Today, Explained - Is there a Dr Pepper in the house?

Episode Date: October 25, 2024

Dr Pepper has overtaken Pepsi as the second-bestselling soda in the US. Its rise helps explain dirty sodas, healthy sodas, and the overall explosion of the beverage market. This episode was produced by Hady Mawajdeh, edited by Amina Al-Sadi, fact-checked by Laura Bullard, engineered by Patrick Boyd and Andrea Kristinsdottir, and hosted by Sean Rameswaram. Transcript at vox.com/today-explained-podcast Support Today, Explained by becoming a Vox Member today: http://www.vox.com/members Dr. Pepper has tied Pepsi for the second most popular soft drink in the U.S., behind Coca-Cola. Photo illustration by Justin Sullivan/Getty Images. Learn more about your ad choices. Visit podcastchoices.com/adchoices

For as long as anyone can remember, it's been Coca-Cola versus Pepsi. Coca-Cola versus Pepsi stands out in the history of marketing as one of the great, great fights between two brands. Pepsi's much better. It's delicious. Sit down nice and smooth, the taste is good. It's great! Take the Pepsi challenge, let your taste decide.

Right guys? Right! But this year, there's a doctor in the house. Great, take the Pepsi challenge. Let your taste decide. Right guys? Right! But this year, there's a doctor in the house. New data shows that Dr. Pepper finally outsold Pepsi in 2023, becoming the country's number two soda brand. It is the number one soda in many of our hearts. And now we can say Dr. Pepper

is the number two soda in the nation. Coming up on today, explain how Dr. Pepper is the number two soda in the nation. Coming up on Today Explained, how Dr. Pepper beat out Pepsi, and how the good doctor helps us understand all those dirty and healthy sodas we're seeing, and the overall explosion in our beverage industry. Carlo, search party. Woo! Because I found him. Found who?

Two thirsty cowboys who deserve the sweet reward. Today Explained. Mmm, that's mighty sweet. Told ya. Dwayne Stanford is the editor and publisher of Beverage Digest, which means he knows a lot about soda pop. Yeah, what's really interesting is that Dr. Pepper actually predates Coca-Cola and Pepsi-Cola. Whoa! Yeah, people don't realize that, but it was founded about a year before Coca-Cola

and about eight years before Pepsi. And it was found in much the same way, you know, this was back in the late 1800s. Back then, it was commonplace for pharmacies to have soda fountains, places that town's youths could kick back, relax, and throw back a couple of caffe caffeinated cold ones so you took a bunch of fruit extracts and sweeteners you mixed it with carbonated water and you served it to customers over the counter and a lot of times it was an elixir a tonic something to make you either uplift you or to make you feel better and in some cases people thought it might cure ailments etc etc. It was at a pharmacy because it was healthy, quote, unquote. Exactly. That's exactly right. What a time to be alive.

Exactly. And this was before the times that soft drinks were bottled and made much more ubiquitous as a result. So you had a pharmacist named Charles Alderton. He was in Waco, Texas. Everybody remembers Waco, Texas from various controversial news over the past. Not for this. Not for this. This is what Waco was known before it was the Waco of the 90s. Good evening, friends. It has been over 36 hours now since federal agents first confronted a heavily armed religious cult near Waco. They were met by a hail of gunfire, killing four of the agents and wounding over a dozen others. And he basically took these 23, 23 extracts and sweeteners, mixed it up and created what was called a Waco by consumers at the time

and later, in short order, renamed Dr. Pepper. How does Dr. Pepper go from some regional concern to beating out Pepsi? I imagine that took what, like a century? It took a century. Yeah. It took many, many years. And, you know, the brand had a strong following in Texas, of course, where it was founded. And, you know, it's almost like in some places in Texas, who knows, you might even find it coming out of the faucets. That's how ubiquitous the drink is. Oh, God.

And so over time, they built a following in the southeast, you know, in southern states. You know, there was a period decades ago that the company was in a lot of financial trouble, got itself out of that. And then in the last several decades, there's been a couple of key developments that really propelled that brand along and helped create what it is today. One of the key things that happened was a court ruling back in the 1960s, like 1963, a judge in Texas said, you know what? Dr. Pepper is not a cola. Dr. Pepper is something different. And the reason that was important, because at the time, once people started bottling soft drinks and Coke and Pepsi were selling franchise territories to independent business people to bottle the products and sell them more widely, these were exclusive franchise territories. And so the position of the major soft drink companies at the time was that Dr. Pepper would be a competing product. And you can't sell a competing product if you have an exclusive franchise territory.

