Case: Dr Pepper Snapple Group, Inc.: Energy Beverages

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Case: Dr Pepper Snapple Group, Inc.: Energy Beverages Texas A&M Corpus Christi Marketing Management MKTG-5320 Case: Dr Pepper Snapple Group, Inc.: Energy Beverages Introduction Dr Pepper Snapple Group, Inc. decided in September of 2007 to explore the profitability of expanding into the energy beverage market. Dr Pepper Snapple Group, Inc. is a major competitor in the flavored carbonated soft drink (CSD) market, and also has a strong presence in the non-CSD market. The energy beverage market had an estimated $6.2 billion in retail dollar sales in 2006. The market grew at an average annual rate of 42.5 percent between 2001 and 2006, however, market industry experts estimated an average annual growth rate of 10.5 percent…show more content…
An alternative market is adults between the ages of 35-54, a market that has been largely untapped but is still a large consumer of energy drinks Product Line and Positioning Currently, energy drinks are in both single-serve packaging and multipacks, with servings ranging from 8.3 ounces to 24 ounces. 8.3 ounces is the most popular because this is offered by Red Bull, which is the industry leader. 16 ounce servings have a 150 percent growth since 2004, making it the fastest growing size. Single servings have much higher sales than multipacks, which are generally sold through grocery stores and mass merchandisers. Brands also offer both a regular and sugar-free version, with market share being 80 percent and 20 percent respectively. Market Channel The prevailing off premises retail channel for energy beverages are convenience stores at 74 percent of sales in 2006, followed by supermarkets at 14 percent. Because of the high profit margins, energy beverage brands are traditionally introduced exclusively in single-serve packaging in the convenience store channel. The distribution agreement between Dr Pepper Snapple Group, Inc. and Hansen Natural Corporation to distribute Monster Energy ends on November 10, 2008. This leaves Dr Pepper Snapple Group, Inc. with an already open channel to distribute its own energy beverage. Pricing and Margins The cost of goods for energy beverages, according to

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