Snapple 2010 Annual Report Download - page 25

Attractive positioning within a large and profitable market. We hold the #1 position in the U.S. flavored CSD beverage
markets by volume according to Beverage Digest. We are also a leader in Canada and Mexico beverage markets. We believe that
these markets are well-positioned to benefit from emerging consumer trends such as the need for convenience and the demand
for products with health and wellness benefits. Our portfolio of products is biased toward flavored CSDs, which continue to gain
market share versus cola CSDs, but also focuses on emerging categories such as teas, energy drinks and juices.
Broad geographic manufacturing and distribution coverage. As of December 31, 2010, we had 18 manufacturing facilities
and 174 distribution centers in the U.S., as well as three manufacturing facilities and 23 distribution centers in Mexico. These
facilities use a variety of manufacturing processes. We have strategically located manufacturing and distribution capabilities,
enabling us to better align our operations with our customers, reduce transportation costs and have greater control over 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, reducing our debt, paying dividends to our stockholders and repurchasing shares of our common stock.
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, manufacturing 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 and enhancing distribution efficiencies through rapid continuous improvement, aligning manufacturing 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 extending brands to take advantage of evolving
consumer trends, improving distribution 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 manufacturing 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 have embarked on an expanded placement program
for our branded coolers and other cold drink equipment and intend to significantly increase the number of those types of 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, manufacturing 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 manufacturing 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.
Strengthen our route-to-market. In the near term, strengthening our route-to-market will ensure the ongoing health of our
brands. We have rolled out handheld technology and are upgrading our information technology (“IT”) infrastructure to improve
route productivity and data integrity and standards. With third party bottlers, we continue to deliver programs that maintain priority
for our brands in their systems.
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