Red Bull North America
• Hansen Natural Corporation: Monster Energy Drinks
• Pepsi-Cola: AMP Energy and SoBe Adrenaline Rush
• Rockstar Inc.
• Coca-Cola: Full Throttle and sugar-free Tab Energy Drinks.
 Product Line and Brand Positioning
• Existing Energy Drink brands have sugar-free options. Regular energy
drinks have an 80% share of the market. Where as sugar-free have
20%.

• Brand Slogan Examples:

• “Red Bull gives you wings.”- Red Bull
• “Unleash the Beast” - Monster
 Advertising and Promotions
• Brand media advertising in the energy drink market is modest. Except
for Red Bull. Energy beverage brands mainly rely on promotional
vehicles like brand Web sites, events, and sponsorships to help
promote the brand.