The Homa Files

TakeAway: Sun Drop’s owner is taking direct aim at Mountain Dew, the fourth-most popular soda in the U.S. after Coke, Pepsi and Diet Coke.   

Mountain Dew dominates the “citrus” category with an 84.3% share, heavily marketed by Pepsi to teens through sponsorships of extreme sports and through advertising that’s embedded into videogames.

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Excerpted from WSJ, “Bigger Splash Planned for a Niche Citrus Soda” By Valerie Bauerlein, December 9, 2010

Sun Drop – which has been around since 1928 – has a rabid following in the handful of mainly Southern states where it’s currently sold. The drink was once pitched by the Nas car legend Dale Earnhardt. Families have shipped it off to soldiers serving in Afghanistan; fans swap recipes for holiday turkey with Sun Drop glaze. Made with orange juice and packing more caffeine than Mountain Dew, it is sometimes used as a mixer with hard liquor.

Its expansion is part of Dr Pepper Snapple’s strategy to fortify consumer interest in flavored sodas, a non-cola segment of the soft drink industry in which the company specializes. Cola sales have fallen to 55.4% of the U.S. soda market in 2009 from 60.5% in 1999, according to Beverage Digest, an industry publication. At the same time, sales of Dr Pepper, Crush, and other brands Dr Pepper Snapple owns have grown.

To reach Sun Drop’s target market of 15- to 17-year-olds, Dr Pepper Snapple developed a revenue-sharing agreement with Viacom Inc.’s MTV network. MTV’s new Scratch marketing arm has designed the drink’s advertising and image, down to a redesign of the can that will be appear in January. The network also will feature Sun Drop in MTV programming, including reality shows such as “The Real World.”

Some analysts have cooled to Dr Pepper Snapple shares, saying the company has improved operations but has little prospect for growth, since the company long ago sold the rights to its brands internationally.

The company said it sees potential nonetheless in the growing appetite for its flavored drinks because carbonated soft drinks is a fairly stagnant, slightly declining category.

Edit by AMW

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Full Article:
http://online.wsj.com/article/SB10001424052748704447604576007841967430316.html

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This entry was posted on December 21, 2010 at 6:40 am and is filed under Beverages - Soft Drinks. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.