Shares price up in 2015
As of April 23, Dr Pepper Snapple’s (DPS) shares have appreciated by 10.3% from the beginning of 2015. Coca-Cola’s (KO) shares declined by 2.8% over the same period. PepsiCo (PEP) and Monster Beverage’s (MNST) shares appreciated by 1.4% and 29.8%, respectively, over the same period.
Monster Beverage’s impressive share performance is a result of the strong demand for energy drinks and the company’s crucial deal with Coca-Cola. As of April 23, the day Dr Pepper Snapple declared its 1Q15 results, the company has outperformed the Consumer Staples Select Sector SPDR Fund (XLP) and the S&P 500 Index since the beginning of 2015.
Focus on innovation
To offset the impact of the shift in consumer preference from soda beverages to alternative drinks, Dr Pepper Snapple has been focusing on innovating new products in growth categories like ready-to-drink tea and other functional beverages. In 2015, the company launched Snapple Straight Up Tea—an unflavored tea in new 18.5-ounce PET packaging—and Hawaiian Punch pouches. The company also expanded its distribution and availability across its tea and juice portfolios.
Dr Pepper Snapple also brought its extremely popular mineral water brand in Mexico, Penafiel, to the US market. The company is also expanding its low calorie and naturally sweetened product portfolio and bringing in high margin products like single-serve packages.
Creating more visibility
Dr Pepper Snapple is creating more visibility for its products by associating with popular movies like The Avengers, the upcoming Minions movie, and high-rated shows like Spike’s new Lip Sync Battle. The company’s highly popular 7UP brand is increasing its association with the EDM (electronic dance music) festival this summer, by partnering with world renowned DJs Tiësto and Martin Garrix. It’s launching limited edition 7Up cans that are designed by the artists. Dr Pepper Snapple expects its marketing spend to be ~7.6% of net sales in 2015.
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