Cadbury Schweppes' 7 Up flat as Dr Pepper Rocks

via infoseek.com

As in the Dickens’ novel, A Tale of Two Cities, it’s the best of times and the worst of times at Dr Pepper/Seven Up Inc.

The Plano, Texas-based subsidiary of Cadbury Schweppes Plc has roughly 15 percent of the $56 billion U.S. retail soft drink market, according to the company. Its flagship brand, Dr Pepper, is “a phenomenon,” says John Sicher, publisher and editor of industry newsletter Beverage Digest, in Bedford Hills, N.Y. “It’s an unstoppable freight train.”

Dr Pepper is the third-fastest-growing U.S. soft drink brand, on a pace that is outperformed only by PepsiCo Inc.’s Mountain Dew and the Coca Cola Co.’s second-place Sprite.

That’s not the story, however, for venerable 7 Up, the lemon-lime soft drink that Sicher says has been on a slow decline over the past 15 years.

At the end of 1985, Beverage Digest estimated, Dr Pepper’s share of the total soft drink market was 3.9 percent. But at the end of last year, it was 6.1 percent. In the same period, 7 Up’s share fell from 4.0 percent in 1985 to 2.1 percent in 1998.

Top company executives refused requests to be interviewed.

Dr Pepper/Seven Up spokesman Michael Martin attributed Dr Pepper’s growth to its dominance of the “pepper” category, which is roughly defined as Dr Pepper and the few soft drinks that try to match its flavor. He also cited its bottler network, a mixture of operators owned by the Coca-Cola Bottling Co., as well as independents. Dr Pepper bottlers support the product through retail displays, key to sales of any soft drink.

7 Up is not so fortunate, Martin said. The brand faces a fiercely strong rival in Coca-Cola’s Sprite, which is No. 1 in the lemon-lime category.

7 Up’s distribution network consists of independents, along with bottlers owned by the Pepsi Bottling Group Inc. Martin noted that Pepsi bottlers have not been as active as their Dr Pepper counterparts in getting 7 Up onto store shelves or setting up crucial end-of-aisle displays.

“Our research indicates that when 7 Up is on display with other soft drinks, overall soft drink sales increase,” Martin said. “There’s an upside for bottlers to put 7 Up on display.”

The company has taken steps to establish more of an upside for 7 Up bottlers to pour additional promotional efforts into the brand. One of the biggest is a new advertising campaign launched recently by longtime Dr Pepper/Seven Up agency Young & Rubicam Inc., of New York. The tagline, “Make 7 Up Yours” replaces the “Are U an UN?” theme that many industry observers thought did not hit the mark.

Martin said the previous advertising scored well in awareness with the target customer, consumers ages 12 to 24, but did not translate into sales. The approach of the current campaign is to talk about the brand’s relevance to the lives of consumers, so they know why they should buy it.

The commercials feature comedian Orlando Jones and flaunt a definite attitude. In several of the spots, he’s wearing a green T-shirt. Lettering on the front reads: “Make 7.” The back says: “Up Yours,” and the comedian turns around several times so that viewers have clear views of the cheeky message.

The campaign casts Jones as an enthusiastic but inexperienced executive newly assigned to the task of marketing the brand. In one spot, he places a 7 Up vending machine in a “high traffic” location, which turns out to be the middle lane of a busy highway. Cars whiz past him honking, their drivers yelling angrily. Even after a huge truck demolishes the machine, Jones still doesn’t get it. He simply calls for another one.

Beverage Digest’s Sicher, who has seen the new advertising, said the 7 Up bottlers he talked to about it are very enthusiastic. Media buys in 2000 include new purchases of airtime on the February Grammy Awards and World Wrestling Federation programmes. Another pre-game and in-game Super Bowl buy has also been set, along with cable time on MTV and ESPN.

Although Dr Pepper/Seven Up executives have promised a double-digit increase in 2000 media spending for 7 Up from this year’s levels, the brand in recent years has been outgunned by rival Sprite.

According to Competitive Media Reporting of New York, which tracks advertisers’ spending, Dr Pepper/Seven Up spent $26.9 million on U.S. consumer media for 7 Up in 1998, while Coca-Cola shelled out $56.5 million for Sprite that year.

Another major step that parent company Cadbury has launched is to consolidate its U.S. bottler network. In September, Cadbury and its U.S. partner, Washington, D.C.-based investment firm The Carlyle Group, paid $283 million and assumed $408 million in debt for Dr Pepper Bottling Company of Texas. Cadbury and Carlyle plan to merge the Texas operation with American Bottling Co. in Darien, Ill., which they also own.

Sicher said that while the new ad campaign and bottler consolidation are steps in the right direction, the company still faces a long-term challenge on 7 Up.

“It didn’t fall into its level of decline overnight,” Sicher said. “It won’t be able to achieve healthy growth overnight either.”