Business
Understanding Dr Pepper
"Once I get Dr Pepper down their throats, and tell them about it, I'm in business."
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The company claims that hot Dr. Pepper retains its flavor because it is based on natural fruit flavors. Artificial flavorings immediately lose their taste when heated. Whatever the reason, the company has been shrewdly promoting hot Dr. Pepper since the mid-1950's and reports that winter sales now equal summer sales. Although hot Dr. Pepper being vendored at the Cotton Bowl on brisk football days is a familiar scene, the practice has now spread to five other non-Texas, non-Southern stadia around the country.
In Alaska, for example, where hot Dr. Pepper receives a supreme test, consumption averages a 24-bottle carry-home case per person annually. And lets the enormity of such a promotion escape the Dr. Pepper-conscious Texan, imagine, if you can, shivering at the Yale Bowl and ordering up a steaming cup of ginger-ale.
The company also claims that because of its distinctive flavor Dr. Pepper is the least taste-affected of all diet soft drinks. Sugarless soft drinks account for a fat 15 per cent of the soft drink market nationally. Clements flatly predicts that Dr. Pepper will be number one in the sugarless market by the end of this year. "We blot out that strong saccharine flavor in diet drinks," he says. "We are currently number one in Dallas, St. Louis and Denver, and we're moving up quickly everywhere else."
The heart of the Dr. Pepper business is selling its concentrated syrup to its 515 bottlers around the country at a flat 88 1/12 cents a gallon. The company's financial investment in its franchise bottlers is limited to paying half of their individual advertising costs. In addition, Dr. Pepper owns and operates about half a dozen bottling plants, mostly in Texas. By selling its syrup in concentrated form, the firm avoided having to expand the large Dallas headquarters which for years had doled out non-concentrated syrup from 5,000 gallon vats. What has been expanded, however, is a quality control lab which constantly checks on the production of the 515 bottlers. Clements is continually travelling and tasting as he goes. "I had the best tasting Dr. Pepper recently in Cincinnati," he reports. "Those boys are doing a fine job."
Clements' status as a Dr. Pepper connoisseur began in 1935, when he joined the company while still an undergraduate at the University of Alabama. To help pay school expenses during the depression, he became a route salesman for Dr. Pepper, which had only recently gained a foothold in the Deep South. He did so well that when he graduated he was offered a job with the company as a Southern regional representative. He has been with Dr. Pepper ever since, and has moved steadily up the ranks.
A devout Baptist who always carries a pocketful of marbles etched with the golden rule which he distributes to friend and foe alike, Clements is a relaxed, confident man who enjoys nothing better than to lean back at his large desk, swig a Dr. Pepper and puff on a thick, black stogie. Staring at you with his friendly, twinkling eyes and sporting a warm smile, he mouths nothing but the friendliest of words for the Coca-Cola company and their Mr. Pibb challenge. "Better to let sleeping dogs lie," President Clements says softly. "Our sales have actually improved since Mr. Pibb came along."
He denies the obvious: Mr. Pibb doesn't taste like Dr. Pepper. "Dr. Pepper," says its president, "tastes entirely different from anything else on the market. It is only natural to say it tastes like something else you are familiar with; but to say that Dr. Pepper tastes like anything else is like saying an orange tastes like an apple."
Under Clements' direction the company has set its sights on the 13 to 30-year-old market, those consumers who are not yet totally committed cola drinkers. Dr. Pepper's president believes that the after-30 crowd is stubbornly committed in their tastes, and so, operating on the rather safe principle that young people are receptive to new taste sensations, the company is busy dispensing free samples on high school and college campuses around the country. The $13 million advertising campaign, mostly on national television, emphasizes the adventurous quality involved in trying a different-tasting Dr. Pepper.
All of which should draw a few guffaws in Waco, where the drink is about as familiar and adventurous as tap water. But probably not even Wacoans know that the trade name immortalizes a real Dr. Pepper, who was a Richmond, Virginia, physician. The doctor's son-in-law worked in a Waco drugstore as a clerk, moonlighting as a beverage chemist. The young man, whose name, unfortunately, is forgotten (at least by Dr. Pepper researchers) worked up a formula with 38 ingredients for use with soda water. The formula was perfected by R. S. Lazenby, who purchased it from the young chemist and, as a favor, agreed to name the drink after the chemist's father-in-law, who didn't think that a Waco drug clerk was quite good enough for his daughter.
Whether the attempt to mollify the Virginia doctor by naming a concoction suspiciously like snake medicine in his honor actually did succeed, is lost to history. We know that Lazenby made a slow but steady start at marketing his beverage around the state. Within a few years, the small bottling plant at Waco was operating near capacity. Modest but consistent sales growth dominated the company's long history until the rather sleepy, comfortable Dallas concern finally began flexing its muscles nationally.
"This is a conservative outfit," admits Clements. "So we move with great deliberation. By the time we decided to go national we had a solidly established base of operations in the South and Southwest. We had, through long trial and error, weeded out good bottling franchises from among the weak sisters. And through long years of experience, we had developed proven marketing techniques."
Armed with such obvious strengths, Clements began planning the national campaign 11 years before becoming president in 1969. As vice president for marketing, he was the key figure in shaping and formulating the expansion of franchising operations around the country. "The soft drink business," he says, "is basically a local enterprise. Actually, it is as depression-proof as any business can be. But consumption patterns vary. Diet drinks, for example, are more popular in the North, East, and West, than they are in the Midwest or South. Also, canned drinks account for a larger share of volume in these same markets than in Texas or the Midwest. Our franchise people are on top of these local situations. They have to be because we have no way of knowing how sales patterns change from one locale to another."
Looking ahead, Clements sees few problems clouding Dr. Pepper's future. "With a market share of approximately four per cent in the United States, we have a fantastic opportunity for domestic growth," he said. "For this reason we are not seeking any other acquisitions. Nothing else interests us but capitalizing on the growth opportunities of Dr. Pepper."
Such sharply focused thinking is just fine with the company stockholders, who are happily floating atop a rising tide of Dr. Pepper sales. At the company's Dallas headquarters, a pretty receptionist greeted us by reaching into a cooler and withdrawing a frosty bottle of the venerable beverage. With an approving smile she watched us take a polite swig. "Isn't it good?" she asks.
It's a happy, enthusiastic place these days. Even W. W. Clements whistles while he works. Escorting us around the plant recently, he stamped out one of his thick stogies and began to whistle a catchy little tune, familiar to just about every American who watches television any time during prime time. We heard a few bars and then caught ourselves humming the words: "Doctor Pepperrr...so misunderstood..."
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