News: Pepsi to distribute Crush


Back in 2006 when I reviewed PepsiCo‘s entry in the orange soda category — Tropicana Twister Soda Orange — I didn’t give it favorable marks. Pepsi has been without a decent orange since they dropped the multi-flavor Slice lineup in favor of lemon-lime-only Sierra Mist. It’s been apparently that the Tropicana Twister Soda line hasn’t exactly been setting the sales world ablaze either, even with other flavors like grape, strawberry, and citrus.

Orange Crush

Orange Crush

Well, it appears that Pepsi at least has a stop-gap measure in place to shore up their orange misfortunes. According to The Atlanta Journal-Constitution, the Pepsi Bottling Group (PBG) has just signed a distribution deal for Dr Pepper Snapple Group’s Crush, including Orange Crush and its spinoff flavors. It should be interesting to see how this increases the profile of Crush in the marketplace.

Here’s the full story from The Atlanta Journal-Constitution:

Pepsi Bottling Group to distribute Crush in U.S.
Joe Guy Collier
Thursday, August 21, 2008
Pepsi Bottling Group has signed an agreement with Dr Pepper Snapple Group to make and distribute Crush beverages in the majority of its U.S. territories, the companies announced Thursday.

Pepsi Bottling Group, based in Somers, N.Y., is the largest Pepsi bottler. Dr Pepper Snapple Group, a Plano, Texas-based beverage firm, was spun off earlier this year from Cadbury Schweppes.

The deal is significant because it will almost double the U.S. market penetration of the Crush brand, which includes Orange Crush, Diet Orange Crush and Grape Crush. Pepsi Bottling Group already distributes Crush in Canada.

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Additional detail, including which flavors are included, provided by The Wall Street Journal:

Pepsi Bottling to Distribute Dr Pepper’s Crush Sodas
By Betsy McKay
August 22, 2008

The maker of Orange Crush is squeezing some new life out of an old soda standby.

Dr Pepper Snapple Group Inc. Thursday disclosed that Pepsi Bottling Group Inc., the second-largest soft-drink bottler in the U.S., will distribute its Crush sodas in most of the bottler’s U.S. markets.

The deal is a coup for Plano, Texas-based Dr Pepper Snapple, spun off from Cadbury PLC earlier this year, and marks a comeback for a well-known brand that faded from store shelves after several bottlers dropped it for other brands.

The new arrangement will make Crush available in about two-thirds of the U.S., still excluding parts of the northern Midwest and northern mountain states. It is sold in less than 40% of the country now, mostly in the Midwest.

PBG will gain a widely recognized brand to take on Coca-Cola Co.’s Fanta, the leading orange soda by volume. Financial terms weren’t disclosed.

PBG’s move represents a blow for PepsiCo Inc., which stands to lose a large chunk of distribution for its own main orange soda at a time when sales of fruit-flavored drinks are performing better than cola. To accommodate Crush, which PBG will sell in orange, diet orange and grape flavors, PBG in those markets will drop Pepsi’s Tropicana Twister soda, which comes in similar flavors.

While Coca-Cola and PepsiCo bottlers sell a few outside brands, they rarely take on a product that competes directly with a Coke or Pepsi drink. PBG distributes more than half of Pepsi’s U.S. volume. It distributes Crush in Canada.

Pepsi spokeswoman Nicole Bradley shrugged off the distribution loss. “Of course we would prefer our bottlers to carry our products over anyone else’s, but we have no objection to PBG’s orange-soda decision,” she said. “We’re making bigger bets together, going where the growth is,” such as enhanced water and energy-drink brands, she said.

PBG spokesman Jeff Dahncke said relations with PepsiCo have “never been stronger.”

The market for orange sodas — which includes fruit flavors such as grape and pineapple — represents a small portion of U.S. soft-drink volume. They account for a 4.1% share of the market, according to industry publication Beverage Digest.

But fruit-flavored sodas are performing better than Coca-Cola, Pepsi-Cola, or other giant soda brands partly because they are popular among the growing number of Hispanic consumers in the U.S., according to Jim Johnston, Dr. Pepper Snapple’s president of sales. “We believe Crush has some unlocked potential,” he said.

Sales of orange sodas declined 1.6% by volume in the U.S. in 2007, hurt by consumers shifting to newer drinks such as enhanced waters and energy drinks. But the drop was less steep than the 2.3% drop for the carbonated-soft-drinks industry overall, according to Beverage Digest.

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