Dr Pepper: Energy Beverage Case Study

Company Description

Scope of Company Operations

With sales of $5.748 billion, the Dr. Pepper Snapple Group participates mainly in the carbonated soft drink (CSD). The company primarily distributes beverage concentrates and fountain syrups to be used by its own bottling operations as well as third party bottlers. The company had an 18.8 % share of the US CSD market in 2007, and operates primarily in the United States, Canada, Mexico, and the Caribbean.

The Dr. Pepper Snapple Group sells popular brand CSDs such as Dr. Pepper, 7UP, Sunkist, A&W, and Canada Dry. Outside of the CSD market, the Dr. Pepper Snapple Group participates in selling ready-to-drink tea, juice, juice drinks, and mixers. In addition to the popular brands, the company has local and regional brands that are aimed at more specific markets.

SWOT Analysis

Strengths

1. Strong Portfolio of Leading, Consumer-Preferred Brands: Dr. Pepper Snapple Inc. is the number one flavored CSD company in the US according to ACNielson. They are the only major beverage concentrate manufacture with CSD growth over the past 4 years. Dr. Pepper is the number two flavored CSD in the US and Snapple is the number one ready to drink tea. All of this is combined with a very strong and diverse portfolio.

2. Integrated Business Model: Dr. Pepper Snapple has a competitive advantage over its US principal competitors because its brand ownership, bottling, and distribution are more integrated than their competition.

3. Strong Customer Relationships: Dr. Pepper Snapple has strong relationships with the top bottlers and distributers in the US as well as food service customers, large retailers, and convenience store customers.

4. Attractive Positioning within a Large, Growing, and Profitable Market: Dr. Pepper Snapple holds the number three position in each of the US, Mexico, and Canada for beverage markets. They are not affiliated within the cola or bottles water industry just in growing and profitable industries.

5. Broad Geographic Manufacturing and Distribution Coverage: Dr. Pepper Snapple has 21 manufacturing facilities and approximately 200 distribution centers in the US as well as 4 manufacturing processes. Warehouses are located at or near bottling plants and geographically dispersed around sales regions to make sure company products are able to meet customer demand. They also manage transportation of their products using their own delivery trucks as well as some third party logistics providers. They have strategically located manufacturing and distribution capabilities to increase efficiency within the business.

6. Strong Operating Margins and Significant Stable Cash Flows: Dr. Pepper Snapple has created an impressive portfolio that has brought strong cash flows and stockholder value to the company.

7. Experienced