Snapple 2008 Annual Report Download - page 29

the timing and coordination of new product launches. In addition, our warehouses are generally located at or
near bottling plants and geographically dispersed to ensure our products are available to meet consumer
demand. We actively manage transportation of our products using our own fleet of more than 5,000 delivery
trucks, as well as third party logistics providers on a selected basis.
Strong operating margins and stable cash flows. The breadth of our brand portfolio has enabled us to
generate strong operating margins which have delivered stable cash flows. These cash flows enable us to
consider a variety of alternatives, such as investing in our business and reducing debt.
Experienced executive management team. Our executive management team has over 200 years of
collective experience in the food and beverage industry. The team has broad experience in brand ownership,
bottling and distribution, and enjoys strong relationships both within the industry and with major customers. In
addition, our management team has diverse skills that support our operating strategies, including driving
organic growth through targeted and efficient marketing, reducing operating costs, enhancing distribution
efficiencies, aligning manufacturing, bottling and distribution interests and executing strategic acquisitions.
Our Strategy
The key elements of our business strategy are to:
Build and enhance leading brands. We have a well-defined portfolio strategy to allocate our marketing
and sales resources. We use an on-going process of market and consumer analysis to identify key brands that
we believe have the greatest potential for profitable sales growth. We intend to continue to invest most heavily
in our key brands to drive profitable and sustainable growth by strengthening consumer awareness, developing
innovative products and brand extensions to take advantage of evolving consumer trends, improving distri-
bution and increasing promotional effectiveness.
Focus on opportunities in high growth and high margin categories. We are focused on driving growth in
our business in selected profitable and emerging categories. These categories include ready-to-drink teas,
energy drinks and other beverages. We also intend to capitalize on opportunities in these categories through
brand extensions, new product launches and selective acquisitions of brands and distribution rights. For
example, we believe we are well-positioned to enter into new distribution agreements for emerging, high-
growth third party brands in new categories that can use our bottling and distribution network. We can provide
these new brands with distribution capability and resources to grow, and they provide us with exposure to
growing segments of the market with relatively low risk and capital investment.
Increase presence in high margin channels and packages. We are focused on improving our product
presence in high margin channels, such as convenience stores, vending machines and small independent retail
outlets, through increased selling activity and significant investments in coolers and other cold drink
equipment. We intend to significantly increase the number of our branded coolers and other cold drink
equipment over the next few years, which we believe will provide an attractive return on investment. We also
intend to increase demand for high margin products like single-serve packages for many of our key brands
through increased promotional activity.
Leverage our integrated business model. We believe our integrated brand ownership, bottling and
distribution business model provides us opportunities for net sales and profit growth through the alignment of
the economic interests of our brand ownership and our bottling and distribution businesses. We intend to
leverage our integrated business model to reduce costs by creating greater geographic manufacturing and
distribution coverage and to be more flexible and responsive to the changing needs of our large retail customers
by coordinating sales, service, distribution, promotions and product launches. For example, we intend to
concentrate more of our manufacturing in multi-product, regional manufacturing facilities, including opening
a new plant in Southern California and investing in expanded capabilities in several of our existing facilities
within the next several years.
Strengthen our route-to-market. In the near term, strengthening our route-to-market will ensure the
ongoing health of our brands. We are rolling out handheld technology and upgrading our IT infrastructure to
5