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Available Expert - Keurig buys Dr. Pepper Snapple Group

Tuesday, January 30, 2018

Queen’s University business expert Ken Wong is available to comment on Keurig buying the Dr. Pepper Snapple Group, the company behind Dr. Pepper soda, Mott’s apple juice and Snapple iced teas. The combined company Keurig Dr. Pepper will have about $11 billion in annual sales.

“This merger is all about cost containment and the potential savings for the businesses. There is no mention of any possible consumer benefit,” says Professor Wong. “That is, there is no mention of any creative way this merger helps consumers. Indeed, if anything, when cost reduction is driving a merger, there is a need to standardize processes across the brands involved. If the things that are standardized don’t t fit with the character of one or more of the brands then the brand is impaired. There may be a short term financial gain but the more integrated the programs and processes the greater the risk one or more brands loses the thing that makes them distinct and valued.

For example, prior to Zellers’ bankruptcy, there was an attempt to merge Zellers with the Bay and standardize and streamline to take advantage of apparent efficiencies. The buying departments were merged, only to find that buyers from the Bay couldn’t get their heads around the need for low prices at Zellers and Zeller buyers were not used to buying on ‘quality’ over ‘price’.  They quickly reversed their integration.”

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