Bai-5 is one of Dr Pepper Snapple Groups allied brands

Bai-5 is one of Dr Pepper Snapple Group's allied brands

Earlier this month, a Reuters report claimed Bai 5-owner Bai Brands was exploring a sale

Bai is one of Dr Pepper Snapple Group's (DPSG's) 'allied brands', in which DPSG paid US$15m for an unspecified minority stake last year. On the day of the Reuters report, DPSG's share price fell back markedly amid concerns the brand could end up in the hands of a rival.

Later in the month, Reuters reported that DPSG was in talks to buy Bai.

Following yesterday's Q3 & YTD results conference call however, analysts did not seem entirely convinced that DPSG was about to get out its wallet - and DPSG management did not seem convinced that it needed to. 

"Management emphasised strong price discipline for potential acquisitions," noted CLSA's Caroline Levy. "Management indicated there are potential new partners to replace Bai if needed, and losing allied brands is not a new phenomenon - Rockstar, Monster and Vitaminwater were allied brands historically."

Stifel analyst Mark Swartzberg added that the company is "well aware that some high-growth businesses have been purchased at excessive multiples".

On the call, DPSG management was not shy about its allied appeal. 

"We have a tremendous pipeline of allied brands that come to us that we can look at," said DPSG CEO Larry Young. "Our distribution system is open to brands that fit our strategy."

Young explained that although DSPG "hates" to lose major players, it is also practised at filling the gaps. 

"We... understand sometimes why they sell - and we're always involved," he said. "When they're for sale, we know it - we're their partner... Sometimes you lose them and then you have to go out and make it back. And I think we've been very successful at building back. We lost Rockstar. We lost Monster. We lost Vitaminwater. We lost Fuze. And we continue to go. We keep building our allied brand portfolio."

Whether DPSG buys Bai or waves it goodbye, the allied model, it seems, will survive.

CSDs help drive strong YTD for Dr Pepper Snapple Group - results