Dr Pepper Snapple Group's net income fell year-on-year in Q1 2012 with a marked slump in non-carbonate sales, although Dr Pepper TEN drove higher carbonates sales, with the firm hinting at further launches on this platform in 2013.
Group net sales for Q1 ending March 31 were $1,362bn ($1,331bn: Q1 2011), but net income fell from $114m to $102m; carbonated soft drinks (CSDs) grew 2% and non-carbonated beverages (NCBs) fell 7%, while bottler case sales (BCS) volumes were flat.
Dr Pepper Snapple Group (DPS) launched its edgy low-calorie offering Dr Pepper TEN last October - a low calorie carbonate with macho marketing that ditched the diet image - and CEO and president Larry Young said it was the main driver behind higher CSD sales.
Brett Cooper, an analyst at Consumer Edge Research, asked him if DPS had a timescale on launching other TEN product nationally?
Young replied: "We haven't come up with a time yet. We're still running the test in four or five markets. Right now, unless we have results like we saw on Dr Pepper TEN, we can always pull it forward. But right now, we're looking at it being more of a 2013."
DPS reported that carbonate sales rose 2% in Q1 2012, and asked by Stephen Powers from Sanford C. Bernstein what contribution Dr Pepper TEN had made to growth, Young said that grocery all commodity volume (ACV - a measure of retailer distribution by overall market sales) was at 93%, while convenience and gas store (petrol station) sales were 60%.
Strong brand impressions
Young added: "We've got a lot of strong brand impressions out there with it. So I would say on Dr Pepper TEN, it is doing exactly, doing actually more than we had planned."
Within CSDs, overall Dr Pepper volume sales grew 2%, while Canada Dry, A&W and Sunkist soda grew mid-single digits and 7UP increased low-single digits.
Peñafiel and Squirt also posted solid gains, while Crush declined mid-single digits and Sun Drop fell double-digits, Dr Pepper Snapple attributed the the latter's decline to its national launch in Q1 2011.
In NCBs, Hawaiian Punch volume declined 21% and Mott’s volume declined 16% due to cycling price increases that were taken in mid-year 2011. Clamato increased 27% and Snapple volume grew 5%, cycling 10% growth in the prior year period.
In terms of geography, U.S. and Canada volume were flat while volumes grew 4% in Mexico and the Caribbean.