Dr Pepper profit beats Street view

By Dhanya Skariachan

BANGALORE (Reuters) - Dr Pepper Snapple Group Inc (DPS.N: Quote, Profile, Research) reported a higher-than-expected quarterly profit and raised its 2009 forecast on Wednesday as consumers looking to curb spending choose its lower-priced soft drinks.

While demand for its value-priced drinks like Crush and Hawaiian Punch has been strong during the recession, the company's more expensive brands -- particularly Snapple -- have suffered as consumers cut back.

Shares of Dr Pepper, whose other brands include A&W, 7UP and Canada Dry, were up 2 percent in afternoon trading after jumping 8.4 percent earlier.

Dr Pepper, which was separated last year from British confectionary company Cadbury Plc (CBRY.L: Quote, Profile, Research), is the third-largest soft-drink maker in the United States behind Coke and Pepsi. It has increased its U.S. market share and is trying to grow through increased marketing and expanded distribution.

For example, the company is rolling out more vending machines and coolers and is touting the value of its Hawaiian Punch in the weak economy. It has also restaged Snapple as a premium drink made with natural ingredients, though that effort came at a tough time as premium drinks have suffered.

Chief Executive Larry Young declined to speculate on the industry impact of PepsiCo Inc's (PEP.N: Quote, Profile, Research) plan to buy bottlers Pepsi Bottling Group Inc (PBG.N: Quote, Profile, Research) and PepsiAmericas Inc (PAS.N: Quote, Profile, Research). On a conference call, Young did say a flexible route to market is "paramount."

Dr Pepper does not have a decentralized system like the ones currently used by Coca-Cola Co (KO.N: Quote, Profile, Research) and PepsiCo. Dr Pepper's Crush drink is distributed by Pepsi bottlers.

The company expects to see a return to growth in Snapple later this year, executives said during the call.