Dr Pepper Snapple sees gains, but spending weak

BOSTON

The CEO of Dr Pepper Snapple Group Inc. thought shopper spending would have recovered more so far this year, though he is seeing improvements.

Larry Young told investors at a conference Wednesday that last year at this time he thought spending would have improved more than it has by now. Retailers, including convenience stores, that carry the company's drinks including its namesake soft drink, Crush and Canada Dry, say more people are coming into stores but they're still looking to spend less on what they buy.

"The consumer is not where i had them planned to be right now," he told investors at the Barclays Capital Back to School conference in Boston.

The convenience store sector -- important for companies like Dr Pepper Snapple because products sell at higher prices there -- is really hurting because it depends on blue-collar workers, who are grappling with high unemployment and weak housing numbers.

"When we see those improve, you see a definite uptick there," he said.

The company's brands are doing well though this year, he said. Dr Pepper continues to be sold in more outlets, including McDonald's.

The company's teas are also doing well and premium-priced Snapple is recovering and should continue to grow, he said.

But deep discounting this summer on soft drinks by retailers such as Wal-Mart hurt business and undid the industry's growth and price increases in the past few years. He said it also shifted shoppers back to cans -- which cost less than other forms of soft drinks -- and lowered sales.

"Now we've got to get back in there and get that mix right," Young said. "We're getting two liter back in the ads, half liter, six pack half liters back in the ads. Other packages besides just the can."