Cadbury Shows 7UP Bottlers New 'dnL.'
Will Make Water 'Very Big Priority.'
Aims Barbs at Pepsi.

At 7UP bottler meeting in Dallas Sept. 5-6, executives of Cadbury's Dr Pepper/Seven Up unit (DPSU) unveil new 7UP product, "dnL." Facing significant 7UP franchise shifts, executives also express confidence in 7UP's future plus displeasure both at Pepsi and at Pepsi bottlers that are dropping 7UP for Sierra Mist. Additionally, they discuss upcoming major push by DPSU in bottled water using Deja Blue brand. Executives. DPSU CEO Doug Tough: "We have confidence and faith in 7UP" and extends "special thanks" to Pepsi bottlers that are keeping 7UP. Declares: "Pepsi has 7UP around the world, but since they couldn't have it here, they're settling for a weaker brand." Mike McGrath, president/COO DPSU's Cadbury Brands/7UP unit, says when Pepsi bottlers drop 7UP, "parent company (Pepsi) wins, bottlers lose." Marketing. DPSU shows series of new ads continuing "Make 7UP Yours" campaign and announces in summer 2003, 7UP will "become eBay's exclusive soft drink partner."

New product. Meeting's biggest news was unveiling of new 7UP line extension: "dnL" (BD 8/30/02). dnL logo is "7UP" upside down (photo). Senior vp marketing Jim Trebilcock notes dnL "is the flipped version of 7UP." Original brand 7UP is clear, caffeine-free and packaged in green bottles. In contrast, dnL is green, contains caffeine and packaged in clear bottles. Caffeine level is 55 mg per 12-oz, same as Dr Pepper, says DPSU executive. Trebilcock quips, in the past, 7UP touted "never had caffeine, never will, but never say never." Product's tagline is, "Turn Your Thirst Upside Down." Trebilcock notes dnL "says something about our company and brands. We're going to be bold ... dnL has the potential to crank up the volume." Trebilcock declares key to "attracting new and lapsed" users of 7UP is "news." Backdrop. Company considered 92 different concepts, including 16 potential names. Says dnL was tested with 900 consumers. History. Previous 7UP line extensions: 1) sugar-free 7UP in 1970; renamed Diet 7UP in 1979. 2) Cherry 7UP and Diet Cherry 7UP in 1987.

dnL details. DPSU says product combines "bold fruit flavors." Launches Nov. 4 in 20-oz for existing 7UP bottlers. Take-home packaging -- 2-liter and 12-packs -- will debut in April 2003. Re 20-oz launch, Trebilcock cites "sampling opportunity, need to get it in cold and speed we can get it into the marketplace." Independent bottlers taking over 7UP franchises from Pepsi bottlers will get dnL early next year. McGrath notes waiting to launch dnL in take-home packaging until next spring also allows company time to align and stabilize shifting 7UP franchise system. Teaser ad campaign begins in September using tagline, "Flip It." Volume. McGrath estimates 2003 volume for dnL will be about 25 mil cases. Co-existence issue? As dnL is green with caffeine, BD asks if DPSU anticipates co-existence issue with Mt. Dew for Pepsi bottlers keeping 7UP. McGrath: "I don't think so, there's no citrus involved. It's a totally different profile, it's a totally different taste. We've read the Pepsi contract, and I don't believe we have any co-existence issue."

7UP vs Sierra Mist. DPSU sees downside/upside from Pepsi bottlers dropping 7UP and more volume moving into independent system. 7UP will lose volume initially, but DPSU cites advantages from more aligned system and stronger independent bottlers. Pepsi bottlers keeping 7UP. Not all Pepsi bottlers appear ready to drop 7UP, at least in near future. Asked which bottlers are holding onto 7UP, McGrath's list includes: Pepsi Buffalo Rock, Pepsi Admiral, Pepsi Gross & Jarson and Pepsi Tenney. Buffalo Rock and Admiral are top-10 7UP bottlers (BD 12/7/01). 'Grave mistake.' McGrath calls decision by Pepsi bottlers to drop 7UP "grave mistake. But we know it's not personal. It's business." Citing potential upside, McGrath notes precedent of Coke/Pepsi bottlers dropping Sunkist and A&W in mid-1990s and brands' strong volume growth after that in independent system. But he does acknowledge that in 2003, "cycling the volume sold by Pepsi bottlers will be difficult." Lemon-lime. Re segment, McGrath notes consumers have been "switching from lemon-lime to water and non-carbs at a disproportionate rate." But McGrath says lemon-lime segment will grow again and "7UP will grow above category long-term."

