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PLANO, Texas -- Dr Pepper/Seven Up Inc. was informed that the Pepsi Bottling Group (PBG) would discontinue distribution of 7 UP, effective December 31.
"We are surprised by this decision given the intrinsic value of 7 UP to PBG in the second largest carbonated soft drinks segment," said Doug Tough, Dr Pepper/Seven Up president and chief executive said in a statement. "However, we are entirely comfortable with moving the 7 UP brand into the independent bottling system which will be able to give greater focus to 7 UP."
Approximately 15 percent of 7 UP volume is sold via the PBG system. This will now transfer back to Dr Pepper/Seven Up and then be refranchised to independent bottlers. Over recent years the independent bottling system has been markedly strengthened through consolidation via the formation of the Dr Pepper/Seven Up Bottling Group Inc., which is 40-percent owned by Cadbury Schweppes plc.
A similar situation happened to Dr Pepper/Seven Up in the mid 1990s, when several of its brands were dropped by other cola system bottlers, explained Tough. "The two key brands, A&W Root Beer and Sunkist, were then refranchised into the independent bottling system," he said. "These bottler portfolios were strengthened and far greater marketing and promotional focus was given to these brands. Since the transfer both brands have grown substantially and today lead their respective categories, reflecting the benefit of a focused and committed bottling system.
"Our key focus will now be to license the brand to maintain our route-to-market, then to build on the brand's 73-year heritage," Tough concluded.