Well, this ruling basically said, nope, not the case. This is a whole different beast, whole different drink. It does not interfere with your franchise agreements. And so that sort of was a key unlock then for Dr. Pepper to branch out from there. And then at some point, there was the realization that the Coca-Cola franchise distribution system and the Pepsi franchise distribution system were very powerful. And they could actually create more scale and Dr. Pepper could become more ubiquitous by getting itself into those two systems. And so then you had a situation where Coke and Pepsi began distributing Dr. Pepper, the competitor, in various parts of the country. And then

the rest is, you know, as I say, history from there in terms of the growth that Dr. Pepper's been able to achieve on the back of the Coke and the Pepsi system. And all this time, I thought Coke owned Dr. Pepper. So Dr. Pepper thrives because it's not a cola. Our colleague Wizzy wrote an article about this that inspired us to make the show today, actually. And in it, she talks about how people can't quite agree on what Dr. Pepper tastes like. Someone on Reddit said it tastes like a sexy battery. And there's probably comments, too, that make it sound much better than that, of course.

But, you know, it's what we call in the industry parlance a pepper drink. A pepper drink. A pepper drink. So you've got colas, you've got lemon-lime. Starry. It's a new lemon-lime soda that's crisp, clear, and... So refreshing.

And you've got citrus, which is like a Mountain Dew. Mountain Dew. And you've got orange sodas, like Fanta. Who loves orange soda? Kel loves orange soda. Oh, yes, oh, yes, oh, yes, it's true. Ew. And then you have pepper drinks, and really, there's not many pepper drinks. There's Dr. Pepper, and then there's Mr. Pibb, which Coke created years ago to compete with Dr. Ooh. And then you have pepper drinks. And really, there's not many pepper drinks.

There's Dr. Pepper and then there's Mr. Pibb, which Coke created years ago to compete with Dr. Pepper. Right. Especially in those places where Dr. Pepper couldn't be served. Mr. Pibb is not a cola, not a root beer. It's an easy new soft drink from the Coca-Cola company. It goes down good. So pepper drinks are just, they have this spicy character. Spicy.

But not so much like a hot pepper spicy, but more like a warm, spicy flavor at Christmas. Spicy. You know, so it's basically just got a more complex character. The caramel notes mix with the more spicy notes to just create this flavor profile that has similar characteristics to cola, but it's very different at the same time. And this pepper drink is now doing better than Pepsi. Was there something that happened in the past few years that really propelled Dr. Pepper to second place?

I mean, there's a few things. One is Dr. Pepper has really done a great job of marketing itself as this differentiated product and really taking advantage of flavor trends in the U.S. over the last 20 years. I mean, we've obviously got a huge demographic shift. You've got a huge multicultural consumer set out there that gravitates towards flavored carbonated soft drinks. So that's one trend that they've taken advantage of. They also have been able to not only get onto Coke and Pepsi trucks, which enables them to access the entire country on pretty powerful distribution systems, but they've also been able to get on fountains across the country

so they can be served, as we talked about, in Coke restaurants, quote unquote, and Pepsi restaurants, which gives it a much wider availability. So that's been a benefit as well. And you've also had a 30-year period where PepsiCo, ever since it bought Gatorade back in 2000, has really been focused on its non-carbonated portfolio. They've seen things like sports drinks and teas and ready-to-drink coffees, canned coffees, as the drinks of the future. And they've spent a lot of their investment dollars and attention on those kinds of products in their portfolio. And they haven't necessarily spent the same time and effort on brand Pepsi or Pepsi-Cola as they might have in the past

during the heyday of the Cola War. So that's allowed Dr. Pepper to make up some ground there as well. Now, to be clear, Pepsi trademark, so that's everything from Pepsi Zero Sugar to regular Pepsi to Diet Pepsi, is still, it's the number two carbonated soft drink trademark in the country. Dr. Pepper is not number two in that regard. Do you think Pepsi could return, could reclaim the number two spot? I mean, I think it's a great question. I mean, it's in essence at parity right now in our numbers, and this is based on volume. I would doubt PepsiCo is content having its flagship product be number three behind Dr. Pepper. I would expect them to want to do something about that. But, you know, in the modern soft drink age, the fact is that brand Pepsi is a smaller part of the overall PepsiCo company,

which half of which is Frito-Lay, is a big snacks company. It's less important than Dr. Pepper is to Keurig Dr. Pepper, which also has a massive at-home coffee business. So, you know, Pepsi's got a broad strategy across snacks, non-carbonated drinks like Gatorade, and then its soft drink portfolio. So I don't think you're going to see them do anything drastic, but I do expect them to want to make some ground back on that and see if they can't reverse that. Dwayne Stanford, Beverage Digest, beverage-digest.com. It sounds like a fun digest. When we return on Today Explained, why people are putting creamer in their soda.

