Dr Pepper to Add $30 Million to Ad Budget

Company Also Prepares for National Launch of Low-Calorie Soda

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Dr Pepper Snapple Group is upping its annual ad budget yet again.

Between 2008 and 2010, the beverage company's marketing budget increased 25%, from $356 million to $445 million. In 2011, execs say they'll up spending by another 5% to 6% or $25 million to $30 million.

The marketer has been steadily increasing its ad budget in the last few years, beginning with a push to more aggressively market its brands in the depths of the recession. The company markets brands including 7Up, A&W, Canada Dry, Hawaiian Punch and Mott's.

"Increasing awareness and availability of our brands is a key focus for us, and I'm thrilled with the progress we're making in 2011," Larry Young, president-CEO, said during the company's second-quarter conference call, noting distribution of core brands has improved in both grocery and convenience store channels. "Moving on to innovation, we're seeing strong trial and repeat in our products. Lapsed users are returning, new users are experimenting and heavy marketing support is providing a halo in the base business."

The company also announced plans for a national rollout of Dr Pepper Ten in October. The 10-calorie soda was created for 25- to 34-year-old men who prefer regular Dr Pepper but want fewer calories. Earlier this year, it began testing in six markets, including Denver and Colorado Springs, Colo.; Des Moines, Iowa; Kansas City, Mo.; and San Antonio and Austin, Texas.

Mr. Young said that Dr Pepper Ten exceeded expectations in test markets, leading to the decision to take the new product national. The launch will be supported by strong retailer activation, trial packaging, targeted coupons and "innovative" merchandising and displays, he said. Inter public Group of Cos.' Deutsch, Los Angeles, handled marketing for the test markets. It included humorous commercials with the tagline "Not For Women," a mobile "Man Cave" and out-of -home, digital and in-store efforts. Interpublic's Initiative handled media buying.

"As we all know, bringing back [carbonated soft drink] occasions is a huge opportunity, and we believe Dr Pepper Ten can do this," Mr. Young said. "In test markets, not only did we see strong overall trademark growth, but more importantly, regular and Diet Dr Pepper both grew."

During the second quarter, revenue rose 4% to $1.58 billion. Earnings, however, fell 6%, as the company faced higher packaging, ingredient and transportation costs. Dr Pepper Snapple, like Coca-Cola and PepsiCo, is raising prices to combat rising costs.

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