7UPS & DOWNS; SODA'S DECLINING MARKET BLAMED ON DISTRIBUTION.

Byline: Katherine Yung Dallas Morning News

7UP bottlers face an unpleasant reality: The Uncola isn't regaining its fizz.

The soft drink, owned by Cadbury Schweppes PLC of London, can't seem to reverse its slow sales slide despite a new ad campaign, redesigned packaging and the first reformulation of the lemon-lime soft drink in its history.

Taking the heat for the poor results: the bottlers that distribute the soda to supermarkets, convenience stores, vending machines and fast-food restaurants. A year ago, Cadbury executives warned them to step up their sales efforts or risk losing marketing dollars contributed by the company. Today, sales are still dropping.

``We have a pretty good renewed commitment from the bottlers,'' said Mike McGrath, chief operating officer of Cadbury Beverages/Seven Up. ``We are not going to turn this thing around overnight.''

The struggle to transform 7UP, once the nation's leading lemon-lime soda, into a serious competitor to the now-dominant Sprite demonstrates how efforts to restore a brand's luster can falter if consumers lack a compelling reason to buy the product.

``7UP has played around with so many things,'' said Tom Pirko, president of Bevmark LLC, an industry research and consulting firm. ``Find a steady course.''

What that course is remains unclear. The Uncola holds no advantage over Sprite in taste, price, availability or image. Instead, it clings to its proud past as the nation's first lemon-lime soda, introduced a few weeks before the stock market crashed in October 1929.

With the situation only getting worse, the company said bottlers will be urged to set up more displays in grocery stores that combine 7UP and so-called flavor drinks, such as Sunkist, A&W Root Beer and Welch's. This ``flavors strategy'' has been shown to boost sales.

Bottlers who also sell Pepsi-Cola drinks will be encouraged to include 7UP in their displays.

7UP lost the lemon-lime lead to Sprite in 1986. Last year, its market share had dwindled to 2.1 percent or 211 million cases, according to Beverage Digest, an industry trade publication. Sprite, with a 6.6 percent share, sold more than triple the number of cases.

The outlook for 7UP is so poor that rumors abound that Cadbury eventually will sell the brand that it acquired in March 1995 when it took control of the U.S. beverage company Dr Pepper/Seven Up. Cadbury recently sold most of its international beverage business to the Coca-Cola Co.

Cadbury has denied the rumors, and Dr Pepper/Seven Up insists that it has no intention of unloading the brand if results don't improve.

``7UP delivers profit for us,'' said Todd Stitzer, chief executive of Dr Pepper/Seven Up. ``It is a very important element with our other flavor brands. Our goal is to fix it.''

The biggest problem plaguing the Uncola is the soft drink's poor distribution system.

The problem is twofold. First, 40 percent of 7UP is delivered by Pepsi bottlers. In the past, these distributors have usually given their best shelf space to new Pepsi-Cola sodas, such as Pepsi One, at the expense of 7UP.

Secondly, there is the problem of the small, struggling independent bottlers. 7UP relies heavily on these distributors, but they often lack the resources to consistently put up as many end-of-aisle grocery displays as does Coca-Cola Enterprises Inc. and other large bottlers.

Cadbury is in the process of consolidating its independent bottlers, following the lead of Coca-Cola and PepsiCo. The bigger a bottler, the more economies of scale it can achieve. The cost savings can be used for more supermarket displays and price discounts, boosting sales.

Besides a troubled distribution system, the Uncola also suffers from the lack of a strong advertising and marketing campaign.

``Good marketing is the only way to save 7UP,'' said Sergio Zyman, Coca-Cola's former chief marketing officer who is now an independent marketing consultant.

The company has just unveiled a new advertising campaign that will begin running this fall. The tag line: ``Make 7UP yours.''

``We think the brand is moving into a new era with this new advertising campaign,'' said Jim Turner, chief executive of one of 7UP's largest bottlers and chairman of the 7UP Bottlers Marketing Committee. ``It's much more targeted toward a younger audience, and yet we will maintain the loyalty of the 7UP users.''

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PHOTO (color) Cartons of 7UP roll down the packing line. The soda has dropped in the market and is trying to regain some of its share from Sprite.

Jim Mahoney/Dallas Morning News