PLANO, Texas - Snapple is getting a makeover, reported The Wall Street Journal. Dr Pepper Snapple Group Inc., the beverage business spun off from Cadbury PLC in May, is revamping Snapple's look and tweaking the formulation of its tea to try to revive consumer interest, saying tightened wallets and discounting by competitors have cut into sales. Far from the corny ads, ad hoc plugs from Howard Stern and Rush Limbaugh, and other ploys that catapulted the drink to cultlike status in the late 1980s and early 1990s, Snapple's current owner plans a more homespun campaign for [image-nocss] its teas, emphasizing the drink's health benefits.
By year end, Snapple tea will come in a sleeker 16-oz. glass bottle with a label describing the drink as "All Natural," noting that it is brewed from both green and black tea leaves and stressing a slogan it has used for years, "Made from the best stuff on Earth." The drink will also be reformulated to contain sugar to improve flavor, according to the report, rather than high fructose corn syrup, a sweetener derided by some consumers as unnatural. Snapple juices and lemonades are also getting new bottles and labels.
Dr Pepper Snapple believes consumers may have overlooked Snapple tea's health ingredients at a time when interest in tea's benefits has grown sharply, Jim Trebilcock, Dr Pepper Snapple's executive vice president of marketing, told the newspaper. "Over the years, we lost the health halo," he said. The Snapple brand was launched in 1972, tea made its debut in 1987, and Cadbury purchased the drinks, along with other brands, from Triarc Cos. in 2000.
While Dr Pepper Snapple risks denting Snapple's cheeky, frolicsome image by focusing on its health benefits, the brand urgently needs a jolt, the Journal said. Snapple and other premium drinks played a major role in the company's 31% drop in third-quarter profit. Volume fell 10% in the quarter for Snapple teas and juices, the company said Thursday.
In the weak economy, "we're seeing consumers either trade down to value products or trade out altogether," Larry Young, Dr Pepper Snapple's president and CEO, said in a conference call with investors and analysts cited by the paper.
Snapple's success is critical for Dr Pepper Snapple. The company needs to diversify its portfolio, which is heavily dominated by slow-growing carbonated soft drinks, said the report. The company also derives higher revenue per case from Snapple and similar drinks than from soft drinks. The company also lost distribution rights to Energy Brands Inc.'s Glaceau drinks when they were acquired by Coca-Cola Co. in 2007, and Hansen Natural Corp.'s Monster energy drinks, following another deal Hansen struck with Coke and its biggest bottler.
Snapple tea volume declined about 9% in the first nine months of this year, after rising more than 13% in 2007, estimated John Sicher, editor and publisher of Beverage Digest. Dr Pepper Snapple ranked third in bottled tea sales in 2007, behind PepsiCo Inc., which markets Lipton teas in a joint venture with Unilever PLC and Ferolito, Vultaggio & Sons' Arizona teas. Coca-Cola ranked fourth with its Nestea, Gold Peak and other brands.
Trebilcock said Snapple's marketing shift to emphasize health will not hurt the brand's image. "We're still Snapple. We take our product seriously, not ourselves," he told the paper.
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