DPS’ TEN Products Struggling?

CEO stands behind line extension

Steve Holtz, Editor in Chief, CSP Daily News

PLANO, Texas -- Beverage stock analyst Bonnie Herzog is sounding an alarm about sales of Dr Pepper’s TEN product extensions, while Dr Pepper Snapple Group executives are standing behind the line.

“Although we conceptually believe in DPS’ TEN platform, we are becoming increasingly concerned about the continued underperformance of TEN,” Herzog wrote in a research note this week. “While this platform does offer an alternative to traditional diet [soft drinks], we fear the failure to sufficiently differentiate it from this struggling category is weighing on results.”

The TEN line includes reformulated versions of Dr Pepper, 7UP, RC and other DPS brands with only 10 calories per serving. The rollout of the beverage line is expected to be complete by the end of this summer.

Dr Pepper Snapple Group’s low calorie offerings “posted its worst performance in over a year,” Herzog reported, “with dollar sales down 5.4% as units declined 4.9%.” She estimates the TEN lineup had similar results.

DPS president and CEO Larry Young, however, said during an earnings call in July that a deeper look at Nielsen data shows a benefit from the TEN line.

"Based on Nielsen home scan research, we know that 51% of TEN's purchases are incremental to the CSD category, meaning that we are achieving our goal of bringing lapsed and new users into the category," Young said. "We are really pleased with these early results."

DPS spokesperson Chris Barnes echoed Young's comments, telling CSP Daily News, "Dr Pepper TEN is a product we believe in and are continuing to invest in to drive consumer trial and awareness."

Steve Holtz, CSP/Winsight By Steve Holtz, Editor in Chief, CSP Daily News
View More Articles By Steve Holtz