‘Dr Pepper will always be a priority - I mean, it’s in the name!’ Group CEO says brand is fine despite decline
Flavored juice drink Hawaiian Punch volume increased 7% in the latest quarter, blended juice Clamato was up 20%, and the water category (which includes coconut water Vita Coco and low calorie beverage Bai 5) up 9%. The company is also expanding distribution and availability across tea and juice portfolios.
Yet flagship brand Dr Pepper declined 1% over the quarter, following on from a 2% decline in 2014.
But Young attributed the decline in Dr Pepper to ongoing challenges in the diet category, and insists that – overall - Dr Pepper is doing ‘okay’.
The Dr Pepper brand remains ‘pretty weak’ in terms of volume and share, commented Bonnie Herzog of Wells Fargo Securities in last week’s earnings call – whereas other brands show continuing strength (Peñafiel increased 20% in the quarter in distribution gains, for example). So where does that leave Dr Pepper in the list of priorities?
Young said the group was working on promotions and will be in ‘great shape’ for the future.
“Dr Pepper will always be a priority for me,” he said. “I mean, it's in the name, and we're pleased with the improvement we've seen in Dr Pepper. If you take the Diet out, our brand is okay.
“Diet is our challenge right now, but our Diet was actually down less than the category Diet. So, we've got a solve for that.”
Young references promotions such as the Diet Dr Pepper ‘Lil’ Sweet’ commercials, which feature American Idol (2002) runner-up Justin Guarini (you can watch one of the videos below).
“We're doing a lot of things with a Lil' Sweet [campaign] and the sweet taste of Dr Pepper and we're doing a lot of things more in the field on execution and getting the product out there. So we're very positive on it, we think we're going to be in great shape there. A lot of it was just some of the first quarter timing on that being down one, but all the down one was Diet.”
The Diet headache
So if Diet is the drag – are there any encouraging signs of improvement in this category?
No, said Young.
“Not really: it kind of moves back and forth. We think we have the right plans in place in marketing. But the biggest piece we are going to go after is making sure that we have the execution out there, the availability. We want, with the marketing, for those Diets to be top of mind; and with our execution make sure they are close at hand.”
Young also points to 4% growth for its Core 4 brands (Canada Dry, 7UP, A&W and Sunkist), driven by 13% increase in Canada Dry.
“We're thrilled with how our Core 4 has done,” said Young. “Again, a challenge on the Diets there, but we're getting great execution, we're getting more availability, and it is doing very well in all formats of the business.”
Dr Pepper Snapple's group net sales for Q1 (three months ending March 31, 2015) were $1.451bn, compared to $1.398bn in the same quarter in 2014.