Snapple 2010 Annual Report Download - page 44

Segments
We report our business in three operating segments: Beverage Concentrates, Packaged Beverages and Latin America
Beverages.
The key financial measures management uses to assess the performance of our segments are net sales and segment
operating profit (loss) (“SOP”).
Beverage Concentrates
Our Beverage Concentrates segment is principally a brand ownership business. In this segment we manufacture and sell
beverage concentrates in the U.S. and Canada. Most of the brands in this segment are CSD brands. In 2010, our Beverage
Concentrates segment had net sales of approximately $1.2 billion. Key brands include Dr Pepper, Crush, Canada Dry, Sunkist
soda, Schweppes, 7UP, A&W, RC Cola, Squirt, Sun Drop, Diet Rite, Welch’s, Country Time, Vernors and the concentrate form
of Hawaiian Punch.
We are the industry leader in flavored CSDs with a 40.4% market share in the United States for 2010, as measured by retail
sales according to The Nielsen Company. We are also the third largest CSD brand owner as measured by 2010 retail sales in the
U.S. and Canada and we own a leading brand in most of the CSD categories in which we compete.
Almost all of our beverage concentrates are manufactured at our plant in St. Louis, Missouri.
The beverage concentrates are shipped to third party bottlers, as well as to our own manufacturing systems, who combine
them with carbonation, water, sweeteners and other ingredients, package it in PET containers, glass bottles and aluminum cans,
and sell it as a finished beverage to retailers. Beverage concentrates are also manufactured into syrup, which is shipped to
fountain customers, such as fast food restaurants, who mix the syrup with water and carbonation to create a finished beverage
at the point of sale to consumers. Dr Pepper represents most of our fountain channel volume. Concentrate prices historically
have been reviewed and adjusted at least on an annual basis.
Our Beverage Concentrates brands are sold by bottlers, including our own Packaged Beverages segment, through all major
retail channels including supermarkets, fountains, mass merchandisers, club stores, vending machines, convenience stores, gas
stations, small groceries, drug chains and dollar stores. Unlike the majority of our other CSD brands, 71% of Dr Pepper
volumes are distributed through the Coca-Cola affiliated and PepsiCo affiliated bottler systems.
PepsiCo and Coca-Cola are the two largest customers of the Beverage Concentrates segment, and constituted
approximately 30% and 21%, respectively, of the segment's net sales during 2010. In 2010, PepsiCo acquired The Pepsi
Bottling Group, Inc. ("PBG") and PepsiAmericas, Inc. ("PAS") and Coca-Cola acquired Coca-Cola Enterprises’ ("CCE") North
American Bottling Business. The percentages above reflect the net sales of the combined entities during 2010.
Packaged Beverages
Our Packaged Beverages segment is principally a brand ownership, manufacturing and distribution business. In this
segment, we primarily manufacture and distribute packaged beverages and other products, including our brands, third party
owned brands and certain private label beverages, in the United States and Canada. In 2010, our Packaged Beverages segment
had net sales of approximately $4.1 billion. Key NCB brands in this segment include Hawiian Punch, Snapple, Mott’s, Yoo-
Hoo, Clamato, Deja Blue, AriZona, FIJI, Mistic, Nantucket Nectars, ReaLemon, Mr and Mrs T, Rose’s and Country Time. Key
CSD brands in this segment include 7UP, Dr Pepper, A&W, Sunkist soda, Canada Dry, RC Cola, Big Red, Squirt, Vernors,
Welch’s, IBC, and Schweppes.
Approximately 87% of our 2010 Packaged Beverages net sales of branded products come from our own brands, with the
remaining from the distribution of third party brands such as FIJI mineral water and AriZona tea. A portion of our sales also
comes from bottling beverages and other products for private label owners or others for a fee. Although the majority of our
Packaged Beverages’ net sales relate to our brands, we also provide a route-to-market for third party brand owners seeking
effective distribution for their new and emerging brands. These brands give us exposure in certain markets to fast growing
segments of the beverage industry with minimal capital investment.
Our Packaged Beverages’ products are manufactured in multiple facilities across the U.S. and are sold or distributed to
retailers and their warehouses by our own distribution network or by third party distributors. The raw materials used to
manufacture our products include aluminum cans and ends, glass bottles, PET bottles and caps, paper products, sweeteners,
juices, water and other ingredients.
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