DR PEPPER COMPANY

Patrick Farl, rev. by Joy Summar-Smith and Rachael A. Nadeau Johnson
Dr Pepper Logo
Dr Pepper Logo. Image available on the Internet and included in accordance with Title 17 U.S.C. Section 107.

DR PEPPER COMPANY. The Dr Pepper Company has operated in the Dallas area since being officially incorporated on July 6, 1923 under the State of Colorado. The company marketed Dr Pepper fountain syrups and sold soft drink concentrates to independent franchised bottlers. These licensed bottlers then added sweeteners and carbonated water, package the result, and sold the finished product in the surrounding market. Dr Pepper is currently part of a network of soft drinks under the umbrella company Keurig Dr Pepper.

Charles Courtice Alderton
Charles Courtice Alderton. Courtesy of the Dr Pepper Museum. Image available on the Internet and included in accordance with Title 17 U.S.C. Section 107.

Dr Pepper was first made in Waco, Texas, in 1885. Wade B. Morrison, owner of Morrison's Old Corner Drug Store, employed a pharmacist named Charles Courtice Alderton, who, when not filling prescriptions, often mixed soft drinks for customers from the soda fountain. Alderton enjoyed experimenting with various combinations of fruit extracts and sweeteners. One combination of twenty-three flavors proved enormously popular with drugstore patrons. This drink was originally called a Waco, and later Morrison would name it Dr Pepper. There are many different myths about how the drink got its name, but all are unsubstantiated, and no one knows exactly why Morrison chose the drink name.

Dr Pepper Bottling Plant in Waco
Dr Pepper Bottling Plant in Waco. Image available on the Internet and included in accordance with Title 17 U.S.C. Section 107.

As the consumption of Dr Pepper increased, Morrison's drugstore could no longer produce a sufficient quantity of the beverage. In an effort to satisfy the demand, Morrison, along with Waco beverage chemist Robert S. Lazenby, started the Artesian Manufacturing and Bottling Company in 1891. On September 8, 1898, the Southwestern Soda Fountain Company of Dallas purchased the rights to produce and sell Dr. Pepper fountain syrups. On September 25, 1902, Southwestern Soda Fountain changed its name to Dr. Pepper Company. In 1904, the Artesian Manufacturing and Bottling Company took Dr Pepper to the world stage at the Louisiana Purchase Exposition in St. Louis, Missouri. The company purchased a plot of land at the corner of 5th and Mary Street in Waco for $6,000 in July 1905, and selected Milton Scott, a local architect, to design their state-of-the-art Richardsonian-Romanesque company headquarters building. The production of Dr. Pepper and other beverages began in 1906 at this location, now known as The Dr Pepper Museum and Free Enterprise Institute. The Southwestern Soda Fountain Company of Dallas moved to Waco in 1907 into the new facility that included both syrup and bottling production.

The Circle "A" Corporation founded by Robert S. Lazenby purchased the Artesian Manufacturing and Bottling Works in 1920 to become the only bottler of Dr Pepper concentrate. On June 12, 1923, because of rising commodity prices and high bottling taxes, Circle "A" Corporation went bankrupt. Less than a month later, the remnants of the old Dr. Pepper Company and Circle "A" Corporation officially incorporated as the Dr. Pepper Company on July 6, 1923, in Dallas. Lazenby's son-in-law, John B. O'Hara, was named general manager of the firm. In those early years, the struggling firm developed a small but loyal following in the South and Southwest.

The company prospered on Second Avenue in Dallas using prolific advertising to propel the beverage to the front of the soft drink industry.  The “10-2-4” logo and slogan developed during the 1920s. Dr. Walter H. Eddy conducted a study on the human body’s fatigue at Columbia University. He found that a human blood sugar fell to the lowest levels around 10:30am, 2:30pm and 4:30pm, which left them feeling tired and hungry. At the time, the Dr Pepper Company employed the Tracy-Locke-Dawson (TLD) agency for their advertising.  In 1926 after learning of Dr. Eddy’s study, the company asked employees to develop a new slogan for the brand. Earle Racey of TLD suggested “Drink a Bite to Eat at 10, 2 and 4.”  He received a $25 bonus for developing the slogan and Dr Pepper used different versions of the logo until the 1970s.

