The latest news, trends, analysis, interviews and podcasts from the global food and beverage industry

The deal is an attempt to guard against the company’s experience with Energy Brands’ Glacéau enhanced water, distributed by Dr Pepper Snapple when it was still operating as Cadbury Schweppes Americas Beverages.

CSAB helped to build Glacéau into a major brand, only to lose Glacéau distribution to Coca-Cola bottlers after The Coca-Cola Company bought Energy Brands last year for a record $4.1bn.

Although CSAB/Dr Pepper Snapple received $90m in compensation for giving up the business, this was considerably less than it would have received as a shareholder.

Now Dr Pepper Snapple – spun off from Cadbury as an independent company in May this year – has resolved that it will only distribute third party beverages if it has a permanent distribution agreement or an equity stake in the product.

“When somebody hits the home run, we get part of it.” Larry Young, president and CEO of Dr Pepper Snapple, explained to The Wall Street Journal.

Dr Pepper Snapple is already distributing Hydrive in a number of its key midwestern and east coast markets, and the company’s stake will rise as it expands the drinks into other markets.

Although exact details of the deal haven't been revealed, Dr Pepper Snapple’s share in the business will not rise about 25%, according to the WSJ.

Industry veterans

Hydrive is a line of low-calorie, enhanced water energy drinks packed in 15.5oz (458ml) resealable bottles. The brand was launched in 2006 by beverage industry veterans Mike Weinstein (former CEO of Snapple and president of A&W) and Brian O’Byrne (former CEO of Yoo-hoo/Orangina) through their INNOV8 beverage development company.

The drinks are currently available in more than 12,000 accounts in 21 states. Dr Pepper Snapple now has a minority interest in the subsidiary Hydrive Energy LLC.

“We're very pleased to be working again with two well-respected beverage veterans, Mike Weinstein and Brian O’Byrne, on their latest beverage innovation,” said Larry Young, president and CEO of Dr Pepper Snapple.

"Hydrive energy drinks are uniquely positioned to take advantage of growth in the two fastest-growing beverage categories, enhanced water and energy. The opportunity to participate at an early stage in the growth and success of such emerging beverage ventures is very exciting for us, and part of our overall portfolio strategy.”

Brian O’Byrne, CEO of Hydrive LLC, said: “Dr Pepper Snapple has been doing an outstanding job getting Hydrive in distribution in its markets. The brand is already sold in over 9,000 accounts by DPS, and the number keeps growing every day. We're looking forward to expanding into additional markets in the future."