Snapple 2008 Annual Report Download - page 36

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sports drinks. The Nielsen Company also provides data on other food items such as apple sauce. The Nielsen
Company data we present in this report is from The Nielsen Company’s Scantrack service, which compiles data
based on scanner transactions in certain sales channels, including grocery stores, mass merchandisers, drug chains,
convenience stores and gas stations. However, this data does not include the fountain or vending channels, Wal-Mart
or small independent retail outlets, which together represent a meaningful portion of the United States liquid
refreshment beverage market and of our net sales and volume.
Beverage Digest is an independent beverage research company that publishes an annual Beverage Digest Fact
Book. We use Beverage Digest primarily to track market share information and broad beverage and channel trends.
This annual publication provides a compilation of data supplied by beverage companies. Beverage Digest covers
the following categories: CSDs, energy drinks, bottled water and non-carbonated beverages (including
ready-to-drink teas, juice and juice drinks and sports drinks). Beverage Digest data does not include multi-serve
juice products or bottled water in packages of 1.5 liters or more. Data is reported for certain sales channels,
including grocery stores, mass merchandisers, club stores, drug chains, convenience stores, gas stations, fountains,
vending machines and the “up-and-down-the-street” channel consisting of small independent retail outlets.
We use both The Nielsen Company and Beverage Digest to assess both our own and our competitors’
performance and market share in the United States. Different market share rankings can result for a specific
beverage category depending on whether data from The Nielsen Company or Beverage Digest is used, in part
because of the differences in the sales channels reported by each source. For example, because the fountain channel
(where we have a relatively small business except for Dr Pepper) is not included in The Nielsen Company data, our
market share using The Nielsen Company data is generally higher for our CSD portfolio than the Beverage Digest
data, which does include the fountain channel.
In this Annual Report on Form 10-K, all information regarding the beverage market in the United States is
from Beverage Digest, and, except as otherwise indicated, is from 2007. All information regarding our brand market
positions in the U.S. is from The Nielsen Company and is based on retail dollar sales in 2008.
ITEM 1A. RISK FACTORS
Risks Related to Our Business
In addition to the other information set forth in this report, you should carefully consider the risks described
below which could materially affect our business, financial condition, or future results. Any of the following risks,
as well as other risks and uncertainties, could harm our business and financial condition.
We operate in highly competitive markets.
Our industry is highly competitive. We compete with multinational corporations with significant financial
resources, including Coca-Cola and PepsiCo and their related affiliated systems. These competitors can use their
resources and scale to rapidly respond to competitive pressures and changes in consumer preferences by introducing
new products, reducing prices or increasing promotional activities. We also compete against a variety of smaller,
regional and private label manufacturers. Smaller companies may be more innovative, better able to bring new
products to market and better able to quickly exploit and serve niche markets. Our inability to compete effectively
could result in a decline in our sales. As a result, we may have to reduce our prices or increase our spending on
marketing, advertising and product innovation. Any of these could negatively affect our business and financial
performance.
We may not effectively respond to changing consumer preferences, trends, health concerns and other
factors.
Consumers’ preferences can change due to a variety of factors, including aging of the population, social trends,
negative publicity, economic downturn or other factors. For example, consumers are increasingly concerned about
health and wellness, and demand for regular CSDs has decreased as consumers have shifted towards low or no
calorie soft drinks and, increasingly, to NCBs, such as water, ready-to-drink teas and sports drinks. If we do not
effectively anticipate these trends and changing consumer preferences, then quickly develop new products in
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