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Varchild2008 (84.00)

Pepsi shouts, "ME TOO!" at Dr. Pepper Snapple Group



April 20, 2009 – Comments (4) | RELATED TICKERS: KO , PEP , DPS

Well Well.... After 1 year's full of Anti-Dr. Pepper Snapple Group naysayers having their way with DPS...Getting to see how correct they are as DPS's share price plummeted for a full year to $12 a share....

My Long term, retirement of which I now carry 426 shares.... That's over an $8 grand stake and I still consider myself to be somewhat NEWBIE-ish to the market.

Turns out that PEPSI wants to buy out their Bottlers... and do a "ME TOO!" in terms of Dr. Pepper Snapple Group owning their bottling companys as well.

So many Hedge Funds like "TRIAN FUNDS" came out against DPS owning their bottlers.
When a press release was issued by TRIAN FUNDS that they were raising their stake in DPS while demanding that the management team dump their bottlers or be forced out by a change in directors....

I got steamed up and incredibly pissed off.    I contacted Dr. Pepper Snapple Group A.S.A.P. and said:

"This is a BEAR market and during a BEAR market there is no way your Bottlers will survive as separate companies.  Please don't agree with TRIAN FUNDS to dump your bottlers when they need you more than ever.  If your bottlers go under after spinning them off then where will you be?"

Seriously...pissed off.... dumping your bottlers is never a good thing when times are tough for the beverage industry.  So...   I guess I can gaffaw...gaffaw... and basque in the glory of knowing that PEPSI agrees with the great "VARCHILD2008" that bottlers are a beverage company's best friend.

BUY....OWN....YOUR BOTTLERS... Don't kick them to the dirt and hope for the best while the bottlers suffer under Bear Market, Volume declines.

Sure... There isn't much revenue in the bottling industry compared to the syrup industry....But their is a fundamental benefit in having complete control over your bottlers.  You can have bottlers wallow in debt until they go under... Or if you control them then you can control costs, perform Lean Six Sigma efforts across the board....and basically keep those bottlers chugging along during even the worst of the BEAR MARKET economy.

Ultimately.... It is far more expensive to have to replace a Bankrupt Bottler.... Than it is to own them.

If Coca-Cola doesn't own their bottlers..... I expect they will jump on board the DPS / PEPSI bandwagon.

IN short:

TRIAN FUNDS          0
VARCHILD2008        1

4 Comments – Post Your Own

#1) On April 20, 2009 at 9:02 AM, russiangambit (28.70) wrote:

I interviewed once for an IT position at DPS. Their IT is horrible, horrible, they have no clue what they are doing ( I sound like a Cramer now). If it is any indication of the overall quality of their people, then this company is a loser.

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#2) On April 20, 2009 at 9:30 AM, wolfhounds (68.23) wrote:

There are good reasons for PEP to buy their 2 major bottlers now. They have cash and bottler prices are relatively cheap at a time when commodity prices have fallen. This means buying higher margins cheap. PBG has also been inking deals to distribute power beverages and other non cola drinks with better margins which are not reflected in future potential profit at todays' stock price. And lastly, owning it's major bottlers outright will improve distribution and cut costs.

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#3) On April 20, 2009 at 9:39 AM, Varchild2008 (84.00) wrote:

russ = turned down by DPS for IT position.

DPS sells beverages..... not Chipsets.   And they are doing just fine for a spinoff carrying as much debt as they have.

1.5 years ahead of schedule in paying off the debt tells me the company must be doing something right.  :-)

Also, doesn't matter... DPS is the only stock in my portfolio in which I am carrying it to my retirement.... through thick and thin.

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#4) On April 20, 2009 at 9:58 AM, russiangambit (28.70) wrote:

> russ = turned down by DPS for IT position.
DPS sells beverages..... not Chipsets.   And they are doing just fine for a spinoff carrying as much debt as they have.

Will see. I trust my own experience more than any press release a company puts out. It has been my experience that good companies have good people in every department, no matter what they sell.

If you think I want to work there or feel bitter that I it didn't work out , you are very much mistaken. I have a great job, with a great company, great people. I am happy. DPS people 50% of the time didn't even understand what I was talking about. Needless to say I didn't care to follow up on that interview.


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