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15 Food Stocks Hit by Commodity Inflation

Dr Pepper Snapple

Dr Pepper Snapple (DPS)

Company Profile : Plano, Texas-based Dr Pepper Snapple is an integrated brand owner, manufacturer and distributor of non-alcoholic beverages in the United States, Canada and Mexico with a diverse portfolio of flavored carbonated soft drinks and non-carbonated beverages. Brands include Dr Pepper, Sunkist soda, 7UP, A&W, Canada Dry, Schweppes, Snapple, Mott's, Hawaiian Punch and Clamato, among others.

In late March Dr Pepper Snapple said that costs for plastic bottles and fuel to transport beverages have been rising as oil prices march higher.

Dr Pepper Snapple reiterated its forecast that total costs of goods will grow between 6% and 7% in 2011, though the recent spike in oil prices was not factored into that projection.

Oil prices affect the price of polyethylene terephthalate, or PET, the plastic used by companies like Dr Pepper Snapple to make soda bottles. Dr Pepper Snapple and others, like Coca-Cola (KO) and PepsiCo (PEP), cannot hedge their prices of PET because the material is not traded like other commodities.

Dr Pepper Snapple intends to raise prices and implement other cost savings initiatives in an effort to offset higher costs. Some other initiatives include more efficiently spending marketing dollars, and shipping certain products directly to retailers.

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