Pepsi Bottling Group Drops 7 UP for Sierra Mist

Jun 21, 2002

The Pepsi Bottling Group, Inc. will discontinue distribution of 7 UP, effective December 31, as it begins to manufacture, sell and distribute Sierra Mist in all of its U.S. marketing areas on January 1, 2003. Currently, Sierra Mist and Diet Sierra Mist are sold in approximately 70 percent of PBG’s U.S. territories.

“With this decision, we can now focus the sales and execution muscle of our entire organization behind a single lemon-lime soda,” says John T. Cahill, Chief Executive Officer of PBG.

“We are surprised by this decision given the intrinsic value of 7 UP to PBG in the second largest carbonated soft drinks segment where 7 UP represents 23 percent of lemon-lime and Sierra Mist five percent,” says Doug Tough, Dr Pepper/Seven Up president and chief executive officer. “However, we are entirely comfortable with moving the 7 UP brand into the independent bottling system which will be able to give greater focus to 7 UP.”

7 UP volume sold via the PBG system will transfer back to DPSU, free of charge, and then be refranchised to independent bottlers. Over recent years, the independent bottling system has been strengthened through consolidation via the formation of the Dr Pepper/Seven Up Bottling Group Inc., 40-percent owned by Cadbury Schweppes plc, owners of 7 UP.

Moderator Comment: Will this decision impact either
7 UP’s or Sierra Mist’s relative position in the CSD marketplace? How will the
Pepsi Bottling Group’s decision affect retailers?

The folks at Cadbury-Schweppes must be thinking 7 UP
yours to there, soon to be, ex-bottlers at PBG. [George
Anderson – Moderator

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