The company slogan gained new meaning during World War II as the United States rationed sugar as a prominent ingredient for explosives. The sugar ration left the soft drink industry scrambling to prove their beverage was indispensable to the war effort. The Dr Pepper Company created a booklet titled, “The Liquid Bite,” which explained how sugar could act as a useful energy booster for soldiers and workers. The successful promotion and “10-2-4” clock logo ushered in decades of innovative advertising from the Dr Pepper Company. 

In 1945 the Dr Pepper Company purchased land on the corner of Mockingbird Lane and Greenville Road in Dallas, and broke ground on new facilities the following year. Architects Arthur Thomas and Ralph Merrell designed the building, while H. P. Inge Construction built the facility. The new headquarters measured four stories tall with approximately 276,000 square feet of floor space that included administrative offices and all the manufacturing components to make soda. The architecture included a curved wall of plate glass between spaced marble columns twenty-two feet high in the lobby, which housed four custom pieces painted by New York muralist, Arthur Crisp.

The trademark included a punctuation mark after “Dr” until 1950, when a redesign of the font led to the elimination of the period. In 1958, company President, Wesby R. Parker, developed a warm version of Dr Pepper with lemon as a unique alternative to serving cold soft drinks in the wintertime. To promote family-oriented activities, the company created a family-sized bottle, generated outlandish contests such as the Solid Gold Dinosaur contest, and advertising icons such as Frosty Dog, Harmon the Caveman, teen idol Donna Loren, and American Bandstand’s Dick Clark. A 1963 district court ruling enabled the company to expand when the United States Fifth District Court of Dallas declared that Dr Pepper was not a cola. This ruling allowed independent bottlers to carry Dr Pepper along with Pepsi-Cola or Coca-Cola, without violating their franchise contracts, which stated that bottlers were not permitted to bottle competing brands. Through close personal contacts and cooperative promotional efforts, Dr Pepper aggressively courted independent bottlers. From 1968 to 1977, under the guidance of Chief Executive Officer Woodrow Wilson Clements, sales increased from $41.9 million to $226.8 million, while net earnings jumped from $4.1 million to $20.3 million.

Dr Pepper Sale to Forstmann and Little
Dr Pepper Sale to Forstmann and Little. Courtesy of the New Braunfels Herald-Zeitung, November 18, 1983. Image available on the Internet and included in accordance with Title 17 U.S.C. Section 107.

During the early 1970s the company expanded soft drink offerings to include Diet Dr Pepper, diet and regular Pepper Free (a caffeine free beverage), Canada Dry, and Welch's soda flavors. In 1977 the company launched one its most successful advertising campaigns of all time, Be a Pepper. In conjunction with David Naughton’s song “I’m a Pepper,” the company increased to a 6.9 percent market share, becoming the nation's fourth largest soft drink company by 1983.

Chuck Jarvie
Chuck Jarvie. Courtesy of the Samuel Curtis Johnson Graduate School of Management and Cornell University. Image available on the Internet and included in accordance with Title 17 U.S.C. Section 107.

As the 1970s drew to a close, Dr Pepper's fortunes declined. First, the company incurred tremendous debts in its acquisition of bottling plants and purchase of Canada Dry in 1982. Second, as market growth leveled off, the soft drink industry became increasingly competitive. As much larger Coca-Cola, PepsiCo, and Seven-Up (owned by Phillip Morris) increased advertising expenditures, debt-ridden Dr Pepper struggled to hold its own. From 1980 to 1983 the Dr Pepper brand's market share declined from 5.5 percent to 4.9 percent. Third, the rapid brand proliferation, begun in 1982 by Seven-Up with Like Cola, pushed Dr Pepper off the grocer's shelves. Fourth, in an effort to meet other soft drink companies' advertising efforts, Dr Pepper concentrated primarily on nationwide advertising and ignored independent bottlers' needs under President Chuck Jarvie. Independent bottlers thus no longer pushed Dr Pepper with the same zeal. Though sales increased from $370.6 million in 1981 to $516 million in 1982, the increase was largely attributed to the purchase of Canada Dry. In 1982 earnings declined to $12.5 million, down from $29.9 million in 1981. The company reported earnings of $21.6 million in 1983, still below the 1981 figure. In late 1983 Dr Pepper began a search for a buyer, preferably a large conglomerate, to increase its competitiveness in the soft drink industry.

