Cadbury's newly demerged American drinks business was given a lacklustre reception on Wall Street yesterday after shares in the group plunged below expectations on their first day of trading.

Shares in Dr Pepper Snapple were changing hands at about $25 each, less than the expected $30 a share that some analysts had been expecting. Yesterday's share price valued the new American group at about $6.4 billion (£3.3 billion).

Dr Pepper Snapple has been split from the main confectionery group, effectively reversing Cadbury's merger with Schweppes in 1969. The new business, whose shares are listed on the New York Stock Exchange, will control brands such as Dr Pepper, 7Up, Schweppes ginger ale and Snapple.

Wall Street is sceptical about the new drinks group's prospects. The bulk of Dr Pepper Snapple's sales are derived from the United States, where the economy is sliding into a recession and consumer confidence is eroding.

At the same time, the company lacks the scale and market share of its two bigger rivals - Coca-Cola and Pepsi. Coke had about 43 per cent of the US carbonated soft drink market in 2007, while Pepsi had 31 per cent. Dr Pepper controlled 15 per cent.

Analysts are also worried that the group does not have drinks brands, such as sports drinks and heavily caffeinated beverages, that have become very popular.

Larry Young, the chief executive of Dr Pepper Snapple, said yesterday that he was devising a five-year business strategy that would concentrate on developing its business in Latin America, a region where it derives 7 per cent of its sales.

He said that the the heart of the company's business would be demand for its drinks in the US and said that the group would launch Venom, an energy drink, this month. The market for caffeinated drinks is growing faster than that for traditional soft drinks.

Cadbury chose to spin-off its drinks business after the US beverages operations dragged down the group's performance. Cadbury is facing intense competition in the confectionery market after Mars acquired Wrigley last week, allowing the combined group to leapfrog Cadbury as the world's biggest sweets and chocolate maker. Under the terms of the demerger, which was finalised on Tuesday, Cadbury shareholders get 12 new shares in Dr Pepper Snapple for every 36 Cadbury ones they hold already. In addition, Cadbury has said that it will return $6.6 billion to shareholders as a result of the deal.

David Liston, equity analyst with Barclays Wealth in London, said that he would not recommend British clients keep their Dr Pepper shares after the spin-off.

At a dinner on Tuesday evening, Todd Stitzer, chief executive of Cadbury, said of the demerger: “We are 200 years young ... there is a great future for both businesses. We have a clear plan of action. We move forward into the next stage of our history with a great deal of confidence. We have to show our investors we can walk and chew gum by growing revenue and margin at the same time.”

The new group will be based in Texas, the home of Dr Pepper and Hawaiian Punch drinks, which Cadbury acquired in 1995.

Judy Hong, beverage analyst for Goldman Sachs in New York, recommended that clients hold Dr Pepper shares and forecast that the stock would hit $32 within 12 months.

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