Will Dr Pepper Snapple's Asset Buy in PA Boost Sales?
Dr Pepper Snapple Group (DPS) recently signed a letter of intent to buy the assets of its distributor Davis Beverage Group and Davis Bottling Co., which is expected to double its company-owned distribution in Pennsylvania.
The acquisition, if completed, will include Davis’ direct store delivery territory in Pennsylvania and New Jersey territory. Dr Pepper Snapple will also acquire production and distribution facilities, delivery vehicles, vending equipment and other assets of the company.
Davis Beverage Group distributes a large number of DPS brands and operates in the eastern half of Pennsylvania, excluding the Philadelphia area, and Western and Central New Jersey. Davis Bottling works on a contract basis and bottles IBC, Stewarts and Crush in glass bottles and Orangina in PET bottles.
In order to drive its sales, the company has been carrying out aggressive marketing programs and strong activation in stores. Its marketing plans include increasing distribution and availability of its key brands and packages; expanding single-serve availability and re-deploying cold drink equipment assets across its DSD (Direct Store Delivery) footprint. The recent acquisition is in line with this strategy.
In 2013, Dr Pepper entered into a deal to buy back distribution rights for several of its brands for certain parts of Asia-Pacific from snack company, Mondelez International, Inc. (MDLZ). The company bought back distribution rights of its Snapple beverage line in Australia, Malaysia, Singapore, China, Hong Kong, Japan and South Korea. In addition, Dr Pepper will henceforth distribute Mott’s, Mr & Mrs T, Clamato, Mistic, Holland House and Yoo-hoo brands in Australia.
In the same year, Dr Pepper acquired a bottling company in the western part of U.S. The bottler, Dr. Pepper/7-UP Bottling Company of the West is based in Reno, NV.
Dr Pepper carries a Zacks Rank #3 (Hold).
Other Stocks to Consider
Some better-ranked beverage stocks are The WhiteWave Foods Co. (WWAV) and PepsiCo, Inc. (PEP). Both the stocks sports a Zacks Rank #2 (Buy).
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Read the Full Research Report on MDLZ
Read the Full Research Report on WWAV
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