Derek DabrowskiVice President – Carbonated Soft Drinks

all thatinnovative?

Is soda

Do innovative categories have headlines like this?

0

+3.5 Points

-0.3 Points -5.6 Points

10 Year Share Growth

Carbonated Soft Drinks3-Year CAGR

Retail Sales

+0.1% +2.1% +2.0% +10.8% +6.2% +9.3%

Soft

Drinks

Manufacturer 1 Manufacturer 2

Source: Share info from May 2018 Beverage Digest Source Book; 3-yr CAGR IRI MULO+C 2016 thru 2018

7 8 10 10 11 12 13 15 16 18 19 2024

2946 47

5 Year TSR distribution of beverage companies1, %

Source: McKinsey Corporate Finance, Company Annual Reports

0.9 35.4 56.4 90.1 9.0 12.1 21.9 63.5 11.0 3.2 1.8 6.7 2.3 3.4 7.6 1.0

1. 2018 TSR 5-year rolling average (including both share price appreciation and all dividends) Note: Peer set excludes large private beverage companies without publicly available financial information (e.g., Red Bull, The Wonderful Beverage Company)

S&P 500

Differentiators of

top performance

▪ Substantial volumetric

organic growth:

inorganic and price-

driven growth alone

usually not sufficient

▪ Significant margin

expansion: price

increases and

operational

improvements both

contribute (e.g., Monster)

▪ Growth from smaller

revenue base: smaller

companies have a higher

probability of outsized

TSR

But we are doing some innovative thinking

How are we staying a step ahead…• How we talk to consumers

• How we make marketing less art and more science

• How we operate quickly

How we talkto consumers“Play in your sandbox”

“I don’t really drink soda…”

I drink Dr Pepper when I’m really

craving one

I drink Canada Dry on an airplane

When I’m really hungover

When I have a Chipotle Burrito

When I’m binge watching a show with my friends

…Except

I don’t drink soda these days… except when

I feel I need a sweet reward

I’m celebrating my college football team

I need a moment of relaxation

Because, after all, it’s ok in moderation…

But people love treating themselves to sodas…

THEY ARE INDULGENT,NOSTALGIA-RIDDEN TREATS.

SODA DOESN’T SOLVE THEWORLD’S PROBLEMS

Honest contentis the best contentSweet reward was the most honest thing we could say about our product…

It’s the sweet one

16

slide I can speak

We set out to crystallize the connection between Canada Dry and relaxation through an ownable brand character.

Insert Canada Dry Guru

Spot that is the funniest

version

Making Marketing More Science than ArtData, Measurement, Learning

On myoffice wall

We strive to have a holistic measurement strategy:ACTIONABLE DATAWITH PRIMARY/SECONDARY KPIS THAT DRIVE REAL INSIGHTS

A data driven process

Case study – diet dr pepper skippable

27

CANADA DRY:TWO WAYS IN TO CONTEXTUAL DIGITAL CREATIVE

Platform SpecificNon-Skippable :15

Platform SpecificSkippable :15

GingerventionBumpers :06

Content that “knows where it is” in relation to audience behavior

Content that is tailored toaudience interests and affinities

1

2

VIDEO CREATIVE PERFORMANCE

29

DR PEPPER MARKETING RETURN ON INVESTMENT

+76%

+35%

+22%

+18%

2013 2014 2015 2016 2017

+10%

2018Source: KDP Proprietary MROI, Marketing Fusion Analytics

FastBeats Slow

Over recent years, about 70 percent of CPG sector growth has come from small and medium-size brands. Smaller brands are capitalizing on the preferences of Millennials and opportunities from digital marketing.Smaller companies, in aggregate, are nimble and respond fast to market signals.

– McKinsey, 2018

Barriersto speed

• The institution itself

• Lack of passion and ownership

• Fear of failure, fear of change

• Not investing in new ideas

• Legacy processes

• Large group churn

• Analysis paralysis

Innovation isn’t just about

IDEAS

Innovation isn’t just about

PROCESS

Innovation isn’t just about

TECHNOLOGY

It’s aboutTaking ActionSeeking meaningful feedback to make our ideas better.

TOM CHITom invigorated the user experience practice at Google with innovative prototyping and design techniques, dramatically increasing the speed and effectiveness of designers on his team.

• “Every single time you answered a question on any test in any school, there was enough information in the question to be able to actually answer it.

• We’ve been unconsciously programmed into the habit of thinking we should just sit there and think about it whenever a problem arises.

• In truth, we don’t have all the information required to solve most of the problems we face in the business world when we first get the question, so sitting there and thinking about it actually becomes not just inefficient but actively counterproductive.”

Rapidly testing multiple solutions wins

At first, we’d rather have quantity and agility.Then we’ll let the data decide quality.

Piloting ideas framework

OBSERVATION HYPOTHESES IDEASTEST

TO LEARNSCALE

THE STORY

Piloting ideas framework

OBSERVATION HYPOTHESES IDEASTEST

TO LEARNSCALE

THE STORY

UNCERTAINTY

INVESTMENT

Recap

WHAT’S THE SECRET TO OUR SUCCESS?

• Honest about the role we play in the world

• Don’t take ourselves too seriously

• Dynamic breakthrough creative work

• Culture of data driven marketers

• Results orientation w/ speed as a tenet

• Talented agency partners

Thank you