- Dr Pepper Snapple reported an increase in net sales of 2% while gross profits grew about 1.6% since last year to reach $951 million during the fourth quarter of 2016, according to the company's earnings report.
- Beverage case sales volumes remained relatively flat in the U.S. and Canada, but grew by 5% in Mexico.
- Currency problems, including an unfavorable exchange rate for the Mexican peso, kept profits down, according to the report.
At first glance, the positive earnings report looks like Dr Pepper Snapple has defied the trends and continues to grow its core soda and juice brands. But that isn't entirely the case: Sales of Dr Pepper itself were down 1%, driven primarily by lower volumes in fountain foodservice, while Snapple saw a 3% decline due to currency headwinds and higher prices of its single-serve packages.
The gains popped up in unexpected places — citrus soda brand Squirt took off with 8% growth in Mexico, and tomato cocktail drink Clamato grew by 13%. As expected, the water category had the biggest gains throughout, increasing by 8% in Q4. Looking at fiscal year 2016, water grew by 18% — reflecting the trend of growing bottled water sales amind declining interest in soda among consumers.
One of the drivers of growth is Dr Pepper Snapple's latest acquisition, Bai Brands, the antioxidant superfruit power drink company. In the earnings report, President and CEO Larry Young said that Bai "will strengthen our priority brand portfolio and bring exciting innovation opportunities to the company."
The $1.7 billion acquisition was completed earlier this year. Dr Pepper Snapple has been Bai's distributor since 2013, and knows the product and its market inside and out. With its exotic and better-for-you line of juices, waters and ready-to-drink teas, Bai Brands aligns nicely with today's consumer trends and presents opportunities to help Dr Pepper Snapple weather the market — including any future negative currency headwinds coming out of Mexico. A recent, buzzy Super Bowl commercial starring Christopher Walken and Justin Timberlate are helping the brand grow its position in the market.