Bai Bubbles, Dr Pepper Snapple Group
Dr Pepper Snapple plans to reposition the Bai Bubbles line to capture share in sparkling water.

PLANO, TEXAS — The acquisition of Bai helped boost sales for Dr Pepper Snapple Group, Inc. in the recent quarter, but higher expenses and a loss on early extinguishment weighed on earnings. Net income in the second quarter ended June 30 was $188 million, equal to $1.02 per share on the common stock, which was down from $260 million, or $1.40, in the year-ago period. Net sales advanced 6% to $1,797 million from $1,695 million.

Sales volumes increased 4%, including Bai, said Larry D. Young, president and chief executive officer of Dr Pepper Snapple Group.

Larry Young, Dr Pepper Snapple Group
Larry Young, president and c.e.o. of Dr Pepper Snapple Group

“For the quarter, bottler case sales increased 3% on just over 1.5 points of positive mix,” Mr. Young said during a July 27 earnings call with financial analysts. “Our C.S.D.s grew 3% in a continued challenging environment and our non-carb brands increased by 5% in the quarter. Dr Pepper increased 2%, driven by regular Dr Pepper, which grew 2% in the quarter and Diet Dr Pepper, which grew 1%, again outperforming the diet category.”

The company’s 7UP brand grew 5% in the quarter, marking the third consecutive quarter of growth in the United States, Mr. Young said.

Snapple, Dr Pepper Snapple Group
Snapple bottler case sales declined 1%.

In non-carbonated beverages, Snapple bottler case sales declined 1%, while Mott’s increased 2% and Clamato grew 3%.

“Bai increased 118%, primarily on the acquired volume outside our system as well as on continued growth in our own D.S.D. system, which grew by 37% in the quarter,” Mr. Young said. “On a year-to-date basis, retail sales of Bai are up almost 37% across I.R.I.-measured channels, significantly outperforming both the category and its key competitors. We’re seeing strong growth across multiple channels and importantly in the grocery and convenience channel.”

Bai now represents about 4.5% of total company revenues. To strengthen the brand’s performance, the company is investing heavily in marketing to drive awareness and trial of the beverages, Mr. Young said, “because we know… once they try it, they are likely to buy it again, as demonstrated by the brand’s strong repeat purchase rate.”

7-Up cans, Dr Pepper Snapple
The 7UP brand grew 5% in the quarter, marking the third consecutive quarter of growth in the United States.

Other plans for Bai include a relaunch of an antioxidant water product in the later part of the year and a repositioning of the Bubbles line to capture share in sparkling water.

“Our early results are encouraging, and we are excited about the future of this brand,” Mr. Young said.