Beverage company, Dr Pepper Snapple Group, Inc. (DPS), recently entered into an agreement with Buffalo Wild Wings, Inc. (BWLD) to offer DPS drinks at all Buffalo Wild Wings restaurants by mid 2014.
Dr Pepper Snapple owns some of the most popular flavored (non-cola) carbonated soft drinks (CSDs) and non-carbonated beverages (NCBs) including ready-to-drink teas, juices, juice drinks and mixers. However, Dr Pepper Snapple as well as other soft drink companies like PepsiCo, Inc. (PEP) and The Coca-Cola Company (KO) have been seeing sluggish volume growth for their high calorie soft drinks. Sales of these drinks have been hurt by changing consumer preferences, increasing health consciousness, rising obesity concerns, possible new taxes on sugar-sweetened beverages and growing regulatory pressures. In fact, Dr Pepper Snapple witnessed year-over-year volume decline in the first three quarters of 2013.
Buffalo Wild Wings offerings are marked by strong flavors, which perfectly complement the beverages from Dr Pepper Snapple. Moreover, given the huge consumer base of Buffalo Wild Wings, the recent agreement will help Dr Pepper Snapple strengthen its volumes in the upcoming quarters.
Buffalo Wild Wings is popular among sports fans for its dine-and-watch games facility. In first quarter 2014, management indicated that all major sporting events are scheduled the same way as in the year-ago period with the addition of Winter Olympics. This would likely improve guest traffic, which will in turn boost sales.
Dr Pepper Snapple presently has a Zacks Rank #4 (Sell), whereas Buffalo Wild Wings carries a Zacks Rank #2 (Buy).
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