DPS has already carried Bai 5 – a range of five-calorie, antioxidant-infused drinks using coffee fruit and flavored with exotic juices – for the last two years in select markets across the US.
New retailers on the Bai 5 rostrum will include Jewel-Osco, Safeway, Stop & Shop and Duane Reade, plus 100+ additional Costco stores across the US.
Following the Pepper deal, the only holes in Bai's US-wide distribution platform will reportedly include the Pacific Northwest, Arizona and parts of the Carolinas.
Ben Weiss, founder and CEO of Bai Brands, said: “Every day we get phone calls and letters from consumers in cities where Bai is not yet on the shelf, asking for the product.
“Our relationship with Dr Pepper Snapple Group will allow us to rapidly roll out Bai to new markets and into the hands of those consumers.
DPS praises portfolio fit
Ken Kurtz, president of Bai Brands, said that the taste of the product, all-natural ingredients and use of coffeefruit as an antioxidant source were all driving strong consumer demand.
“So we are very pleased to work with DPS to complete our national distribution footprint,” he added.
Jeff Conrad, DPS VP of market development, said Bai had been a “great success” in select markets over the last few quarters.
“There’s no question that Bai fits exceedingly well with our portfolio…and we expect this new choice to be very well received by consumers from coast to coast,” he said.
‘Beneficial for both companies’ – Analyst
In a note released Monday on DPS, analysts at Zacks Investment Research greeted news of the Bai 5 distribution extension as “beneficial for both companies”.
“Bai Brands will benefit from Dr Pepper’s extensive delivery network and the latter would profit from expanded marketing rights of a popular low-calorie drink,” they added.
DPS' move can be seen as tactical given the circa. 80% weighting towards CSDs in its portfolio, and recent bad press for sugar-sweetened beverages, 'artificial' sweeteners and aspartame in particular.
Aside from its status as a low calorie offering, the Bai 5 range is sweetened with organic stevia and erythritol.
'Antioxidant powerhouse'
CEO Larry Young principally blamed diets for the 2% overall decline in CSD volumes when DPS reported its Q3 2013 results.
That said, the firm has reported 10 consecutive quarters of flat to negative growth in non-carbonates, so involvement with brands such as Bai 5 can help it shake up its portfolio in this space.
Bai founder Weiss said that, while traveling in Indonesia, he stumbled on the fact that coffee fruit – the casing surrounding the coffee bean – is an “antioxidant powerhouse”.
He then spent a year in his family kitchen mixing it with exotic fruit juices to create the beverage line.