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Insight - US: Dr Pepper Snapple Group steers clear of Pepsi talk

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Dr Pepper Snapple Group has distanced itself from discussions regarding the distribution deal it currently has with PepsiAmericas and Pepsi Bottling Group for its Crush CSD brand in the US.

The company's president and CEO, Larry Young, warned analysts in the company's half-year webcast today (13 August) that he would not answer any questions about the future of the agreements with the two bottlers following PepsiCo's announcement this month that it will buy the two companies.

The Crush brand outsells PepsiCo's fruit soda brands in the country.

Last year, Dr Pepper Snapple Group (DPSG) secured an agreement with PepsiAmericas, which would see the Crush brand become available in around 80% of PepsiAmericas' US system. As part of the deal, PepsiAmericas said at the time that it would "further align" its fruit-flavoured CSD portfolio behind the Crush brand.

A month prior, DPSG also secured the resources of the Pepsi Bottling Group for Crush in the country. Under the terms of the agreement, PBG has a perpetual license to manufacture, sell and distribute the brand in its territories across the US.

"The acquisition of two Pepsi bottlers clearly shows the strategic importance and growth potential of the North American beverage market," Young said today. "We're reviewing a number of possible strategic options, so it would be premature and inappropriate for us to comment further on this transaction for the time being."

The webcast today followed DPSG's announcement of its second-quarter and first-half results, earlier today.

Elsewhere in the call, Young noted that CSDs are "definitely benefiting" from the current economic climate in the US.

"In the first half, we're seeing retailers allocate a lot more space to CSDs," he said. "They're also using private label to attract consumers. We really expect this trend to continue into 2010."


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