Businessmodel of Dr Pepper Snapple Group

Customer Segments

Dr Pepper Snapple manufacturers a range of consumer-focused beverage products. These products reach the mass market through the Company’s principal customers, which include:

• Distributors and Wholesalers, comprising national and international distributors, and food and beverage wholesalers;
• Retailers, comprising supermarkets, club stores, vending machines, convenience stores, gas stations, drug chains and dollar stores
• Foodservice Outlets, notably fountain customers such as fast food restaurants, which mix syrup with water and carbonation to create a finished beverage at the point of sale to consumers. Dr Pepper Snapple includes among its customers many of the largest retailers in the US, notably Walmart, The Kroger Company, Safeway, Target Corporation, and Publix Super Markets, as well as foodservice chains such as McDonald’s, Burger King, Subway, and Wendy’s.

Dr Pepper Snapple principally serves customers across North and Latin America, with the US, Canada, Mexico, and the Caribbean its main markets. The Company also serves customers outside of the Americas, principally through distributors in Asia and Europe.

Value Propositions

Dr Pepper Snapple provides value to its customers in the following ways:

• Its industry standing and reputation, with the Company one of the largest and most recognisable beverage manufacturers in the world, with an extensive distribution and sales network;
• Its broad portfolio of brands and products, with the Company manufacturing and managing a broad portfolio of popular international beverage brands, including Dr Pepper, Schweppes, Sunkist soda, Sun Drop, and RC Cola;
• Its commitment to encouraging balanced lifestyles, with the Company offering a number of low and no calorie products, as well as reducing calories in its mainstream offerings and packaging its products in smaller sizes; and
• Its customer-centric business model, with the Company working closely with its customers to fulfil their individual needs and requirements. ### Channels

Dr Pepper Snapple operates a website at www.drpeppersnapplegroup.com, through which it provides information on its brands, activities, and locations. The Company also operates separate websites dedicated to its major brands, including www.sunkist.com and www.rccolainterntaional.com, as well as online stores that sell merchandise under the Company’s numerous brand names.

Dr Pepper Snapple makes sales directly to its customers through its in-house sales force, which is organised geographically, and operates out of the Company’s international network of offices. The Company produces and distributes its products through its own production and distribution channels, comprising 19 manufacturing facilities and 101 principal distribution centres and warehouse facilities in the US, as well as three manufacturing facilities and 12 principal distribution centres and warehouse facilities in Mexico.

In addition, Dr Pepper Snapple warehouses are located at or near bottling plants and are geographically dispersed to ensure that its products are available to meet consumer demand, with the Company offering direct store delivery capabilities. The Company owns or leases its own fleet of 8,500 vehicles across the US and Mexico, but also utilizes the services of third party logistics and distribution providers.

Customer Relationships

Dr Pepper Snapple offers a small number of its secondary products, notably branded merchandise, directly to consumers on a self-service basis through online channels. The Company, however, does not operate a self-service channel for its core beverage products.

Dr Pepper Snapple’s sales teams deal directly with customers over a period of time to agree the details of sales and distribution contracts. These contracts are typically agreed for a term of several years. The Company has longstanding relationships with its largest customers – including retailer, bottlers, and distributors – and seeks to secure recurring business.

Dr Pepper Snapple provides support to its customers through a range of online resources, such as FAQs. It also provides personalised responses to customer enquiries through a series of online contact forms. The Company also provides information through its news portal, which covers company developments and releases, and operates social media accounts with Facebook, Twitter, LinkedIn, and YouTube through which it can interact with customers directly.

Key Activities

Dr Pepper Snapple is an owner, manufacturer and distributor of non-alcoholic beverages, primarily across the US, Canada and Mexico, as well as in Asia and Europe through authorized distributors. The Company offers a portfolio of beverage products, comprising flavoured carbonated soft drinks and non-carbonated beverages, including ready-to-drink teas, juices, juice drinks, water and mixers.

Dr Pepper Snapple organises its operations into three business segments: Beverage Concentrates, Packaged Beverages and Latin America Beverages. The Company’s brands include well-known names such as Dr Pepper, Schweppes, Sunkist, RC Cola, and Hawaiian Punch, which the Company sells to a range of customers, including retailers, foodservice chains, distributors, wholesalers, and bottlers.

Key Partners

Dr Pepper Snapple collaborates with various partner companies and organisations throughout the production sales and distribution of its products. These partners include:

• Supplier and Vendor Partners, comprising suppliers of ingredients, tools, services, and technologies, which support the Company’s production and distribution processes;
• Channel Partners, comprising various authorised distributors, and logistics providers that assists in extending the Company’s sales and distribution reach and capabilities;
• Bottling Partners, comprising specialist bottling plants that assist in bottling and packaging the Company’s products;
• Social and Community Partners, comprising non-profits and charitable organisations with which the Company collaborates on social and community projects; and
• Strategic and Alliance Partners, comprising a range of companies with which the Company shares resources and collaborates on joint projects. Dr Pepper Snapple has a number of partnerships in place, including a product content partnership with Walmart, a co-branding and marketing partnership with Marvel, and a recycling and environmental partnerships with Keep America Beautiful.

Key Resources

Dr Pepper Snapple’s key resources are its brands and intellectual properties, its manufacturing facilities and supply chain, its warehousing and distribution infrastructure – including its fleet of delivery vehicles, its sales channels, its partnerships, and its personnel.

As noted above, Dr Pepper Snapple owns and leases a number of properties and facilities as part of its distribution and logistics infrastructure, including 19 manufacturing facilities and 101 principal distribution centres and warehouse facilities in the US, and three manufacturing facilities and 12 principal distribution centres and warehouse facilities in Mexico. The Company also owns and leases more than 8,000 distribution vehicles.

Dr Pepper Snapple owns a number of intellectual properties that it deems material to its operations, including a portfolio of around 2,100 trademark applications and registrations in the US, Canada, and Mexico, as well as outside the Americas. These trademarks cover its major brands, including Dr Pepper, Sunkist, and RC Cola.

Cost Structure

Dr Pepper Snapple incurs costs in relation to the development of its products, the manufacture of its products – including the acquisition of supplies and ingredients, the operation of its distribution and logistics infrastructure, the implementation of advertising and marketing campaigns, the operation and maintenance of its distribution vehicles – including fuel costs, the operation of its sales channels, the management of its partnerships, and the retention of its personnel.

In 2015 the Company incurred selling, general and administrative expenses in the amount of $2,31 billion and cost of sales in the amount of $2.56 billion. This included research and development costs totaling $19 million and advertising and marketing expenses amounting to $473 million.

Revenue Streams

Dr Pepper Snapple generates revenue through the production and sale of various beverage products, agreed through sales and distribution agreements with fixed or determinable pricing structures.

In 2015 Dr Pepper Snapple recorded annual net sales of $6.28 billion, up slightly on the $6.12 billion generated by the Company in 2014. The majority of the Company’s sales were attributed to its Packaged Beverages segment, which alone recorded annual sales of $5.54 billion. The bulk of the Company’s remaining sales came through its Beverage Concentrates segment, which recorded sales of $1.24 billion for the year.