Independent and Pepsi bottlers; 'pay dearly'; 'loyalty' to be rewarded. 7UP's volume down YTD -7% (table). Senior vps John Tomescko and Rich Wach note 7UP down -7.7% YTD in independent system and down -6% in Pepsi system. Tomescko says, "bottled water has had an impact, as have (CSD) flavor extensions." Notes volume per display is down this year for 7UP and for most major CSD brands. Re Pepsi bottlers dropping 7UP, Wach declares: Pepsi bottlers "will pay dearly for giving this advantage to their enemies." Adds, "to Pepsi bottlers who keep 7UP, your loyalty will not go unrewarded. We shall not rest until we pay you back." National accounts. Senior vp national accounts Dana Berghorn says YTD results "disappointing." Notes 7UP volume at top-12 national accounts down -12%; down -3% without K-Mart. Declares, "we shall make the necessary changes."

'Carnac' à la 7UP. Lemon-lime issues have clearly soured Cadbury on Pepsi. Trebilcock and chief advertising officer John Clarke entertain bottlers with take-off on famous Johnny Carson Show skit, "Carnac the Magnificent." In original TV skit, Ed McMahon would provide an answer to "Carnac" (Johnny Carson), and Carnac would supply question. In DPSU version, Clarke (in Ed McMahon role) provided answers, and "Carnac" Trebilcock then provided questions. Clarke: "Sierra Mist and Storm." "Carnac" Trebilcock: "What two products inspired the movie, 'Dumb and Dumber?'" Clarke: "Tofu, Slim-Fast and PCNA's (Pepsi-Cola North America's) treatment of 7UP." "Carnac" Trebilcock: "Name three things Mike McGrath refuses to swallow."

Advertising and marketing. Company shows nine new 7UP spots, continuing humorous, irreverent "Make 7UP Yours" campaign. Re eBay partnership, Trebilcock notes auction site has 50 mil users who spend average of two hours per week on site. Trebilcock also notes 7UP will increase "multi-cultural marketing." Clarke says 7UP has "closed awareness gap against Sprite. We're moving higher, and they're moving lower." Adds, "Sprite's media budget is 2.5 times 7UP's." Declares: "7UP must maintain its coolness."

Bottler views. 7UP bottlers generally positive on dnL: 1) "It's cool and exciting. I wish I could take some home to my kids." 2) "I think it's good, but they should roll out future consumption packages earlier." 3) "With everyone else coming out with new products, I'm glad they've stepped up to the line." 4) "It tastes good, but it will have problems catching on. The green (color) is too different from 7UP." 5) "I love it."

Water 'very big priority.' Having long expressed reservations about U.S. bottled water business, DPSU is now set to dive in with Deja Blue. Brand belongs to Dr Pepper/Seven Up Bottling Group (DPSUBG), owned by Cadbury, Carlyle Group and CEO Jim Turner. DPSU has royalty-free license in non-DPSUBG territories. McGrath calls Deja Blue "very big priority" for DPSU. Says independent system bottlers need and asked for national water strategy. Says "whole approach" on Deja Blue is to "seed it nationally." DPSU will sell it to national accounts, which "are asking for it." McGrath says "almost every" independent system bottler has agreed to take it on. Adds, "if (DPSU) is going to be competitive as a full-service supplier, we have to be in this category ... If you're not competing in that category, you're just not competitive."

Water pricing. McGrath cites price deterioration in water category. Says DPSU originally planned to price Deja Blue "one price point below" Aquafina and Dasani. Now, he says, Deja Blue will be priced with Aquafina and Dasani. Adds, "that appears fine with the retailers and bottlers." Other details. DPSU executive says Deja Blue will be produced in eight production sites around U.S. Says it's already in part/all of 20 states. Packaging will be .5- and 1-liter; also 20-oz.