Dr Pepper Snapple (DPS) has seen its earnings drop by 28% which it put down to marketing expenses related to its acquisition of Bai Brands.
Net income of the US company for the second quarter was $188 million, down from $260 million for the same period of 2016.
However, in the face of consumer trends away from sugary sodas, DPS saw its net sales for the first half rise by nearly 4%, increasing from $3.18 billion in 2016 to $3.3 billion this year.
For the second quarter, sales volumes increased 4%, inclusive of the Bai acquisition. Reported net sales increased 6%, including the Bai acquisition, which accounted for just over 1% of net sales growth. Total Bai brand sales growth contributed just over 2% of net sales growth.
DPS announced it would buy antioxidant-infused drinks company Bai last year in a deal worth $1.7 billion, stating it was ‘one of the fastest growing beverage brands’.
By geography, US and Canada volume increased by 3%, and Mexico and the Caribbean by increased 6%, both slightly higher than the previous quarter.
DPS President and CEO Larry Young said: “I’m proud of our teams for delivering strong top-line results for the quarter. We remain committed to our priority brand strategy, as demonstrated by our increased marketing investment.
“We also invested further in activities to deliver increased trial of Bai and are encouraged by the results so far. Our carbonated soft drinks portfolio once again outperformed the category, growing both dollar and volume share in IRi-measured markets. Our allied brands continue to contribute strong growth to our business, and we’re driving growth and productivity with rapid continuous improvement.”
DPS estimates that for 2017 as a whole organic volume growth will be just over 1%, with total volume growth around 2%, inclusive of the Bai acquisition.
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