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I am, in fact, a fan. I probably consume more Dr. Pepper than any medical professional would be comfortable with. It's maybe a problem. How does the Dr. Pepper ascendancy fit into the larger story of what's going on in the beverage market in America and around the world right now? I think the beverage market is very weird right now, and there's a lot going on. Now, the global non-alcoholic beer market is currently worth $20 billion, a figure that's expected to double to $40 billion by 2033. The prebiotic soda market closed 2022 with a gross revenue of $73.4 million.

How could a new product break into the crowded bottled water market, which is valued between $146 and $350 billion? I'll focus kind of on two different phenomenons. The first is totally separate from Dr. Pepper. It's what the companies would call functional beverages or what you might call a healthy soda. So a soda like Poppy or Olipop. Naturally sweet.

Nothing fake. Supports digestive health. Olipop, a new kind of soda. So those have become really popular over the last, let's say, three to five years. It will be the soda your kids and grandkids think of when they think of soda. I'll say I'm pretty skeptical on the health benefits of a soda, especially one that, in my opinion, doesn't taste very good. But, you know, I understand why people are into them. The idea that you could get eight grams of fiber from a can of soda is

both terrifying and appealing, you know, I guess. I guess so. You have that side of it where fewer people are drinking. We know that Gen Z is drinking less than generations that came before it. And they're looking for something to consume when they're at a party. So you have things like CBD seltzers, THC, cannabis seltzers. You have adaptogenic beverages. So beverages that are infused with different types of mushrooms that promise some health benefits that are, you know, to be determined, I think. And so there's that side. There's the healthy, you know, soda that's better for you side. And then the other side is like the polar opposite, where you have the most unhinged kind of flavor combinations that you can imagine um you have brands like dr pepper

and coke and pepsi making all these crazy flavors coke produced a space flavored beverage space a taste from another world coca-cola starlight what does space taste like It's supposed to taste like space. You learn something every day. And then Dr. Pepper has kind of always been ahead of the curve on that. I was doing a little bit of research and the first flavor variant that Dr. Pepper released was way back in 2002. They released Dr. Pepper Red, I believe it was called. And it was like a cherry soda that was red in color. Oh, like Mountain Dew Code Red. Remember that guy?

Yes, very similar, I would say, except a cola instead of a citrus soda. So Dr. Pepper, I would say, was kind of at the forefront of the crazy flavor trend. Then in 2004 came Cherry Vanilla Dr. Pepper. There has been a Cream cherry vanilla Dr. Pepper. There has been a cream soda Dr. Pepper. There has been a strawberries and cream Dr. Pepper. There's been a lot of different flavors. And so Dr. Pepper has been experimenting and that's indicative of like the broader soda world also getting a little strange? Totally. Mountain Dew is a really great example of that. You know, there's so many wild flavors. There's been Totally. Mountain Dew is a really great example of that. You know, there are so many wild

flavors. There's been a spicy Mountain Dew. Spicy! Dragon fruit, you know, all these sort of different flavors that you don't typically associate with a soda. Mountain Dew Summer Freeze. Oh my goodness. This is a dew with a blast of summer Americana. All right. This is a do with a blast of summer Americana, all right? There was a Oreo-flavored Coke Zero and also Coke-flavored Oreos. So the market was pretty limited.

And now I think it's way more expansive, way more inclusive in terms of what types of flavors are popular. It's not just a citrus soda, a cola, and, you know, a Fanta. Is there like an actual market for Oreo-flavored Coca-Cola in people's day-to-day lives? Like, or is this like a one-time gimmick kind of thing? I think it's definitely the latter. I read somewhere where a sort of marketing expert was talking about the purpose of these kinds of products and he described it as a yes and or a plus one kind of thing where you go you're walking down the soda aisle because you already buy diet coke or coke zero in this case and you see this weird thing this oreo flavored coke and you think huh i maybe want to try that. I stopped in the gas station