Because of the highly competitive nature of that industry and Dr Pepper's poor cash position, few companies showed interest in the firm. In late 1983 Forstmann, Little, and Company, a New York investment-banking firm, offered twenty-two dollars a share for Dr Pepper. This deal, using primarily borrowed funds, involved buying out existing shareholders, refinancing Dr Pepper's debt, and retaining the company's top management. On February 28, 1984, Dr Pepper shareholders accepted the Forstmann, Little, and Company offer, and the company went private.

After the buyout, the company sold a majority of its fixed assets. Canada Dry was sold for about $175 million to R. J. Reynolds Industries, Incorporated, in 1984. All ten company-owned bottling plants were also sold. In 1984 the Dr Pepper brand slipped from fourth to fifth in soft drink popularity, while maintaining an approximate 5 percent share of the market. By 1985, however, it had climbed to the number three position in the market, moving ahead of Seven-Up. Dr Pepper closed out its centennial year in 1985 with a 7½ percent share of the market as the third largest soft drink. It was the biggest sales year in the company's 100-year history.

In 1986 Dr Pepper merged with the Seven-Up Company after both companies were acquired by the investment firm, Hicks and Haas. Shortly thereafter the company manufacturing operations relocated to St. Louis, while the corporate headquarters remained in Dallas on Walnut Hill Lane. In 1992 Dr Pepper/Seven-Up Companies, Inc. was the soft drink industry's third largest marketer, with a domestic market share of 11.1 percent. Its products included Dr Pepper, Diet Dr Pepper, 7UP, Diet 7UP, Cherry 7UP, Diet Cherry 7UP, Welch's, and IBC soft drinks. The company's net sales totaled more than $658 million in 1992.

Dr Pepper Snapple Group Brands
Dr Pepper Snapple Group Brands. Image available on the Internet and included in accordance with Title 17 U.S.C. Section 107.

Dr Pepper/Seven-Up was acquired by Cadbury Schweppes in 1995, and renamed Cadbury Schweppes Americas Beverages. The new company headquarters were built on Legacy Drive in Plano, Texas. The soft drinks portions were spun off from Cadbury Schweppes in North America in 2008 creating Dr Pepper Snapple Group. In 2017, the new company increased its market share to 22.5%. In 2018, the company merged with Keurig to become Keurig Dr Pepper. As of 2019, Dr Pepper ranked second in the flavored carbonated soft drink category. Keurig Dr Pepper is a leading coffee and beverage company in North America, with annual revenue in excess of $11 billion.

The company archives are housed at the Dr Pepper Museum and Free Enterprise Institute in Waco. The museum is dedicated to telling the story of the soft drink industry, especially the invention of Dr Pepper and its rise within the industry.   See also SOFT DRINK INDUSTRY.

BIBLIOGRAPHY: 

Dallas Morning News, May 11, 1991. Dr Pepper Company, Annual Report, 1977, 1982. Harry E. Ellis, Dr Pepper-King of Beverages (Dallas: Taylor, 1979). Ruth Miller Fitzgibbons, "The Dr Pepper Merger: So Misunderstood," D Magazine, April 1984. Charlene James, "Dr Pepper . . . Distinctively Different," Texas Historian, May 1981. Robert Lawrence Kuhn, "Taking Aim at the Giants," Texas Business, June 1982. Jeffrey L. Rodengen, The Legend of Dr. Pepper/Seven-up (Fort Lauderdale: Write Stuff Syndicate, 1995). Andrew F. Smith, Food and Drink in American History: A “Full Course” Encyclopedia (Santa Barbara: ABC-CLIO, 2013).

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The following, adapted from the Chicago Manual of Style, 15th edition, is the preferred citation for this article.

Handbook of Texas Online, Patrick Farl, rev. by Joy Summar-Smith and Rachael A. Nadeau Johnson , "DR PEPPER COMPANY," accessed December 14, 2019, http://www.tshaonline.org/handbook/online/articles/did01.

Uploaded on June 12, 2010. Modified on August 6, 2019. Published by the Texas State Historical Association.
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