Beverage company Dr Pepper Snapple Group (DPS) recently announced that from 2013 onward its consumers can get calorie information when they purchase from its vending machines in Chicago and San Antonio. The installation of the vending machines, which will display calorie count, is a part of the Calorie Count Vending Program. Following its launch in these two cities, the program will eventually be extended to different parts of the nation. Previously, the companies had to provide calorie labels on every beverage product, so that the consumers could make a well-informed choice.
Dr Pepper Snapple Group offers several options in low calorie drinks, like Diet Dr Pepper and Diet Snapple brands. Its latest product innovation includes Dr Pepper TEN, which contains only 10 calories per serving.
Low calorie products have a huge demand in the market with the growing number of health conscious consumers. Given the rise in lifestyle diseases, people are more concerned about the nutritional value of packaged food. Introduction of calorie count vending machines will allow consumers to make a conscious dietary choice, as they can enjoy the beverages and at the same time be aware of the number of calories consumed.
Most food and beverage companies acknowledge that they need to increase the health quotient of their products in order to accommodate the consumer shift toward healthier lifestyle. One of Dr Pepper's peers, The Coca-Cola Company (KO) is also installing calorie count vending machines in Chicago and San Antonio.
Overall, we are encouraged by Dr Pepper's strong position in the flavored carbonated soft drinks market and wide range of product portfolio. Though commodity cost pressures are expected to subside in the near term, the company's weak volume growth and lack of exposure outside the U.S. keep us on the sidelines.
We currently have 'Neutral' recommendation on Dr Pepper in the long term. The stock carries a Zacks #2 Rank (a short-term 'Buy' rating).