Dr Pepper President: Red Fusion Designed to Add 'Excitement'
and Appeal to Non-Dr Pepper Users.

New Dr Pepper CSD -- "Red Fusion" -- will, as anticipated, be introduced in mid-July (BD 5/10/02) by Cadbury's Dr Pepper/Seven Up unit (DPSU). Identified by DPSU as part of "Dr Pepper family," new product is translucent dark red; caffeinated. Red Fusion combines "basic flavor profile of Dr Pepper" with fruit flavors. Will be launched in 20-oz and 2-liter PET plus 12-can packs; also fountain. Additional packaging rolls out about four weeks after launch. Package graphics (photo) feature "Red Fusion" logo displayed prominently. Background color is red, with black graphic elements. Word "red" in red, "fusion" in white. Below "red" is small disk displaying Dr Pepper brand logo.

Strategic rationale. In interview with BD, Dr Pepper president Jack Kilduff notes CSD industry's growth last year came mainly from line extensions, like Mt. Dew Code Red and Diet Coke With Lemon. Adds consumers today "are looking for new excitement in their soft drinks." Notes: "If we are to re-establish Dr Pepper back to its historic growth rates, we have to add more excitement (so) the brand appeals not only to our users today, but also to light and non-users of Dr Pepper and also to a younger demographic group." Non-users. Kilduff cites "extra added piece of gold" for DPSU in introducing Red Fusion. Says company's research shows "non-users of Dr Pepper or users who have tried the brand and don't like it ... responded very, very positively to" Red Fusion. Adds, "we'll be bringing in more non-users of the (Dr Pepper) brand, so we'll be expanding the brand's penetration." Kilduff also notes Red Fusion will appeal to "rapidly growing Hispanic and African-American communities" where Dr Pepper has relatively "lower brand development."

Details. Asked if Red Fusion is line extension or new brand, Kilduff says Red Fusion is "by Dr Pepper, it's a member of the Dr Pepper brand family." Adds, "it's a national product" with "huge potential" in both established and lower per-cap markets. Says new product is "whole-heartedly endorsed" by Dr Pepper Bottler Association. Bottler system. Most Dr Pepper volume handled by Coke/Pepsi bottlers. Kilduff says company hopes "all Dr Pepper bottlers will be Red Fusion bottlers ... I do not anticipate any Dr Pepper bottler not being a Red Fusion bottler based upon all the response we've had." However, Kilduff acknowledges that all Pepper bottlers may not sell it on "day one," but likely will by August. Adds "intent" is for Red Fusion to be available only to Dr Pepper bottlers.

Volume and cannibalization. Kilduff estimates Red Fusion's volume at 50+ mil cases within first 12 months after launch. Predicts Red Fusion will be "substantially incremental to Dr Pepper." Based on research, Red Fusion will source volume "from a variety of brands and categories. (But) the majority of (its volume) will be incremental through increased consumption," says Kilduff. Last year. Dr Pepper's 2001 volume was 617 mil cases, down -1.7%; first non-growth year for Dr Pepper in at least 10 years.