Soda Giants Expand Beyond the Fizz Biz

Needing Revenue Boost, Cadbury and Pepsi Begin to License Brand Names

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Beverage Bigs Try to Woo Restaurants
Dr pepper barbeque sauce. 7Up Bundt cakes. Mountain Dew lip balm.

While primarily small soft-drink players such as Jones Soda Co. have for a long time licensed their brand names for products such as candy, the soda giants are increasingly breaking out of the beverage aisle in search of new revenue streams as soft drinks shrink.

Cadbury leads the way
So far, No. 3 beverage giant Cadbury Schweppes has been the most aggressive. Last year, it expanded its partnership with Jelly Belly Candy Co. with the Jelly Belly Soda Pop Shoppe collection. And it already has relationships with Unilever's Good Humor for frozen novelties, Popsicle for sugar-free pops and Breyer's for an A&W-branded root-beer-float ice cream.
Exploring the beverage aisle: Dr. Pepper barbecue sauce, Aquafina skin-care products and Mountain Dew smoothies are all in the works.
Exploring the beverage aisle: Dr. Pepper barbecue sauce, Aquafina skin-care products and Mountain Dew smoothies are all in the works.

Now, in conjunction with Vita Food Products, it is marketing a line of soda-flavored sauces and marinades featuring Dr Pepper, 7Up and A&W Root Beer for grocery and convenience stores, along with casual-dining restaurants. The sauce line is expected to hit shelves in July and August.

The company has also been selling soda-laced, branded Bundt cakes via B.C. Bundt. Launched under a three-month exclusive at Wal-Mart, the line includes 7Up, Cherry Vanilla Dr Pepper, Hawaiian Punch and Orange Crush cream cakes.

It's an idea that's been a long time coming. Fizzy sodas and fruit drinks have long been popular ingredients for everything from cookies to confections to sauces. Coca-Cola Co. on its website features more than 60 recipes passed down from families and new recipes created by the Culinary Institute of America using its beverage brands as key ingredients.

"We really use our licensed products to reinforce and generate awareness and impressions and secondarily is the revenue piece," said Megan May, associate licensing manager-carbonated soft drinks, Cadbury Schweppes Americas Beverages. Cadbury and its confection business, Adams, license 50 brands accounting for $100 million in retail sales. Beverage licenses are roughly half of that figure, making the marketer the leader in carbonated-soft-drink licensing, Ms. May said. Equity Management, San Diego, is the marketer's licensing partner.

Big players relent
Though share leaders Coke and Pepsi have seen their carbonated soft-drink brands languish as consumers flock to other beverages such as energy drinks and water, they've balked at the idea of licensing their soda brands. Only recently have they begun tapping other equities, such as hydration, for nonbeverage products.

Pepsi-Cola North America, for example, licensed its Aquafina brand to Added Extras for a line of skin-care products called Aquafina Advanced Hydration RX. Set via licensing agent Joester Loria Group, the 10-SKU line includes a facial scrub, foaming cleanser and clarifying toner for sale in mass merchants beginning in August. Added Extras first sold Aquafina Hydrating Lip Oil last year at Wal-Mart. Now the marketer is adding Aquafina FlavorSplash flavors. Pepsi has also licensed its Pepsi, Mountain Dew and Mug brands for lip balm and is set to introduce Mountain Dew smoothies at Coldstone Creamery.

It's not surprising that Pepsi would be eager to leverage the healthy halo of its best-selling water brand. Yet, wouldn't it make sense to draw out the culinary equity of its soda brands as well? At the very least it could reposition how soft-drinks are viewed by consumers increasingly fascinated with the Food Network and cooking as entertainment.

"From an industry perspective, we have seen categories including frozen novelty become cluttered with beverage brands, all being sold as part of assortments," said Debra Joester, president of Joester Loria Group. "The benefit and revenues to the brands are clearly not significant enough to attract the category leaders."

Kevin Keller, professor-marketing at Dartmouth College's Tuck School of Business, questioned the relative potential volume gains compared with launching other beverages. "I suspect finding ways to better build the brand within the cola, or at least soft-drink category, would be more promising."
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