Dr. Pepper/7Up Wants Consumers To Flip For New Drink

DALLAS (Dow Jones)–Dr. Pepper/Seven Up is hoping consumers will flip for its newest addition, dnL, a carbonated soft drink that is being billed as an “upside down” 7Up.

Targeted to teens and young adults, the product is in some respects everything 7Up is not. It is bright green in a clear bottle, rather than being clear, like 7Up, in a green bottle. dnL also has caffeine and distinct flavor.

Marketing support for the drink initially will rely on grassroots advertising and marketing programs, which will incorporate an “upside-down” perspective, the Plano, Texas-based unit of Cadbury Schweppes PLC (CSG) said Thursday. Point-of-sale materials, merchandising pieces, cold drink programs and a heavy sampling effort also will use topsy-turvy elements. Examples could include product-sampling events where the soda must be sipped upside down.

“I think it is creative and daring for 7Up, and absolutely the right move,” said John Sicher, editor and publisher of industry trade magazine Beverage Digest.

Sicher, who attended the 7Up bottler meeting in Dallas where the news was announced, expects the concept of dnL will bolster the work Dr. Pepper/Seven Up has done began over the past two to three years to revise the 7Up brand image and pitch it toward younger consumers, he said.

Lemon-lime sodas, in general, have been on the decline with consumers, who tend to be fickle when it comes to the flavor. Still, lemon-lime is the best-selling carbonated soft drink flavor after cola, and the segment is expected to face increased competition heading into 2003.

Also, the 7Up distribution system is in upheaval. Earlier this summer, Pepsi Bottling Group Inc. (PBG) decided to put its support behind PepsiCo Inc.’s (PEP) Sierra Mist, a small, but growing, new entry into the category. As a result, Cadbury has been working to convince smaller Pepsi bottlers to stay with the 7Up brand, while working to forge new relationships with other independent bottlers.

The new brand will be a reward to those bottlers who have chosen to stick with Dr. Pepper/Seven Up. They will be the first to sell dnL when it becomes available in early November in 20-ounce bottles.

Even the size is a plus for the bottlers, which typically earn a higher profit on 20-ounce-size servings.

Once the switch is made to 7Up’s new distributors in January, dnL’s distribution will widen nationally.

Take-home packaging, which will include 12-packs and 2-liters, won’t roll out until April 2003.

To create dnL, the company tested more than 1,000 different flavor types, slowly whittling them down to a group that was tested in five U.S. cities. At one point in its development, the idea was to create a lime-lemon, but the lime flavor was too strong, said Mike McGrath, president and chief operating officer of Cadbury Beverage/Seven Up, in an interview. Lime is still part of the dnL mix, but it is blended with a variety of other fruit flavors.

Although there is a connection between 7Up and dnL, the company considers the new beverage a new brand. The idea was to create something “separate and unique” in order to add incrementally to sales rather than to have consumers switch back and forth between the two without adding to the company’s sales volume, McGrath said.

Still, dnL’s identity as an “upside-down” 7Up will reinforce what 7Up is to consumers, according to McGrath. That could stir up new excitement about 7Up.

Although he did not hear the company’s presentation in Dallas Thursday, Morgan Stanley analyst William Pecoriello said Dr. Pepper/Seven Up’s strategy is consistent with the type of innovation the industry has seen recently.

“Innovation is crucial,” Pecoriello said. “Whether this brand, dnL, is going to take off, that remains to be seen, but the strategy behind it makes perfect sense.”