Fighting to Prosper In a Highly Competitive Market
Written by Joseph S. Harrison under the direction of Jeffrey S. Harrison at the Robins School of Business, University of Richmond. Copyright © Jeffrey S. Harrison. This case was written for the purpose of classroom discussion. It is not to be duplicated or cited in any form without the copyright holder’s express permission. For permission to reproduce or cite this case, contact Jeffrey S. Harrison (email@example.com). In your message, state your name, affiliation and the intended use of the case. Permission for classroom use will be granted free of charge.
Larry Young, President and CEO of Dr Pepper Snapple Group, Inc. (DPS) seemed to be on a roll. Named 2010 Beverage Executive of the Year by Beverage Industry Magazine, he led the company through three very difficult economic years since it separated from the London-based food and beverage giant Cadbury Schweppes. Reflecting on that time, he chuckled, “There couldn’t have been a worse year to go public.”1 Triggered by the collapse of mortgage-backed securities, the recession froze the credit markets and led to unprecedented commodities prices. In spite of adverse economic conditions and fierce competition, the company managed to obtain modest growth in sales in 2010. Perhaps most satisfying of all was the recent turnaround of the Snapple Brand, which had been struggling for many years.2 Sales volume for the brand grew 10 percent in 2010, fueled by new products, packages and distribution. In addition, Dr Pepper, Canada Dry, Crush, Mott’s and Hawaiian Punch all experienced increases in demand. A healthy cash flow allowed the company to pay down its debt, increase dividends and repurchase shares. A question remained as to whether the company was simply taking advantage of some fairly obvious opportunities that it could not pursue when it was under Cadbury Schweppes ownership, or whether this number three