UPDATE 2-Dr Pepper Snapple lays out growth plan, shares up

* Sees adding 700 mln cases in volume over next 10-15 yrs

* Sees net sales up 3-5 pct annually over time

* Sees EPS up high single-digit rate over time

* Says to distribute Vita Coco, test other drinks

* Shares close Tuesday up 1.9 pct
(Adds company comments throughout, byline)

By Martinne Geller

NEW YORK, June 8 (BestGrowthStock) – Dr Pepper Snapple Group Inc
(DPS.N: ) laid out a long-term growth plan on Tuesday that
includes testing new soft drink brands and boosting consumption
of its established brands.

Over the next 10 to 15 years, the maker of Dr Pepper,
Schweppes, Canada Dry and 7UP expects to add another 700
million cases to the volume of soft drinks it sells, up from
1.6 billion cases today.

In so doing, Dr Pepper expects to increase its beverage
market share by 2.5 percentage points, said Chief Financial
Officer Marty Ellen.

Ellen and other Dr Pepper executives spoke at the company’s
first-ever analyst and investor meeting in Plano, Texas on
Tuesday, two years after becoming a public company. They said
they believe the business is capable of growing annual net
sales by 3 percent to 5 percent and earnings per share by a
high single-digit rate over time.

“From 2007 through 2010 we’ve been building the
foundation,” said Chief Executive Larry Young at the meeting,
which was broadcast on the web. “Over the next five years …
we’re investing for growth and so we would expect to see
above-average growth trends. And, in 2016 and beyond, we’ll
focus on optimizing the business, driving strong returns on
capital.”

Dr Pepper shares closed up 1.9 percent at $36.54 on the New
York Stock Exchange on Tuesday.

LITTLE BRANDS, BIG BRANDS

Some of the company’s growth would come from smaller brands
like Vita Coco, which just reached a distribution deal with Dr
Pepper. It is also testing other types of beverages, such as
so-called relaxation drinks from Mellow Beverage Co.

But its “single largest opportunity” is to increase per
capita consumption of its large brands, said CFO Ellen.

Ways of doing that include putting Dr Pepper in more soda
fountains in McDonald’s (MCD.N: ) restaurants across the country
and adding bottles to refrigerators in convenience stores.

Even though there are some places in the United States
where the average person drinks 400 8-ounce servings of Dr
Pepper per year, Young said the national average is 62 servings
per year. He hopes to increase that to 100 servings per year.

The company said on Monday it would receive a one-time
payment of $715 million from Coca-Cola Co (KO.N: ) to continue
selling certain Dr Pepper drinks after Coke consolidates its
U.S. bottling operations. Dr Pepper drinks will also be
included in Coke local fountain accounts and its new Freestyle
soda fountains. [ID:nN07186617]

PepsiCo Inc (PEP.N: ) paid Dr Pepper $900 million for similar
rights after it bought its largest North American bottlers.

Dr Pepper said its priorities for using its cash are to
maintain its capital structure, keep a modest cash reserve, pay
shareholders dividends and buy back shares.

Ellen said growth would be “solely” organic, meaning that
acquisitions are unlikely. The company is also unlikely to seek
expansion overseas, since CEO Young said he wants to focus for
the next six or seven years on opportunities in North America.

When asked by an analyst whether Dr Pepper would consider
teaming up with another company in an alliance similar to the
procurement deal between PepsiCo and Anheuser-Busch InBev NV
(ABI.BR: ), Ellen said no.

“We’re significant enough to create necessary leverage to
buy effectively. At this point I see no evidence of any cost
advantage created by those kinds of joint ventures,” Ellen
said.

Stock Market Investing

(Reporting by Martinne Geller; Editing by Gerald E. McCormick
and Tim Dobbyn)

UPDATE 2-Dr Pepper Snapple lays out growth plan, shares up