Re: Dr Pepper Snapple Group, Inc. – Memo of Recommendation

Strategic Issue

Energy beverages in 2006 were the fourth largest nonalcoholic beverage category in the United Sates after carbonated soft drinks (CSD), bottled water, and sport drinks. Currently the company sells ready-to-drink tea, juice, juice drink, and mixer categories. The main issue is Dr Pepper Snapple sells four categories which are not among the top four. Therefore, they are missing out on a huge opportunity in the market. It would be in their best interest to penetrate the energy beverage market based on their current standing. Dr Pepper Snapple should enter into the energy beverage market with an all-natural, non-carbonated energy beverage.

The Market and Competitors

The energy beverage market is expected to grow at an average annual rate of 10.2% until 2011. It has slowed down recently due to the maturing of the market as well as new competitors to the market of hybrid energy beverages. Dr Pepper Snapple major competitors in the energy drink market are Red Bull North America, Hansen Natural Corporation, Pepsi-Cola, Rockstar Inc., and Coca-Cola. Each competitor is very power and influential in the drink, but each also have their own strengths and weaknesses. Every competitor struggles in this market due to brand loyalty, Dr Pepper Snapples most challenging obstacle to overcome.

Competitors offer very similar product which provide consumers with an energy boost, mental alertness, refreshment, and great taste. The difference ultimately lies with the packaging size, price per single-serve package, target market, and marketing.

Traditional marketing almost seems to be non-existent among the energy beverage market besides Red Bull. Competitors rely on promotional vehicles, websites, events, and sponsorships to promote their brand.

• Red Bull North America - Pioneer since 1997