Practice Case 1: Dr Pepper Snapple Group, Inc: Energy Beverages

1. How would you characterise the energy beverage category, competitors, consumers, channels, and DPSG’s category participation in late 2007?
Energy Beverage
Category: Energy drinks provide consumers with a boost of energy and they fall under the category of functional drinks. Functional drinks are non-alcoholic drinks which include ingredients such as herbs, vitamins, minerals, amino acids or other nutritional ingredients. Other functional drinks include sport drinks, teas, fruit drinks and enhanced water drink.
DPSG participation → In the US and Canada, Dr Pepper Snapple Group participated primarily in the flavoured carbonated soft drink (CSD) market segment
Competitor: The largest non-alcoholic beverage category, after carbonated soft drinks, sport drinks, and bottled water, but the fastest growing one.
DPSG participation → their major competitors include Red Bull, Monster Energy, and Coca Cola.
Consumers: Average US per capita consumption of energy beverage drinkers increased by 14% since 2004. Predominantly consumed by males aged between 12- 34 during the afternoon or morning. The reasons for consumption include energy boost, mental alertness and taste. Most limit their options to 1.4 different brands which sheds light on strong brand loyalty.
DPSG participation → DPSG have an attractive positioning within a large, growing, and profitable market.
Channels: Distribution channels include convenience stores and supermarkets, which are the dominant off-premise retail channels for energy beverages. Industry analysts expect continued sales erosion in the convenience channel in the future. Hence, companies in this category should work to broaden their distribution channels in order to gain more exposure.
DPSG participation → Broad geographic manufacturing and distribution coverage

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