US: Dr Pepper Snapple Group face risks over Ten range - analyst
DPS is throwing its marketing weight behind Ten
Dr Pepper Snapple Group's (DPS) major push for its new low-calorie Ten range risks "cannibalising" its full-calorie products, according to an analyst.
CLSA analyst Caroline Levy said today (15 February) that the group's US$30m marketing spend on Ten, which launched in December, may not necessarily pay off. "The key risks are cannibalisation of its full-calorie equivalents, in terms of shelf space and sales, or simply a lack of consumer adoption despite more marketing spend," Levy said in a note.
Meanwhile, Stifle analyst Mark Swartzberg called the Ten launch "a good move for an industry hurt by lack of innovation".
The group reported a 3.8% rise in full-year net profits on Wednesday, but sales came in flat in the 12 months.
Looking ahead, Levy added that DPSG is "dependent on continued strength in its core markets and could see better-than-expected results if US consumer sentiment materially improved."
However, she warned: "If crude oil were to continue rising in price and remain at elevated levels, DPSG could face lower-than-expected margins and earnings."
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