PLANO, TEXAS — Dr Pepper Snapple Group, Inc. has “great urgency” to improve the performance of its 7UP soft drink brand, said Marty Ellen, executive vice-president and chief financial officer.
|Marty Ellen, executive vice-president and c.f.o. of Dr Pepper Snapple|
“While there’s still a great deal of work to do, the team has diligently focused on the components of brand messaging and execution in local markets,” Mr. Ellen said during a July 27 earnings call with financial analysts. “Supporting this is a deep inspection of pricing, packaging, channel, and geographic competitive trends alongside those of 7UP. These insights should enable us to begin implementing certain changes in the balance of 2016. There’s definitely more to come on 7UP.”
Despite 7UP’s souring sales trends, Dr Pepper Snapple posted a solid second quarter, with bottler case sales up 1%, carbonated soft drink volumes up 1% and non-carbonated beverages up 2%.
Net income in the quarter ended June 30 was $260 million, equal to $1.40 per share on the common stock, up 18% from $220 million, or $1.15 per share, in the prior-year period. Net sales increased 2.4% to $1,695 million from $1,655 million. Sales volume increased 1%.
While Diet Dr Pepper declined during the quarter, it continues to “significantly outperform” the category, declining at about half the rate of all diet carbonated soft drinks, said Larry Young, president and chief executive officer.
He added that consumers who switch away from diet soft drinks may be opting for some of the allied brands in Dr Pepper Snapple’s portfolio, such as Bai, Vita Coco and Fiji.
|Larry Young, president and c.e.o. of Dr Pepper Snapple|
“We’re outperforming the category, but I don’t think we’re losing consumers,” Mr. Young said. “If you look at our broad portfolio, especially with our allied brands, we have some people going over to some of our allied brands, some of our better-for-you, some of the diet brands in there…
“If you break the diet category down, there’s (companies) losing much more of the volume. I think we’re going to get it. But I still think some of our consumers as we continue our insights, we’re not losing them. Their switchers are going to other brands and we’re keeping them in our portfolio.”
Net income in the six months ended June 30 was $442 million, or $2.37 per share on the common stock, up 17% from $377 million, or $1.96, in the same period of the previous year. Net sales were $3,182 million, up 2.4% from $3,106 million.“We continue to expect reported net sales to be up approximately 2% inclusive of a foreign currency translation headwind of about 1%,” Mr. Ellen said. “We continue to expect total company sales volume to be about flat. Similar to our previous guidance, we expect C.S.D.s to be about flat while we expect non-carbs to be up slightly.”