Going Out on Top
March 1, 2005
Going Out on Top
BY SARAH THEODORE
Dr Pepper’s Jim Turner reflects on 30 years
In the soft drink business, the name Jim Turner is almost synonymous with Dr Pepper. The president and chief executive officer of Dr Pepper/Seven Up Bottling Group, Dallas, Texas, has spent nearly 30 years in the business, and while his company has come to envelope many other products and brands, Texas’ favorite soft drink remains at the core. Turner recently announced that he plans to retire from the bottling company, and he sat down with Beverage Industry to talk about his career’s high points, challenges and where the business is heading.
Turner formed the Dr Pepper Bottling Co. of Texas in 1985, and grew the business to an $800 million venture, covering territories in Texas, Oklahoma, California, New Mexico and Nevada. In 1999, Cadbury, owner of the Dr Pepper and 7 UP brands, turned to Turner to create an “anchor bottler” within the independent bottling system and begin to consolidate its bottling network. Cadbury and Washington, D.C.-based financial firm The Carlyle Group acquired a majority interest in the company, merging it with American Bottling Co. in the Midwest. Since 1999, the company has branched out to 22 states throughout the Southwest and Midwestern United States, handles nearly 30 percent of Cadbury’s U.S. soft drink volume, and does about $2 billion in sales.
Turner spends much of his time in the market, traveling to each division, and says that while it is a big part of his company’s success, it also factored heavily into his decision to retire. “I spend a lot of time out in the trade, with our plant people and our sales people,” he says. “I’m weary of all the travel and I want to take a step back from that.”
Turner began his soft drink career in 1977. In 1982, he joined the corporate plant division of the Dr Pepper Co., managing the company’s bottling operations. He purchased his first plants in Texas when the company made the decision to spin off the franchise bottling operation after Forstmann/Little acquired the Dr Pepper Co. in 1984.
“I was very fortunate. I had an opportunity to work in virtually all segments of the business. That provided a broad range of experience and there weren’t many areas of the business I hadn’t worked in. So it was a natural fit for me to acquire the bottling plants when I did.”
Throughout much of his career, Turner and his team have been responsible for acquiring businesses, integrating them into the company, and in some cases, turning around struggling operations. The integration of American Bottling was one of the biggest of those challenges. American Bottling was a newly formed company itself when it was merged with Dr Pepper Bottling, and brought with it a number of operating cultures and financial pressures, as well as a short deadline to turn things around.
“That’s probably one of the biggest challenges I’ve had to face in my whole soft drink career,” says Turner. “We only had about a three- month period to get it out of the red and into the black. So there was a lot of pressure and a lot of sleepless nights during that time.”
The company used an approach of applying its own best practices to the Midwest business. “We just kept it simple, laid out a very clear and simple strategic direction of where we needed to be, and implemented the best practices of our old company,” Turner says. “Through the changes we put in place, and the cooperation of the whole team at American Bottling, we got it done so that by the time we got into spring and summer, the business was running pretty well.”
The team had worked similar feats when it moved in to the California market in 1997, where it bought the 7 UP/RC Bottling Co. of Southern California, which had recently emerged from bankruptcy.
“Getting that company on solid footing again and watching it grow has been rewarding, but it’s also been challenging. That’s when you look back and think, ‘why did I do that?’ But it’s been worth it for the progress we’ve made in Southern California.”
It’s been a combination of bottling know-how and a competitive spirit that has driven Turner and his company to continue to acquire new operations and make them grow.
“We’ve never bought anything and run it as status quo,” he says. “We’ve always had to make changes and improvements to grow the business and improve our earnings from the business.
“Our goal has been to get each market up to a market share where we can compete, and we’ve been fortunate enough to do that in all of our markets. Our goal is to have at least a 15 share, and our market shares range from 15 to 40 in the take-home segment and as high as a 45 share of market in the convenience segment.”
Franchise agreements that put Cadbury brands in the Coca-Cola and Pepsi-Cola bottling systems as well as the independent system mean Dr Pepper/Seven Up Bottling Group does not have the same lineup of brands in each market.
“In Texas, Dr Pepper was our lead brand, and in the Midwest and California, 7 UP is the lead brand because we don’t have the Dr Pepper franchise in every Midwest market or in California,” says Turner. “We had to re-gear our thinking around 7 UP being our lead brand. We applied the same principles as we did in the other markets but we refocused our thinking around 7 UP and the other flavors like Sunkist and A&W.”
The company also developed its own brand in Deja Blue bottled water, which helped round out the portfolio in those markets. The product was something of a family affair, and gut instinct played a major role in the development of Deja Blue as Turner rejected a lot of “expert” advice, especially regarding the brand’s name and packaging.
“My wife actually named the water after we did a lot of research with an advertising and marketing company,” he says. “We felt we needed to have a difference from the other waters so we went with the blue bottle. Some of our consumer research showed that the consumer didn’t particularly want water in a blue bottle, but I said ‘if we don’t do a blue bottle, we’re going to look like all the other waters on the shelf.’ So with the blue bottle and the name Deja Blue we got off to a fast start and we got very good early acceptance by the consumer and by our retail customers.”
The company capitalized on big-name sports teams and events in its territories for brand marketing — Deja Blue is the official water of the Dallas Cowboys and the Rose Bowl.
“We were really one of the first to enter the purified bottled water market,” Turner says. “We determined early on that if you were going to be successful and efficient, you really need to be in the purified bottled water business and you need to be able to produce that product at many different locations instead of trying to haul water half-way across the country… It’s a huge brand for us today and a very profitable brand. It has far surpassed our early expectations.”
Competing with colas
Dr Pepper/Seven Up Bottling Group faces stiff competition from the cola system bottlers in all of its markets, but during the past several years, the soft drink industry has gone through a number of changes that have played to its strengths.
“One of the major changes that’s been occurring over the past three or four years has been the growth in the flavor brands,” says Turner. “That’s helped us because we feel we have the strongest flavor lineup with our brands. We virtually have the No. 1 brand in all the flavor categories. That has really played well for us as that part of the business has changed.”
The company’s ability to juggle many brand SKUs and adapt its lead brand strategy in different markets also helped it be successful in handling the growth of alternative brands and energy drinks, which had the potential to throw other bottlers for a loop.
“Being able to balance all of those does disrupt your system, so our ability to manage all the flavors that we traditionally carry vs. Coke and Pepsi probably made that transition easier for us because we were used to juggling a lot of brands and a lot of package sizes,” Turner says.
As for the future, Turner predicts the continuation of flavor growth and diet product growth, including 7 UP brand extensions such as 7 UP Plus. But he also sees a comeback for colas and Dr Pepper, which has slowed lately. “Diets are going to continue to grow at a faster pace and represent a much larger percentage of our business, but I think you’re going to see those other mainline sugared brands begin to grow again,” he says.
As of presstime, the search for Turner’s replacement had not been concluded, but an announcement was expected by the end of the first quarter. No matter who steps into the chief executive’s shoes, Turner says there’s a strong group of employees waiting to continue to move the company forward.
“We have a strong management and operating team in place,” he says. “In this business, nothing happens until the dollar changes hands out in the store, so you better have a strong team in the field.
“It will always kind of be my baby because we really managed significant growth. You’ve got a lot of great people that made that happen and they’re still here. So the new CEO inherits a very strong company and a very strong group of people. It’s nice to go out on top.” BI