Snapple 2008 Annual Report Download - page 55

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Finished Goods
The following table details our Finished Goods segment’s net sales and UOP for 2008 and 2007 (dollars in
millions):
2008 2007
Amount
Change
Percentage
Change
For the Year Ended
December 31,
Net sales ..................................... $1,624 $1,562 $62 4.0%
UOP........................................ 245 221 24 10.9%
Net sales increased $62 million for 2008 compared with 2007 due to a 2% increase in sales volumes and price
increases. The increase in sales volumes was led by Hawaiian Punch with growth of 18%, recently launched
products, including Venom Energy and A&W and Sunkist Ready-to-Drink Floats, as well as growth of 2% and 1%
in Clamato and Mott’s, respectively. Snapple sales volumes decreased by 10% as we chose not to repeat aggressive
promotional activity used in 2007 and from the impact of a weakened retail environment on our premium products.
The increase in prices was primarily driven by our Mott’s brand.
UOP increased $24 million for 2008 compared with 2007 primarily due to the growth in net sales combined
with lower marketing costs as we cycled the introduction of Accelerade and savings generated from restructuring
initiatives. These increases were partially offset by higher commodity costs and higher distribution costs.
Bottling Group
The following table details our Bottling Group segment’s net sales and UOP for 2008 and 2007 (dollars in
millions):
2008 2007
Amount
Change
Percentage
Change
For the Year Ended
December 31,
Net sales ..................................... $3,102 $3,143 $ (41) (1.3)%
UOP........................................ (36) 76 (112) NM
Net sales decreased $41 million in 2008 compared with 2007 reflecting price increases offset by a 1% volume
decline. The sales volume decline was driven by the termination of the glaceau distribution agreement on
November 2, 2007, and the Hansen distribution agreement on November 10, 2008. The termination of the glaceau
and Hansen agreements reduced 2008 net sales by $227 million and $23 million, respectively. A decline in external
sales was partially offset by an increase of 10% in intersegment sales as we increased Bottling Group’s manu-
facturing of Company owned brands. SeaBev, which was acquired in July 2007, added an incremental $82 million
to our net sales in 2008.
UOP decreased by $112 million primarily due to declines in net sales combined with higher commodity and
component costs, higher distribution costs and increased wage and benefit costs. The termination of the glaceau
agreement reduced UOP by $40 million, excluding a one time gain of $13 million from the payment we received on
termination. The termination of the Hansen agreement reduced UOP by $3 million.
During 2008, our Bottling Group generated approximately $197 million and $38 million in net sales and
operating profits, respectively, from sales of Hansen brands to third parties in the United States.
31