DESPITE NEW ADS, 7 UP DOWN DUE TO BOTTLER WOES

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a new formulation, new packaging and a new ad campaign-backed by a rare infusion of marketing dollars from bottlers-have so far failed to breathe new life into 7 UP.

"The brand was allowed to slide for such a long time it lost its currency. It's like air leaked slowly out of its balloon," said Tom Pirko, president of beverage consultancy Bevmark. "It's going to require a lot of perseverance. The consumer is confused."

SALES SLIP 2.5%

Cadbury Schweppes, in reporting on first-quarter soft-drink performance in the U.S. earlier this month, said the 69-year-old brand saw sales slip 2.5% for the period ended March 31, compared with the same period a year ago. The $54 billion market was up 3.3% last year, according to Beverage Marketing Corp., which ranked 7 UP as the No. 8 brand last year, with a 2.2% share of market, down 0.1 share point from 1996.

Cadbury blamed the quarterly decline of the brand, marketed by its Dr Pepper/Seven Up division, on a "lack of focus" among its distributors in the Pepsi-Cola Co. bottling system.

Unlike Coca-Cola Co. and Pepsi, Cadbury until this month hasn't directly owned bottlers to distribute its products, forcing it to rely solely on independent bottlers and bottlers representing other brands. The company has now bought two independent bottlers.

Dr Pepper/Seven Up kicked off a new, humorous ad campaign in late January from Y&R Advertising, New York. The ads tout 7 UP's "crisp new taste," a more intense lemon and lime flavor-and the first reformulation in the brand's history.

$40 MIL-PLUS IN SPENDING

The campaign, backed by $40 million to $42 million in media spending, includes a 25% contribution from bottlers, their first such sharing of national marketing expenses in at least a decade.

A spokesman for Dr Pepper/Seven Up said results are improving in the current quarter.

Observers said it will take more than the new marketing initiatives to reverse fortunes for the once-vibrant brand, which has seen sales slide for most of the 1990s at the hands of Coca-Cola's continuing emphasis on rival, strong-performing Sprite.

At the same time, Pepsi has entered test markets with Storm, a lemon-lime soft drink-not to mention its fastest-growing non-cola of the moment, Mountain Dew.

While Coca-Cola's ad spending behind Sprite dwarfs 7 UP's, it's at the store level where the battles are fiercest in soft drinks, and where the weapon of choice is price.

"I'm noticing [Coca-Cola] is getting much more focused on individual markets, which usually means street spending. Maybe we've got to get in there with them," said Ralph Crowley Jr., president-CEO of Polar Beverages, a Worcester, Mass., 7 UP bottler.

Emanuel Goldman, beverage analyst with PaineWebber, said it's too early to judge the effectiveness of 7 UP's new initiatives.

"Sometimes these things take a while to grab; you can't expect it to grab in one quarter. The thing that grabs in one quarter is price," he said. "[Coca-Cola] has been extremely aggressive in the large-volume outlets in terms of pricing Sprite, and Seven Up has had to deal with this."

Mr. Crowley said bottlers want Dr Pepper/Seven Up to take more risks with advertising to reach a younger demographic.

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