A Third-Way Beverage Play

Posted by: Roben Farzad on March 2, 2006

Cadbury Schweppes (CSG): The name immediately brings to mind the Easter-favorite creme egg, which, according to those ’80s TV spots, was pumped out by a delusional RabbitChicken. The 223-year old London company’s portfolio also includes Bazooka, Bubblicious and Swedish fish. But it’s Sir Cad’s vast, yet largely unsung beverage business that really has me bunnied up.

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Cadbury Schweppes owns Dr. Pepper, an impressively growing name in a declining carbonated beverages category. I used to think the stuff tasted like fizzy Palmolive, until my girlfriend somehow got me into it. But now that I've been converted, it's like there's a party in my mouth...and everyone's invited!

In an unprecedented marketing push, the company is giving out 250 million cans of Diet Dr. Pepper this month. Meanwhile, CSG sports a fructolicious roster of beverages in the States, including (inhale): 7-UP, Snapple, Mott's Apple Juice, A&W Root Beer, Sunkist Soda, Canada Dry, Hawaiian Punch, Schweppes, Diet Rite, Slush Puppie frozen drinks, Clamato, Mr & Mrs T's Mixers, Rose's, Mistic, Yoo-hoo, Orangina, IBC, Stewart's and Nantucket Nectars.

And anyone who knows me knows how much I root for RC Cola, perhaps the most neglected and underrated brand in Cadbury's stable -- a real shame, as I feel it easily out-tastes Coke and Pepsi. It's a pain to find outside of Dixie and the Midwest ... and, oddly enough, NYU.

But I digress. My $0.02: Dr. Pepper is really getting the Cadbury Schweppes foot in the distributional door -- at restaurants, corner groceries, cafeterias, college campuses, and so on. Since the mid '90s, the stock has quadrupled to a recent all-time high of just under $44. Yes, the shelf space game is brutal in the soft drinks biz. But, assuming it has the marketing vision, CSG is in a great position to leverage its Dr. Pepper ubiquity to better push its other brands, which can be relaunched in a thousand different ways. Heck, Coke just reincarnated TaB, your mom's favorite diet cola when Jimmy Carter was leaving office.

I say keep your eyes on Cadbury Schweppes. And keep RC alive!

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Bloomberg Businessweek’s Ben Steverman focuses on the latest moves in financial markets and emerging trends in stocks, bonds, and funds, always with an eye toward giving readers a better understanding of the sometimes confusing and often chaotic world of money. Standard & Poor’s senior index analyst Howard Silverblatt will also provide his take on companies’ finances and the markets. Voted one of the “Top 100 Finance Blogs” in 2007.

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