Posted: 1/29/03

Dumping 7 UP par for business world

God bless Royal Crown Cola. I say that for all you 7 UP and Diet 7 UP drinkers out there. I know you are out there.

For some of you wandering the soft drink aisle of grocery stores and discount stores looking for 7 UP in early January, you were searching for a product that wasnít there. You may welcome such divine intervention.

Although it is probably more a business deal than divine intervention, I know how serious some 7 UP drinkers can be, morning, noon and night.

If you keep looking when shopping your favorite store, 7 UP can be found, but it might take a bit more searching to find it. After seemingly disappearing for a short time this month, 7 UP is back under the distributorship of American Bottling Company of South St. Paul, the Royal Crown folks.

As of Jan. 1 of this year, the distribution rights of 7 UP products were given up by Pepsi to many third-tier bottlers across the country. In its place, Pepsi is delivering something called Sierra Mist. It was a move, Pepsi people say, to give the company a new look and a new image to push on a national scale via all its regional Pepsi bottlers.

Nothing against Sierra Mist. It is probably a fine lemon-lime soft drink. (But based on the TV commercials for the drink during Sundayís Super Bowl, I may be mistaken. The commercials did little to make me want to grab a cold Sierra Mist!)

But I have to wonder if history and tradition mean nothing in the American business world.

One would think a well established brand name like 7 UP would be so well entrenched in American culture that a major soft drink company wouldnít think of moving in another direction. But that is exactly what happened on Jan. 1.

As we look back on the 20th century, 7 UP is one of the names that became part of Americana. The soft drink got its start around 1920 by a fellow named C.L. Grigg who founded the Howdy Orange drink company.

7 UP was introduced in 1929 and began a success story that saw the trademark formed in 1936 when the company name changed to The Seven-Up Company. By the late 1940s, 7 UP was the third best selling soft drink in the world.

Like many companies in America, the firm has not been immune to ownership changes. In 1978, Philip Morris acquired The Seven-Up Company. In 1986, Philip Morris sold the domestic operations of The Seven-Up Company to a private investment group which consolidated the operations with Dr. Pepper Company. In 1995, Dr. Pepper/Seven-Up Companies, Inc. was acquired by Cadbury Schweppes of London and 7 UP became part of Cadbury Beverages North America.

The decision by Pepsi Bottling Group last year to dump its distribution of 7 UP effective Dec. 31, 2002, sent the Cadbury folks searching for the new third-tier bottlers who have picked up the soft drink, many through the Dr. Pepper/Seven Up Bottling Group which is 40 percent owned by Cadbury Schweppes.

The long run outcome for 7 UP may be better than remaining with the Pepsi Bottling Group.

But it is big business and the reasons for stepping away from 7 UP are baffling. According to 2002 statistics, lemon-lime soft drink is a $6.5 billion business and pulled 11 percent of the total soft drink sales. Thatís not bad going up against the likes of the two big colas, Pepsi and Coke, and the youth-popular Mountain Dew.

Sierra Mist is bound to see some bounce from the strength of Pepsi and the elimination of 7 UP from the Pepsi family. Consumers are almost certain to try it, even the loyal 7 UP drinkers.

At the end of last year, however, 7 UP held a 23 percent share of Pepsiís lemon-lime sales. Sierra Mist, unveiled in October of 2000, held a 5 percent market share.

We shouldnít be surprised by such big business moves.

I still want to go to Daytonís and forget it is now Marshall Fieldís.

We all know that AT&T, Qwest and Xcel Energy are three rock-solid companies that would warrant investments? Not if you checked stock prices recently. All have been subjects of mergers and consolidations.

We purchased gasoline from Standard Oil which later became Amoco. Now, Amoco stations are operating under the British Petroleum flag after another major business sale. If you buy a Chrysler today, you are buying from a German company.

The list of mergers and acquisitions goes on and on. There is no end to it and even with 7 UP we have a company that long ago gave up its American roots for sake of a buyout.

It happens at all levels of business in this great country.

How smart are the soft drink companies? That may be debatable.

It wasnít too many years ago when Coca-Cola dumped the formula that made it famous and came out with something new and improved. After howls of consumer protests and declining sales, Coke quickly brought back ìClassic Coke.î

So much for that experience.

Perhaps Pepsi knows what it is doing in parting ways with 7 UP products. Maybe 7 UP is a bit too old-fashioned for todayís consumers? Maybe Sierra Mist is the lemon-lime drink of the future?

The real test will be in the taste. Thatís what the Coke brain trust banked on and lost on. In the case of Pepsi, there is likely no going back to 7 UP which will find its home and place with a new bottling network.

Itís been a while since my RC Cola sipping days. If 7 UP isnít good enough for Pepsi, my next 12-pack of cola might just be RC.

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