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In the soda pantheon, Dr Pepper is the odd one out: it has neither the popularity nor the sales of Coca Cola or Pepsi, you cannot use it in a standard cocktailand it doesn’t fit neatly into a category like cola or root beer.
For decades, pepper soda has marketed its 23-flavor blend as a one-stop choice for discerning soda drinkers. Over the years, Dr Pepper has found success as a quirky alternative to Coke and Pepsi.
Today, Dr Pepper is hardly a rambling underdog – that’s the heroic mark of Keurig Dr Pepper
(PDK) who, with Coca-Cola
(KO) and PepsiCo
(DYNAMISM)constitute the three largest soda companies in the $37 billion U.S. market, as measured by NielsenIQ in retail and convenience stores.
And recently, Dr Pepper has been gaining ground over its competitors, even as the overall soda market has stagnated.
Dr Pepper soda grew its dollar share by 9% from 2003 to 2021, compared to a 26% drop in the soft drink category overall, according to Keurig Dr Pepper, citing IRI and the Beverage Digest factbook. Today, Dr Pepper is the fourth most popular soda in the country after Coke, Pepsi and Mountain Dew.
“Over the past 20 years, the volume of soft drinks has gone down,” said Duane Stanford, editor of Beverage Digest. “One of the positives…was Dr Pepper.”
Founded in 1885 in Waco, Texas, Dr Pepper was the first in a wave of soda companies that reached into the 19th century. (He dropped the period in the 1950s for design reasons.) The small brand rose to prominence in the second half of the 20th century and helped shape the soda industry, while cultivating its reputation as a ‘outsider.
The drink was invented by Charles Alderton, a pharmacist at a pharmacy owned by Wade Morrison, who is credited with patenting the drink and its name.
Legend has it that Morrison named the drink after a Charles Pepper, the father of a woman he loved, hoping the gesture would make a match easier. It’s the tale at Dr Pepper’s website. But Joy Summar-Smith, associate director of the Dr Pepper Museum in Waco, said there are multiple origin stories, and this one doesn’t hold up.
By the time [Morrison] ran into Dr. Pepper, he was married and he had a son,” Summar-Smith said.
Coca-Cola was established in 1886. Pepsi was invented in the 1890s, but got its name in 1898.
“The soft drink industry itself, as a whole, was still really trying to figure itself out in the late 1800s, early 1900s,” Summar-Smith said. “Each city had its own soft drink factory.”
Coca-Cola won the fastest, helped by its invention of the couponHe offered free samples of his new drink. Pepsi has positioned itself as a cheaper competitor to Coke.
While Coke and Pepsi were making waves, Dr Pepper “just didn’t push that hard,” said Tristan Donovan, author of “Fizz: How Soda Shook Up the World.”
In the early 20th century, Dr Pepper Customers are encouraged to drink a Dr Pepper three times a day, around 10 a.m., 2 p.m. and 4 p.m., to keep their energy up. Although successful, the campaign never focused on the unique, cola-free flavor of the product.
Back in the 1950s, Dr Pepper called himself “the likeable Pepper-Upper”, once again focusing on the energy boost you can get from any can of soda.
Then everything changed.
In the early 20th century, domestic bottlers who worked with Coke or Pepsi were moving away from Dr Pepper, fearing they would violate agreements that prohibited them from partnering with a competitor. As a result, Dr Pepper had little national distribution, focusing primarily on Texas and neighboring states.
In the 1960s, PepsiCo sued Dr Pepper for trademark infringement. Dr Pepper hit back, accusing Pepsi of denying drinks entry to its distribution platform. In 1963, a judge ruled in favor of the bottler, opening the door to the national expansion of the product.
Dr Pepper “succeeded in a legal coup that gave him the boost he needed: he effectively argued in U.S. District Court that Dr Pepper was not a cola,” a 1984 article in D magazine Explain. Or like the The Federal Trade Commission said so“The lawsuit opened the bottles of PepsiCo and Coca-Cola to Dr Pepper and his sales immediately increased.”
With new nationwide access, the brand “began to promote [itself] much more heavily,” said Donovan, the author of “Fizz.”
During the 1970s, Dr Pepper presented itself to a national audience as a unique flavor, a change that D Magazine said it “has fleshed out an identity for Dr Pepper that may be his most formidable asset”. In 1977, the company launched its “Be a Pepper” campaign, encouraging people to identify themselves as Dr Pepper drinkers.
Today, Dr Pepper bills itself as a treat, using a pint-sized mascot called Lil’ Sweet in its advertisements. Another campaign, Fanville, is set in a fictional world where people are obsessed with college football and Also Dr Pepper, positioning the drink as a cult favorite.
After Dr Pepper established itself as an alternative to traditional colas, it embarked on a path that eventually made it part of the nation’s third-largest soft drink maker, Keurig Dr Pepper.
During the wave of mega-mergers of the 1980s, Coca-Cola tried to take over Dr Pepper.
In 1986, shortly after PepsiCo announced its intention to buy 7Up, Coca-Cola said it had agreed to acquire Dr Pepper. The plans would have made Coke and Pepsi the toughest players in the market by far, the Los Angeles Times reported at the time.
But the Coke and Pepsi deals stalled as the FTC ruled the drinks were similar enough to pose a potential antitrust threat.
A meteoric series of mergers, acquisitions and splits ensued. Dr Pepper and 7Up merged in the late 1980s. Over the years, Cadbury Schweppes took stakes in the combined company and, ultimately, full ownership of the brands. In 2008 Cadbury spun off its North American beverage division to create the Dr Pepper Snapple Group. A decade later, Keurig Green Mountain merged with this companycreating Keurig Dr Pepper.
Today, KDP still lags behind Coca-Cola and PepsiCo, but it is closing the gap.
By volume, Coca-Cola controlled about 40% of the U.S. retail market in the first nine months of 2022, followed by PepsiCo with about 29% and Keurig Dr Pepper with about 25%, according to data from Beverage Digest.
Year over year, PepsiCo’s share fell 1%, while Keurig Dr Pepper’s share rose. And over the years, the Dr Pepper brand has grown as some of its competitors struggle. This could be due to growing consumer interest in flavored soft drinks, said Stanford, the publication’s editor.
There are other benefits to existing outside of the cola dichotomy. Food service providers usually have an agreement with either Coke or Pepsi for its soda fountains, and one fountain will not offer products made by the other. But fountains often feature Dr Pepper, making it a widely available choice.
“Dr Pepper is the most differentiated brand in beverages – not just soft drinks, but beverages,” said Derek Dabrowski, general manager of juices, mixers and sauces at KDP. People seek out Dr Pepper when they want a treat, he added. This is “where we won”.
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