to get some quick carbohydrates for my workout. And I found this abomination. It's the most impulsive purchase I ever made, but I have to try it. Oreo Coke zero. And because soda is so inexpensive, you know, you're maybe only buying a six pack for $5 or an individual 20 ounce bottle for a couple bucks. It's such a low risk, like way to experiment and try new things as opposed to, you know, a very expensive handbag or some trend that you saw on social media. And so I think that really gets at what it is,

is that it just appeals to our sense of novelty and our, and I know for myself, whenever I see something weird on the grocery store or on the shelf at the grocery store, I'm gonna pick it up. I know that about myself to be like, this is so strange. And yet, I, you know, it doesn't mean I'm going to buy it again. But maybe I will. Maybe you find something you really are in love with in that process of, you know, discovery and trying new things. Okay. But there is one place in these United States where the flavored weird soda situation is very real.

And that is in the state of Utah. Correct. For anyone who watched the smash hit Hulu series, The Secret Lives of Mormon Wives, that was kind of a plot point. In the Mormon church, drinking alcohol is not allowed. But even though Mormons don't drink, we like to party. So soda is the Mormon version of coffee. Because we're not supposed to have coffee or tea, so then Mormons have tons of soda. Amazing.

People who follow the rules to the tea aren't allowed to drink hot drinks. So no coffee, no tea. But soda is fair game. And, you know, in Utah, there are chains, you know, like we have Starbucks and Dunkin' and, you know, all the other independent coffee shops. The version of that in Utah is soda shops. And those soda shops have started to expand beyond Utah. I live in Dallas, Texas, and we got our first locations of Swig, which is a Utah-based chain, last year.

And I, like, rounded up my best friend. We got in the car and went and tried all these crazy drinks that involve, you know, a base that's a soda or a sparkling water, typically. And then there's syrups and all kinds of flavors, like just a dizzying array of flavors that you can add to these sodas. 44 ounce sparkling water with sugar-free coconut, sugar-free vanilla, sugar-free raspberry, sugar-free pineapple, and coconut cream.

Chef's kiss. All right, we're gonna make a Mormon soda. We got our Diet Coke and our creamer. Let's do it. We're going to mix it all together. This looks so good. This is our treat. My mouth is watering already. No, same. Shake that up. Yeah, give it a good shake.

And yeah, it's been really popular, I would say, especially with young people. You know, the idea of going and getting, you know, your special treat drink has been a thing for a long time. And for people who aren't into coffee, for whatever reason, these have kind of filled that gap. It's funny to think of, like, all this experimentation going on right now in the beverage market because, you know, we're here because of Dr. Pepper, which began as a small local experiment in 1885, I believe. So, like, do you think we're right now maybe sampling the next Dr. Pepper? I think it's entirely possible. You know, I think that some of these upstart brands, there are so many right now.

We'll see in maybe three to five years which ones have the staying power. If it's going to be Olipop, if it's going to be Poppy, if it's going to be both of them. Time will tell on those. In terms of what the other brands are doing, you know, I think there's so much consolidation in the soda market. It's kind of like the Spider-Man meme. Everyone's just kind of standing around fighting themselves for that supremacy. What move stations? Stop what you're doing and stop Spider-Man.

You feel like me? I think we will continue to see that innovation because of the way that brands can predict trends and think about trends is so much more granular. And the way that they can get products to market is so much faster than it used to be that, yeah, why not try out a trend? And if it works, great, we'll put it on the shelf and pray it becomes a bestseller. If it doesn't work, then we just dump this batch and try again. Amy McCarthy, Eater.com, and they just launched an app. It is delicious. Today Explained doesn't have an app yet,

but you can find us and rate us and review us on a bunch of apps. You know which ones. The show is distributed by WNYC. The show is a part of Vox. You can support our journalism by joining our membership program today. Go to vox.com slash members to sign up and thank you. We use music by Breakmaster Cylinder when we feel like it. Our team includes Avishai Artsy, Zach Mack, Eliza Dennis, Halima Shah, Amanda Lou Ellen,

Miles Bryan, Victoria Chamberlain, Peter Balanon, Rosen, and Rob Byers. Matthew Collette is a supervising editor, Miranda Kennedy is our executive producer, and Noelle King is our Dr. Pepper. Hadi Mawagdi produced our program today, Amina Alsadi edited, Laura Bullard fact-checked, and we were mixed by

Patrick Boyd and Andrea Christensdottir, whose name we're always getting questions and comments about. So basically, when we make last names in Iceland, you take your parents' first name and add son or daughter to it. Hence, Kristinsdóttir. That was Icelandic last names explained. Bless, bless!