6 Beverage Insights From Dr Pepper Snapple Group
By Steve Holtz on Aug. 02, 2017PLANO, Texas -- An exclusive meeting with several executives from Dr Pepper Snapple Group (DPSG) netted a collection of industry and company insights that will help set the stage for the year to come in carbonated soft drinks (CSDs) and other major beverage categories.
DPSG saw total CSD unit sales dip 2.1% in convenience stores during the 52-week period ending July 15, according to Nielsen data, but the Plano, Texas, company saw wins in other categories, including bottled water and sports drinks, thanks to its allied-brand format that brings smaller beverage brands to a wider audience.
Here’s a look at six insights into DPSG’s product development strategy …
1. Soft-drink strong
While acknowledging that the steady decline of CSD sales is one of the most significant story lines facing the beverage industry, DPSG believes it’s in a position of strength.
“One of the defining differences of our strategy is we believe we can grow soft drinks,” said Jim Trebilcock, chief commercial officer for DPSG. A focus on flavored CSDs—Dr Pepper, 7UP, A&W, etc.—have helped DPSG stand out in coolers focused on colas. That “assortment and variety”—a phrase that comes up often—gives the company room to grow the category, he said.
“[Consumers] still love their CSDs.” Trebilcock said. “And 82% of the category in convenience stores is based on indulgence.”
2. Bottled water blossoms
DPSG realizes it’s not one of the first names the industry thinks of when discussing bottled water. But through its allied-brands strategy, it happens to be the home of two of the fastest-growing water brands in c-stores: imported brand Fiji, with volume up nearly 9% in c-stores in the first half of this year, according to Nielsen, and premium brand Core, up 54%.
“It’s all about distribution and bringing the brand message to retail,” Trebilcock said. “We’re working more closely with our allied partners. We provide one voice to the retailer, but each brand can tell its own story.”
3. Package potential
One innovation DPSG is putting front and center this year is new PET packaging for its Snapple teas and juices.
Nearly indistinguishable from Snapple’s longtime glass bottle, the plastic package “opens a bunch of new occasions we can’t reach today,” said Sal Lazar, senior vice president of business development for DPSG. Lighter weight and safer, the new package opens the door to more lunch boxes and sporting-event occasions, he said.
“If you think about convenience stores and the single-serve occasion, this is a perfect fit for them,” he said.
The PET bottles will roll out nationally by October.
4. Seeking premium allies
Following its success with allied brands, particularly Bai, BodyArmor and Core, DPSG is eager to use the strategy to grow into new categories. (DPSG purchased Bai in January 2017. It had been an allied brands since 2013.)
“It’s no secret that we could make a stronger play with an energy drink, but we’re also open to innovative juices or a cold brew,” Trebilcock said. “And we’d look at just about anything in the premium water category.”
What doesn’t the company want? “We have no interest in a low-end water brand,” he said.
"We're selling premium beverage opportunities to our retailers," said Kevin Martello, vice president and general manager of national accounts, convenience channel. "As an example isotonics has not changed or offered a premium experience. BodyArmor changed that, and our retailers are seeing very positive results as they expand BodyArmor. Same holds true for our other trademarks."
5. The beer door?
One of DPSG’s brands, Clamato, doesn’t get much attention beyond the juice door in the cold vault, but DPSG hopes to change that this year. It hopes to take advantage of Clamato’s frequent use in michelada drinks—beer plus lime juice, with assorted sauces, spices and peppers—by encouraging retailers to place Clamato in their beer coolers, whether on shelves or suction-cup racks.
The bundling promotion rolling out now will include the introduction of PET single-serve 12-ounce bottles of Clamato. A partnership with a beer brand may be next for the campaign.
6. C-store challenge
As drug stores, grocers, dollar stores and even web-based retailers focus more on stealing fill-in trips, convenience stores will be challenged to maintain foot traffic.
Trips are the biggest obstacle we’re going to face over the next three to five years,” Trebilcock said. “The sheer amount of competition is overwhelming.”
What’s a retailer to do? Here are four tips from DPSG’s big thinkers:
- "Understand who the shopper is. They are multicultural and looking for variety. Build your assortment around that."—Martello
- "Evolve and change. Stay up with what the consumer is looking for. Don't continue to agree to annual procurement contracts with brands that aren't growing anymore. They occupy cold space that can be used for brands that are more productive and are more on-trend with what today's consumers are looking for."—David McMichael, senior vice president and general manager of national accounts and warehouse direct
- "Leverage consumer insights. What are their needs? Use that information to evaluate the potential of new products and new thinking. It will be critical for retailers to optimize their cold-vault space in order to satisfy the shopper's need for assortment and variety across the entire liquid refreshment beverage category"—Lazar
- "Leverage what they uniquely have vs. the other channels." ... DPSG wants "to partner up with these guys" to help build traffic. "Be open to testing a restructuring of the nonalcohol cold vault. Have the courage to make the change, and use your own results to make decisions."—Trebilcock