In its quarterly earnings call, Dr Pepper Snapple Group (DPSG) announced that following its acquisition of Bai in January, the antioxidant-infused beverage brand made up 4 percent of total net sales for the company in the first quarter of 2017, marking “an important shift” in the its portfolio.
Bai, which DPSG acquired for $1.7 billion in November, saw 80 percent volume growth over the quarter. While the company is optimistic for Bai’s flagship brand to grow, current predictions point to Bai Bubbles, Supertea, and Black having the greatest potential, particularly as the sparkling water category sees double-digit growth, according to DPSG CEO Larry Young.
“We’re investing significantly behind Bai this year as we looked to build trial and awareness of the brand,” Young said.
Following its well-received Super Bowl commercial, Bai’s advertising plan for the rest of 2017 and into 2018 will include national TV ads, a strong digital and social media presence, public relations, and out of home advertising in certain markets, Young said. DPSG also consumer awareness of Bai is still low, there is a high repeat purchase factor and the company will increase its sampling efforts. The company recently partnered with the TriBeCa film festival in New York City to be the official enhanced water of the event.
“Anytime you’ve got 50 percent repeat, you want all the trial you can get,” Young said. “You want every person tasting that.”
Young also announced “Bai-o-Sphere,” a selling and merchandising strategy to incubate Bai’s innovation across all beverage categories. He said DPSG believes the brand has potential to compete as a total beverage plan. Early test market results were positive, he said.
CFO Martin Ellen admitted that in hindsight, DPSG should have planned more retail activity with the Bai management team following the airing of the brand’s Super Bowl ad. But he and Young shot down concerns raised during the Q&A section of the call regarding the ability of the Bai management team to deliver on the high expectations for the brand and praised founder Ben Weiss on the work he had done to grow the brand.
Bai recently launched in the U.K. but Young declined to comment on the brand’s further international expansion, telling investors it was too early to tell and that DPSG plans to “take it slow.”