A&W KEEPS LEAD DESPITE GAINS BY RIVALS;BARQ'S, MUG BOTH MAKE STRONG SHOWING IN ROOT BEER CATEGORY

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Cadbury Beverages' A&W root beer lost share to rival brands from Coca-Cola Co. and Pepsi-Cola Co. this year but maintained its lead in the segment.

Both Coca-Cola's Barq's root beer and Pepsi-Cola's Mug brand achieved strong sales gains through August, according to Information Resources Inc., behind increased ad spending and expanded distribution.

Barq's, a brand Coca-Cola acquired in the summer of '95, boosted volume 12% in the first eight months of '96, according to IRI supermarket sales data. Its share grew slightly to about 14.5% of the root beer category.

Meanwhile, Mug doubled volume and share, with share rising to nearly 12%. A&W suffered an 8% volume drop and lost 2 share points, to about 29%.

Overall, root beer is almost a $2 billion category, representing 3.5% of the total soft-drink market.

UNIFYING DISTRIBUTION

Much of Pepsi's bottling system carried rival brands before this year, when Pepsi issued a mandate seeking to "unify" its system behind Mug.

Likewise, Barq's benefited from expanded distribution, at A&W's expense. Many Coca-Cola bottlers had carried A&W, then switched to Barq's after the acquisition.

Prior to '96, Barq's had distribution in about two-thirds of the U.S.

"Coca-Cola Enterprises [Coke's biggest bottler] resigned certain Cadbury brands, including A&W. That's what cost them the volume," said Roy Burry, an analyst with Oppenheimer & Co.

Marketing support also drove A&W's rivals. Barq's spent a modest $800,000 in the first half of '96, according to Competitive Media Reporting, but that was up from $700,000 in all of '95. Mug spent $4 million in the first half after four years off-air. To defend its position, A&W nearly doubled first-half spending to $4.4 million.

MAY BE ONE-TIME EFFECT

A&W executives couldn't be reached, but analysts' reactions to the brand's slide were mixed. The hit from the bottler switches could turn out to be a one-time effect. But A&W isn't showing the kind of dominance of other niche drinks such as Gatorade and Dr Pepper.

Quaker Oats Co.'s Gatorade has faced a similar threat in the past three years from Pepsi-Cola `s and Coca-Cola's sports drinks. While those brands have achieved solid growth in a fast-growing category, Gatorade has maintained a 75% share and solid growth.

"The difference is, Gatorade is the sports-drink category. [Pepsi's] All Sport and [Coke's] PowerAde are like Mr. Pibb to Dr Pepper," Mr. Burry said. "It's very difficult to penetrate against Gatorade and Dr Pepper, but not so with A&W in root beer. There, it's a free-for-all."

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