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Dr Pepper Expects to Outperform Overall CSD Industry

CHICAGO -- Dr Pepper Snapple Chief Executive Larry Young, speaking Monday at the Reuters Food and Agriculture Summit here, said he expects his company will outperform the overall U.S. carbonated soft drink industry this year, helped by Dr Pepper's dominance in the growing market for flavored beverages.

According to a Reuters report, Young predicted the U.S. carbonated drinks industry would be flat to down 1 percent, while flavored drinks, which include its own Dr Pepper, 7UP and Sunkist, should be flat to slightly up. "We expect to outperform the market this year and see our market share improving," Young said.

Compared with rivals Coke and Pepsi, which have strong cola brands, Dr Pepper is heavily weighted toward flavored soft drinks, the Reuters report noted.

Young disagreed with the notion of a "new normal" in terms of spending on soft drinks. He said consumers will return to splurging as the economy recovers. "When the economy goes soft, tap water tastes pretty good," he said. "We're a resilient industry."

Dr Pepper Snapple Group Inc. is currently in negotiations with Coca-Cola Co. for distributing its drinks after Coke consolidates its bottling system. Young said it was still too early to comment on specifics of its talks with Coca-Cola, but said he would approach a decision the same way he did with PepsiCo.

"Value is not always dollars. There's lots of ways to look at value," Young said. He noted that renegotiating with Coca-Cola gave Dr Pepper Snapple a "once-in-a-lifetime opportunity to clean up" some of its regional distribution.

PepsiCo paid Dr Pepper $900 million for the right to continue distributing its soft drinks -- a consequence of Pepsi buying its two largest bottlers who held those rights.

Wall Street is looking for a similar-sized payout from Coke, which said last month it would buy the North American operations of its largest bottler, Coca-Cola Enterprises, another bottler of Dr Pepper Snapple drinks, according to the report.

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