Dr Pepper Snapple’s Stellar Performance and Raised Outlook in 3Q15

(Continued from Prior Part)

Volume growth

The overall bottler case sales volumes of Dr Pepper Snapple (DPS) increased by 2% in 3Q15 on a year-over-year basis. Bottler case sales volume measures the sales of packaged beverages sold by the company and its bottling partners to retailers and independent distributors.

The 3Q15 growth in bottler case sales volume resulted from a 2% rise in the company’s carbonated soft drink (or CSD) volumes and a 4% growth in noncarbonated beverage volumes.

CSD volumes in 3Q15

Among Dr Pepper Snapple’s CSD brands, the volumes of Dr Pepper, Core 4 brands, and Crush were flat in 3Q15 on a year-over-year basis. The volumes of the regular Dr Pepper brand increased 2% while Diet Dr Pepper declined 4%. The Core 4 brands comprise Canada Dry, 7UP, Sunkist Soda, and A&W.

Peñafiel, Dr Pepper Snapple’s Mexican sparkling mineral water brand, continued its strong run and reported a 14% growth in its 3Q15 volume. This growth was driven by higher promotional activity and distribution gains. The volumes of the Schweppes brand increased 11%, driven by the growth of sparkling waters and ginger ale. Squirt brand volumes grew 5% on a year-over-year basis. Other CSD brand volumes declined by 1% in 3Q15.

To boost its soda volumes, Dr Pepper Snapple entered into a partnership with Keurig Green Mountain (GMCR), under which some of the company’s brands will be available on the Keurig Kold at-home carbonation machine, which was launched in September 2015.

Noncarbonated beverages

Within Dr Pepper Snapple’s noncarbonated beverages portfolio, water category volumes increased by 16%, mainly due to third-party brands like Bai 5 and Fiji. Volumes of the spicy juice blend Clamato grew 15%, helped by distribution gains. Snapple volumes increased 5% due to product innovation. Hawaiian Punch volumes decreased 1% while volumes of Mott’s juice brand were unchanged in 3Q15 on a year-over-year basis. All other noncarbonated brands declined 3% in 3Q15.

Coca-Cola (KO) and PepsiCo (PEP) also witnessed higher growth in noncarbonated beverages than CSDs. In 3Q15, Coca-Cola’s sparkling beverage volumes grew 2% and still beverage volumes increased by 6%. PepsiCo reported a 2% decline in the CSD volumes of its North America Beverages segment. This decline was offset by a 10% rise in its noncarbonated beverage volumes.

Dr Pepper Snapple, PepsiCo, and Coca-Cola together account for 15.2% of the holdings of the Consumer Staples Select Sector SPDR ETF (XLP) and 16.2% of the Vanguard Consumer Staples ETF (VDC).