PLANO, TEXAS — Dr Pepper Snapple Group, Inc. isn’t planning to pull the plug on its ailing brands.
“We’ll never give up on Hawaiian Punch,” said Larry Young, president and chief executive officer, during an April 23 earnings call with analysts. “It’s had some struggles out there on growth, but also it’s a huge brand. There’s a lot of volume there that we wouldn’t give up on.”
The fruity beverage, which declined 8% during the company’s first quarter, faces more competition than before with similar “sweet, cheap treat” products flooding the market. Still, the company remains optimistic for a recovery.
“We’re not doing anything silly with it,” he said. “We’re not doing anything with pricing. We think it’s starting to level off a little bit… And so probably won’t be back to growth levels it used to be, but it’ll continue to be profitable for us.”
Another product facing steady declines over the past year is the Dr Pepper brand, which has struggled under continued headwinds in the carbonated soft drink category. The company has aggressive plans to nurse the namesake soft drink back to health.
“I don’t ever like to see the product, the brand, to be down,” Mr. Young said. “But whenever I look at it and understand the conditions of what drove it, what programs we have in place to bring it back, and what we’re doing with the marketing programs… We’ve got a lot of things happening with Dr Pepper.”
Blaming harsh winter weather for a 4% decline in Dr Pepper volumes, the company is counting on TEN, its mid-calorie soft drink platform, as well as a new naturally sweetened line recently rolled out to test markets.
“We’re currently testing naturally sweetened versions of Dr Pepper, 7Up and Canada Dry in a few key markets with select retailers,” Mr. Young said. “We have specific retailers, specific geographic territories. … We want to really understand it completely before we really start making any decisions to get any bigger or to expand.”
Dr Pepper also remains bullish on Snapple, with new marketing and innovation efforts under way. The tea brand has dipped or delivered modest gains in recent quarters.
“I think on the Snapple, you won’t see us cut anything back on Snapple,” Mr. Young said. “We’ve got a lot of great plans, and that’s one that we’ll stay behind for the long term.”
For the first quarter ended March 31, net income was $155 million, equal to 78c per share on the common stock, up 46% from $106 million, or 52c per share, in the prior-year quarter.
Net sales increased 1.3% to $1,398 million from $1,380 million the year before.In bottler case sales volumes, carbonated soft drinks declined 1% and non-carbonated beverages declined 2% during the quarter. Dr Pepper Snapple said it gained distribution on key juice and tea brands and packages.