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Dr Pepper Snapple Group Strategic Management

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Strategic Management Project/Presentation
The Dr. Pepper Snapple Group

History
Overview
From the invention of the first soft drink more than 200 years ago to some of the industry's most beloved beverage brands, Dr Pepper Snapple Group (DPS) has a proud legacy of innovation, bold and distinct flavors, and entrepreneurial spirit.

On May 7, 2008, DPS became a stand-alone, publicly-traded company on the New York Stock Exchange as the result of a spin-off by Cadbury, plc which held the Cadbury Schweppes Americas Beverages business group of entities.

One of North America's leading refreshment beverage companies, DPS markets more than 50 brands of carbonated soft drinks, juices, teas, mixers, waters and other premium beverages. The company's strategy, brands and people have made it a strong, sustainable and profitable business.

The company's integrated business model enables the company to manage the entire value chain from innovation to the store shelf.

History
The company now known as DPS has evolved from a combination of discovery, invention and collaboration. This rich history includes the very birth of the soft drink in 1783, when Jean Jacob Schweppe perfected the process for carbonating water and created the world's first carbonated mineral water.

Dr Pepper and Snapple, the flagship brands of DPS, have origins that share Schweppe's entrepreneurial spirit. Charles Alderton, a young pharmacist in Waco, Texas, invented
Dr Pepper in 1885. It was served at the drug store where Alderton worked and the first
Dr Pepper fans asked for a "Waco." The oldest soft drink in the United States, it was later named Dr Pepper, according to legend, after Dr. Charles Pepper, a friend of the drug store owner.

Nearly 100 years later, three New York-area health food storeowners created a unique apple soda they named Snapple. They began selling the original Snapple in health clubs in 1973. Throughout the 1970s, the company that owned Snapple was known as The Unadulterated Food Corporation, later becoming Snapple Beverage Corp.

Growth and Expansion
Cadbury Schweppes was formed in 1969 with the merger of Cadbury and Schweppes, and over the ensuing three decades the company amassed the third largest share of the North American beverage market through a series of strategic acquisitions.

In 1982, Cadbury Schweppes acquired the Duffy-Mott Company (later known as Mott's), one of the largest apple juice processors in the world. Through the rest of the 1980s, the company added Canada Dry, Sunkist Soda, Crush and Sun Drop.

A&W Brands, which included the signature root beer and cream soda, as well as Squirt and Vernors, joined the portfolio in 1993.

In 1995, Cadbury Schweppes purchased Dr Pepper/Seven Up, Inc. The acquisition brought Dr Pepper and 7UP, along with IBC Root Beer and the Welch's soft drink line, into the Cadbury Schweppes family.

In 2000, Cadbury Schweppes acquired Snapple Beverage Group, which included the namesake brand as well as RC Cola, Diet Rite and Stewart's, among others.

In 2003, the four North American beverage companies under Cadbury Schweppes -
Dr Pepper/Seven Up, Inc., Snapple Beverage Corp., Mott's, and Bebidas Mexico - were unified under a common vision, business strategy and management structure to become Cadbury Schweppes Americas Beverages.

The company established its own bottling and distribution network in 2006, when it acquired full ownership of Dr Pepper/Seven Up Bottling Group, the largest independent bottler in the U.S. Subsequently, it acquired several other major independent bottling and distributing businesses, including All-American Bottling Co., 7UP Bottling Co. of San Francisco, and Southeast-Atlantic Beverage Corp., among others. Adding to its finished goods manufacturing footprint for distribution of juices, teas, mixers and apple sauce, the bottler acquisitions have given DPS control of nearly half of its overall volume and direct access to a substantial majority of the U.S. population.

DPS Today
Dr Pepper Snapple Group is a leading producer of flavored beverages in North America and the Caribbean. Our success is fueled by more than 50 brands that are synonymous with refreshment, fun and flavor. We have 6 of the top 10 non-cola soft drinks, and 9 of our 12 leading brands are No. 1 in their flavor categories. In addition to our flagship
Dr Pepper and Snapple brands, our portfolio includes Sunkist Soda, 7UP, A&W, Canada Dry, Crush, Mott's, Squirt, Hawaiian Punch, Peñafiel, Clamato, Schweppes, Venom Energy, Rose's and Mr & Mrs T mixers.

Mission Statement
At Dr Pepper Snapple Group, it is our vision to be the best beverage business in the Americas. Our brands have been synonymous with refreshment, fun and flavor for generations, and our sales are poised to keep growing in the future.
Our strategy reflects and builds upon our position as the leading flavored beverage business in the U.S. Accordingly, we focus on: 1. Building and enhancing our leading brands 2. Pursuing profitable channels, packages and categories 3. Leveraging our integrated business models 4. Strengthening our route to market 5. Improving operating efficiency
The results of our great brands are driven by the hard work of our great people. ACTION is at the heart of everything we do. It all begins with our Call to ACTION. Every DPS employee contributes to our success by taking action to meet the needs of our customers and consumers.

