Drinks giant’s health in hands of Dr Pepper
Cadbury Schweppes is launching a 6.5m ad campaign for Dr Pepper this week (MW April 9).
It is Cadbury Schweppes’ biggest UK spend on the brand since the company acquired it – along with 7-Up – in a 1.6bn takeover of the Dr Pepper company in 1995.
In the US, Dr Pepper lies in third place in the soft drinks market behind Coca-Cola and Pepsi, accounting for about 5.9 per cent of the carbonated drinks market by volume, according to stockbroker Merrill Lynch.
But Dr Pepper has still to make its mark in the UK. Volume sales are estimated at 30 million litres a year – a tiny proportion of the 10 billion-litre UK soft drinks market.
Cadbury Schweppes sees marketing Dr Pepper in the UK as a precursor to building sales around the world. The company’s ability to build a global brand is crucial to its future success.
“There should be no doubt that this is a vital brand to the long-term future of Cadbury Schweppes,” says Richard Hall, chairman of marketing consultancy Zenith International. “It’s a huge brand in the US and it’s one of very few brands with the potential to have a global presence. My feeling is that the acquisition of Dr Pepper was partly based on the challenge of extending it internationally, and on much more than just taking over a mature US brand.”
Cadbury Schweppes first needs to get consumers to try Dr Pepper – a blend of 23 flavours – and then get them used to its taste, which has been described by industry commentators as “unique” and “sophisticated”. Ads for the brand carry the line “You’ve got to try it to love it!”
Its unusual taste means different marketing tactics are required to those used with, say, a new orange-based carbonated drink.
But Hall is upbeat. “My understanding is that it is a brand which inspires loyalty. Consumers are more likely to remain with the brand than some other flavours. For Dr Pepper to become a more international brand, strong foundations in selected countries outside the US have to be established first.
“The UK is clearly a launch pad for other international activity.”
Cadbury Schweppes says the latest campaign through Young & Rubicam represents “nearly double the investment, compared with last year’s advertising spend”. But ACNielsen-MEAL figures for 1997 show Cadbury Schweppes spent just 1.9m on advertising soft drinks.
The marketing spend on Dr Pepper. which was first introduced in the UK in 1982, escalated when Cadbury Schweppes bought the brand. Before that, UK sales stood at 10 million litres. They have since trebled.
After purchasing Dr Pepper, Cadbury Schweppes awarded the ad account to Saatchi & Saatchi and charged it with replicating the brand’s success in the US. The relationship did not last long. Young & Rubicam was appointed just a year later. This year’s budget for advertising and on-pack promotions has been set at more than 13m. It represents a major investment compared with the 500,000 spent on radio and cinema advertising by former owner Food Brokers.
Hall says. “The company has made strong advances in the UK market over the past couple of years. The signs are pretty encouraging. The new budget commitment is confirmation of the company’s continuing faith in the concept.”
But the brand is a long way off from achieving a strong foundation. Rival brand Irn-Bru is understood to sell more than 100 million litres and the flavoured carbonate leader Tango achieves volume sales of more than 200 million litres.
Hall comments: “It’s poised to enter the big league, but it’s not there yet. Give it another year or two and it could be overtaking quite a few more prominent brands.
Distributor Coca-Cola & Schweppes Beverages (CCSB) has included Dr Pepper with Sprite, Lilt and Fanta as one of its “core four” soft drinks brands. Last year CCSB invested 25m in these four products – double its 1996 spend. It will invest 26m in on-pack promotions this spring.
According to ACNielsen, the flavoured carbonates sector saw significant sales growth through convenience stores last year, with these four brands accounting for 60 per cent of volume growth. Their share of “total home trade” increased by ten per cent to 14 per cent of flavoured carbonates.
Cash-rich Cadbury Schweppes has been investing heavily in its brands since it sold a 51 per cent share in CCSB to Coca-Cola Enterprises (CCE) for 620m last year. At the same time, Coca-Cola sold its shares in Cadbury Schweppes to CCE for 616m.
The performance of Dr Pepper will be a crucial factor in determining Cadbury Schweppes’ future profitability. Changes to its advertising may encourage consumers to try the brand, but there is one thing that Cadbury Schweppes is unlikely to change which will be crucial to its success – the taste.
