- Dr Pepper Snapple Group hopes Bai Brands, the enhanced water manufacturer it recently acquired for $1.7 billion in cash, will soon lead the healthy beverage segment, said Michael Simon, chief marketing officer of Bai Brands, according to Food Business News.
- Bai Brands is expected to be the beverage maker's ninth "priority brand," though the soda company will allow Bai to operate independently to ensure continued growth and disruptive innovation in the beverage space. During the past year, Bai Brands introduced a fruit-based carbonated beverage and a better-for-you soda called Bai Black, which comes in traditional flavors such as Ginger Ale, Citrus and Root Beer.
- Simon said for Bai Brands' targeted health-conscious consumer "the definition of health for them had evolved from taking the bad stuff out to keeping the good stuff in. So purity, natural ingredients were key to them, but they also wanted flavor."
Bai Brands is helping Dr Pepper Snapple expand beyond a struggling soda industry where consumers are moving away from sugary drinks, and taxes in Philadelphia and other cities also are discouraging consumption. Already, the purchase is paying off for Dr Pepper Snapple with industry analysts attributing the beverage giant's 2% sales growth in Q4 to its acquisition of Bai. In a company earnings report, president and CEO Larry Young said Bai "will strengthen [its] priority brand portfolio and bring exciting innovation opportunities to the company."
Dr Pepper Snapple has acted as Bai's distributor since 2013 and sees market potential in its exotic, healthy line of juices, waters and ready-to-drink teas. Bai brands refers to its array of products as "a refreshing lineup for all types of taste buds," though the company is targeting a very specific type of consumer.
According to Simon, Bai's demographic "sweet spot" is a highly-educated, affluent, slightly older millennial looking to improve their health. And though this description may suggest a narrow consumer base, many of today's mass-market consumers are looking to improve their personal nutrition by swapping soda with added sugars and artificial sweeteners for value-added sparkling beverages. Dr Pepper Snapple is betting that Bai will be the next big soda alternative, in much the same way that the Snapple brand was at the height of its popularity in the 1990s.
Bai's product portfolio is certainly diverse enough to attract a variety of consumers, but the brand's addition of healthy, low calorie sodas is what secured its industry dominance. Consumers may want to continue avoiding the traditional soda products, but still demand sweet, innovative flavors and carbonation in their beverages. It will be interesting to see if Bai will be able to quash competition from trendy craft soda makers, especially because some millennial consumers may see its affiliation with "Big Soda" as a turn off.