Environmental Scan for the Organization
By 2015, DPS will: * Improve energy efficiency and reduce CO2 from emissions in manufacturing by 10% per gallon of finished product. * Increase product shipments per gallon of fuel used by 20%. * Replace 60,000 vending machines and coolers with Energy Star-rated equipment that is approximately 30% more energy-efficient. * Reduce manufacturing water use and wastewater discharge by 10% per gallon of finished product. * Recycle 90% of manufacturing solid waste. * Conserve more than 60 million pounds of plastic through PET package lightweighting and redesigns and increased use of recycled PET.
Dr Pepper Snapple Group has made a strong commitment to environmental stewardship on every level of our business. Creating and distributing such a wide portfolio of brands from our locations across North America gives us an opportunity to make a real difference.

Over the past five years, the company has invested resources into aligning and integrating our operations to serve our customers and consumers more efficiently and consequently reducing our energy and fuel consumption per unit of production.

At the same time, we have pursued a multitiered approach to reducing waste by ramping up recycling, developing innovative packaging solutions and collaborating with the industry on the Full Circle Recycling Initiative.

Water conservation has also been one of our primary concerns, and in 2008 we began tracking our consumption and waste water discharge to help us measure the success of our ongoing production and facility improvements.

In our first sustainability report in 2010, we set big goals in a number of categories – fuel conservation, energy consumption, recycling, reducing waste with innovative packaging, water conservation, and creating sustainable processes in all our manufacturing locations. Read the 2012 Corporate Social Responsibility Report to see how we’re progressing against our goals and to get a glimpse at our plans for the future.

Leadership Team
Larry D. Young
President and Chief Executive
Martin M. Ellen
Chief Financial Officer
James L. Baldwin, Jr.
Executive Vice President and General Counsel
Tina S. Barry
Executive Vice President, Corporate Affairs
Rodger L. Collins
President - Packaged Beverages
Derry L. Hobson
Executive Vice President - Supply Chain
James J. Johnston, Jr.
President - Concentrate Sales
Lawrence N. Solomon
Executive Vice President - Human Resources
David J. Thomas, Ph.D.
Executive Vice President - Research & Development
James R. Trebilcock
Executive Vice President – Marketing

Strategies
***The key elements of our business strategy are to build and enhance leading brands, focus on opportunities in high growth and high margin categories, increase presence in high margin channels and packages, leverage our integrated business model, strengthen our route-to-market and improve operating efficiency.***
The key elements of our business strategy are to:
Build and enhance leading brands.We use an on-going process of market and consumer analysis to identify key brands that we believe have the greatest potential for profitable sales growth. We intend to continue to invest most heavily in these key brands to drive profitable and sustainable growth by strengthening consumer awareness, developing innovative products and brand extensions to take advantage of evolving consumer trends, improving distribution and increasing promotional effectiveness.
Focus on opportunities in high growth and high margin categories.We are focused on driving growth in our business in selected profitable and emerging categories. These categories include ready-to-drink teas, energy drinks and other functional beverages. We also intend to capitalize on opportunities in these categories through brand extensions, new product launches and selective acquisitions of brand and distribution rights.
Increase presence in high margin channels and packages.We are focused on improving our product presence in high margin channels, such as convenience stores, vending machines and small independent retail outlets, through increased selling activity and investments in coolers and other cold drink equipment. We also intend to increase demand for high margin products like single-serve packages for many of our key brands through increased promotional activity and innovation.
Leverage our integrated business model.We believe our integrated brand ownership, bottling and distribution business model provides us opportunities for net sales and profit growth through the alignment of the economic interests of our brand ownership and our bottling and distribution businesses. We intend to leverage our integrated business model to reduce costs by creating greater geographic manufacturing and distribution coverage and to be more flexible and responsive to the changing needs of our large retail customers by coordinating sales, service, distribution, promotions and product launches.
Strengthen our route-to-market through acquisitions.The acquisition and creation of our Bottling Group is part of our longer-term initiative to strengthen the route-to-market for our products. We believe additional acquisitions of regional bottling companies will broaden our geographic coverage and enhance coordination with our large retail customers.
Improve operating efficiency.We believe our recently announced restructuring will reduce our selling, general and administrative expenses and improve our operating efficiency. In addition, the integration of recent acquisitions into our Bottling Group has created the opportunity to improve our manufacturing, warehousing and distribution operations.

To entice consumers back to CSDs, the category’s top players also are experimenting with promotions based on combined purchases of beverages and snacks as well as new marketing programs. As part of its national launch of citrus-flavored Sun Drop, DPS partnered with an affiliated company of TV network MTV to develop a marketing campaign targeted at millennial consumers. Its Sun Drop TV ad featuring Matty, the Sun Drop girl, attracted close to 9 million views on YouTube in 2011, Young reported during the DPS fourth-quarter 2011 results call. Sun Drop led the company’s portfolio performance and posted 43 percent growth in the segment, according to DPS’ presentation at the CAGNY event. BI http://www.bevindustry.com/articles/85653-2012-state-of-the-industry--carbonated-soft-drink Threats | Opportunities |  Decreasing Consumer disposable income reduce selling of “junk food” Health awareness among consumer has adversely affected CSD industry CSD industry facing difficulty to compete with global local drinks Snack food and CSD industry is not so prominent outside North America, specially in Asia-Pacific regions |  Asia-Pacific region is vast and open for snack food and beverage industry Bottled water industry has chances to grow outside North America due to low competition in foreign market Fruit juice and functional beverage industry is growing more rapidly than any other parallel industry. Allowing franchises in foreign market will increase market share and revenue |

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