Texas A&M Corpus Christi
Dr Pepper Snapple Group, Inc.
Definition of the problem
Energy beverages as of 2006 are a 6.2 billion dollars in sales Industry. While being the fastest growing beverage category in the US, energy drinks are also the fourth largest nonalcoholic beverage category in the United States as of 2006 after soft drinks, sports drinks, and bottled water. Dr Pepper Snapple (DPS) is a major competitor within the non-alcoholic beverage industry having 18.8% of the US Carbonated Soft drinks (CSD) market and the non-carbonated beverages, however they have no significant branded energy drink.
Dr Pepper Snapple currently sells ready-to-drink tea, juice, juice drinks, and mixer categories, but none of these gives them a share in the 6.2 billion dollar industry of energy drinks. Therefore, they are losing out on a huge market and profit opportunity. Dr Pepper Snapple needs to expand their portfolio to include energy beverages, which most of their competitors already have and get market shares in the energy drink industry.
There are clearly 2 alternatives here; Dr Pepper Snapple can continue to operate as is. They have sizable market shares in the CSD industry and constantly return outstanding profit margins, or Dr Pepper Snapple can grow its profit margin and its business by adding a new line of successful merchandise to its portfolio.
The First alternative is not necessarily a detrimental decision for Dr Pepper Snapple Inc. as it owns a diverse portfolio of well-known CSD and non-CSD brands. They have built their success through strategically acquiring beverage brands and then building them into leaders in their category. Examples of these key brands are shown in figure 1 below.
Courtesy of Dr Pepper Snapple Group Inc. (Figure1)
The second alternative will increase profit, market share and company visibility for Dr Pepper Snapple Inc., more so because the target group heavily consists...