COMMENT: Dr Pepper/Seven Up - splashing into water
The US carbonated beverages market is continuing to prove a difficult one in which to secure significant growth. On top of this general market issue, Dr Pepper/Seven Up has had additional brand-specific problems over the past year.
7-Up's sales volumes declined by 16% in the first half of 2003 due to the soft drink being dropped by several bottlers in the PepsiCo network. Meanwhile, Dr Pepper suffered from contract issues with a major customer causing declines in Dr Pepper fountain and food service sales.
Some of these issues, however, are providing interesting market opportunities for Dr Pepper/Seven Up. For example, by being forced to find its own independent distribution networks, it is now less confined by its rivals' product offerings.
As such, the company is taking the opportunity to invest in two new beverage types. Raging Cow is a new milk-based drink launched in five flavours: Pina Colada Chaos, Jamocha Frenzy, Berry Mixed Up, Chocolate Caramel Craze and Chocolate Insanity. Deja Blue is a purified water already popular in Texas, the Midwest and Southern California.
Offering a well-rounded product portfolio is always vital in negotiating and securing retail shelf space, but never more so than now within the soft drinks market. Coca-Cola and Pepsi have also been introducing new milk-based products; Swerve, Starbucks' Frappuccinos and SoBe's Love Bus Brew, and of course already market the Dasani and Aquafina waters respectively.
Dr Pepper/Seven Up faces an interesting challenge in taking Raging Cow and Deja Blue nationwide at the same time. Indeed, its entry into the water market could well spark the much anticipated water price war.
Raging Cow's success will ultimately depend on attracting a wider demographic than just the youth market. Each will require highly tactical marketing efforts, but the potential upside makes the efforts well worth undertaking.
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