Dr. Pepper Snapple Group Case Study
Problem
Andrew Barker, a brand manager for Snapple beverages at the Dr. Pepper Snapple Group, Inc., must assess whether or not a profitable market opportunity exists for a new energy beverage brand to be produced, marketed, and distributed by the company in 2008. He has about 3 months to determine the market opportunity.
SWOT
Strengths | Weaknesses | * Strong portfolio of leading consumer-preferred brands * Integrated business model * Strong customer relationships * Attractive positioning within a large, growing, and profitable market * Broad geographic manufacturing and distribution coverage * Strong operating margins and significant, stable cash flows * Experienced executive management team | * Currently the only major domestic nonalcoholic beverage company in the US without a significant branded energy drink of its own * Company bottlers and distributors do not serve all areas of the US (by early 2008, 80% of the US market) * Market is already established | Opportunities | Threats | * Integrated business model provides opportunities for net sales and profit growth through the alignment of the economic interests of its brand ownership and its bottling and distribution businesses * Carbonated beverages were the 4th largest nonalcoholic beverage category in the US in 2006 and the fasted growing beverage category * Average US per capita consumption of energy beverage drinkers increased by 14% since 2004 | * Industry analysts project an average annual growth rate of 10.5% from 2007 to 2011 (down 32% from 2001-2006) which is attributed to market maturity, increased price and packaging competition, and the entrance of hybrid energy beverages, such as energy water, energy fruit drinks, ready-to-drink energy teas, and energy colas * Energy beverage consumers limit their choice to only 1.4 different brands, which suggests brand loyalty in this market * 5 Major brands (Red Bull, Hansen, Pepsi-Cola, Rockstar and Coca-Cola)
Andrew Barker, a brand manager for Snapple beverages at the Dr. Pepper Snapple Group, Inc., must assess whether or not a profitable market opportunity exists for a new energy beverage brand to be produced, marketed, and distributed by the company in 2008. He has about 3 months to determine the market opportunity.
SWOT
Strengths | Weaknesses | * Strong portfolio of leading consumer-preferred brands * Integrated business model * Strong customer relationships * Attractive positioning within a large, growing, and profitable market * Broad geographic manufacturing and distribution coverage * Strong operating margins and significant, stable cash flows * Experienced executive management team | * Currently the only major domestic nonalcoholic beverage company in the US without a significant branded energy drink of its own * Company bottlers and distributors do not serve all areas of the US (by early 2008, 80% of the US market) * Market is already established | Opportunities | Threats | * Integrated business model provides opportunities for net sales and profit growth through the alignment of the economic interests of its brand ownership and its bottling and distribution businesses * Carbonated beverages were the 4th largest nonalcoholic beverage category in the US in 2006 and the fasted growing beverage category * Average US per capita consumption of energy beverage drinkers increased by 14% since 2004 | * Industry analysts project an average annual growth rate of 10.5% from 2007 to 2011 (down 32% from 2001-2006) which is attributed to market maturity, increased price and packaging competition, and the entrance of hybrid energy beverages, such as energy water, energy fruit drinks, ready-to-drink energy teas, and energy colas * Energy beverage consumers limit their choice to only 1.4 different brands, which suggests brand loyalty in this market * 5 Major brands (Red Bull, Hansen, Pepsi-Cola, Rockstar and Coca-Cola)