Discussing US consumer concerns surrounding caloric intake, Young said consumers are looking for healthier choices and said there was “no question they’re drinking fewer CSDs (carbonated soft drinks)”.
Group net sales rose for Q1 2013 rose 1.3% to $1.38bn year-on-year, while net income was up 3.8% to $106m.
However, total sales volumes fell 2% in the quarter, with a 3% decline for Dr Pepper and Dr Pepper TEN (with DPS blaming inventory builds from the latter’s late 2011 launch), and declines for Sunkist, 7UP and RC Cola.
‘We’re not going to turn the lights on overnight’
To kickstart growth in carbonates, in 2013 DPS ramped up its TEN (calorie per 12oz or 355ml) platform – for 7UP, Sunkist, A&W, Canada Dry and RC Cola, backed by a $30m M&A spend in 2013 – to give consumers the same taste and mouthfeel of a regular CSD with fewer calories.
“In fact, they can drink an entire 12-pack of TEN and consume less calories than in one regular 12oz can. Now that’s something to get excited about,” Young said.
Nonetheless, Young insisted it was a long journey, in terms of retailer and consumer education.
“It’s not just something where we go out there and turn the lights on overnight, getting those consumption habits to change,” he told investors and analysts.
“But so far we’re very, very bullish on what we’ve seen be able to happen and how excited the retailer is about it.”
With DPS targeting incremental space taking for all the TEN brands, Young said the firm expected sales to grow throughout Q2 as stores effected planogram resets.
RC Ten ‘very successful’ on platform
All commodity volume (ACV) of the TEN platform through grocery channels was now 65%, he added, insisting that the products had “been highly incremental to the CSD category, meaning that we’re achieving our goal of bringing lapsed consumers back to the category”.
“We’ve got a lot of accounts right now that are giving us some incremental end cap until they can reset the shelf,” Young said.
“And as I mentioned…the accounts that we’ve been able to get it in, we’re showing that TEN is 10% of the trademark.”
Young made a special mention of classic cola brand RC TEN – the Cott Beverages brand that DPS distributes in the US – and said that one “pleasant surprise is how well it’s being doing”.
“We don’t ever do much with it, but it’s just been very, very successful working on the TEN platform. [But] when you go across them [the TEN portfolio] they’re all performing basically equally out there,” he added.