Snapple 2008 Annual Report Download - page 62

Volume (BCS) declined 2% in 2007 due primarily to a 3% decline in Dr Pepper, and a single and double digit
percentage decline in 7UP and Diet Rite, respectively. The Dr Pepper decline results from comparisons to strong
volumes in 2006 driven by the “Soda Fountain Classics” line which was introduced nationally in 2005. The 7UP
decline primarily reflects the discontinuance of 7UP Plus, as well as the comparison to strong volumes in 2006
driven by the third quarter launch of 7UP “with natural flavors” and heavy promotional support for 7UP and other
brands. The Diet Rite decline was due to the shift of marketing investment from Diet Rite to other diet brands, such
as Diet Sunkist, Diet A&W and Diet Canada Dry. These declines were partially offset by single digit percentage
increases in Sunkist and Canada Dry, which are consistent with the consumer shift from colas to flavored CSDs.
Finished Goods
The following table details our Finished Goods segment’s net sales and UOP for 2007 and 2006 (dollars in
millions):
2007 2006
Amount
Change
Percentage
Change
For the Year Ended
December 31,
Net sales ..................................... $1,562 $1,516 $46 3.0%
UOP........................................ 221 228 (7) (3.1)%
Net sales increased $46 million for 2007 compared with 2006 primarily due to price increases and a favorable
shift towards higher priced products such as Snapple and Mott’s. These increases were partially offset by a 2%
decrease in sales volumes and higher product placement costs associated with new product launches. The decrease
in volumes primarily resulted from a decrease in Hawaiian Punch volumes due to a price increase in April 2007
which more than offset growth from Snapple and Mott’s. Snapple volumes increased primarily due to the launch of
Antioxidant Waters and the continued growth from super premium teas. Mott’s volumes increased due primarily to
the new product launches of Mott’s for Tots juice and Mott’s Scooby Doo apple sauce and increased consumer
demand for apple juice.
UOP decreased $7 million in 2007 due primarily to a $55 million operating loss from Accelerade, partially
offset by the strong performance of Mott’s and Snapple products. The $55 million operating loss attributable to
Accelerade was primarily due to new product launch expenses, such as significant product placement and marketing
investments. In 2007, we had no net sales for Accelerade as gross sales were more than offset by product placement
fees. UOP was also negatively impacted by higher packaging and commodity costs, as well as the launches of
Mott’s line extensions and Peñafiel in the United States. These decreases in UOP were partially offset by the
elimination of co-packing fees previously charged by the Bottling Group segment and lower SG&A expenses in
connection with a sales reorganization.
Bottling Group
The following table details our Bottling Group segment’s net sales and UOP for 2007 and 2006 (dollars in
millions):
2007 2006
Amount
Change
Percentage
Change
For the Year Ended
December 31,
Net sales ..................................... $3,143 $2,001 $1,142 57.1%
UOP........................................ 76 74 2 2.7%
The results of operations for 2006 only include eight months of results from DPSUBG, which was acquired in
May 2006, approximately seven months of results from All American Bottling Corp., which was acquired in June
2006, and approximately five months of results from Seven Up Bottling Company of San Francisco, which was
acquired in August 2006. 2007 includes a full year of results of operations for these businesses and approximately
six months of results from SeaBev, which was acquired in July 2007.
Net sales increased $1,142 million for 2007 compared with 2006 primarily due to the bottling acquisitions
described above, price increases and a favorable sales mix of higher priced NCBs.
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