Snapple 2012 Annual Report Download - page 4

฀ •฀We฀grew฀Dr฀Pepper฀dollar฀share฀for฀the฀fifth฀consecutive฀year,฀up฀0.2฀points.฀
฀ •฀Based฀on฀positive฀consumer฀response฀to฀Dr฀Pepper฀TEN
฀ ฀ 40฀percent฀of฀dollar฀sales฀were฀incremental฀to฀the฀CSD฀category.฀Backed฀by฀these฀promising฀results,฀we฀took
฀ •฀We฀grew฀Snapple฀volume฀3฀percent,฀ensuring฀that฀Snapple฀is฀enjoyed฀by฀more฀consumers฀across฀the฀country.
฀ •฀We฀launched฀Snapple฀Diet฀Half฀‘n฀Half฀Lemonade฀Iced฀Tea,฀which฀gained฀distribution฀quickly฀and฀has฀already฀฀
฀ •฀Driven฀by฀local฀activation฀events฀such฀as฀sponsorships฀of฀sporting฀events฀and฀The฀Latin฀GRAMMY
฀ •฀Canada฀Dry฀volume฀increased฀6฀percent฀on฀top฀of฀double-digit฀gains฀in฀2011.
฀ •฀Retail฀sales฀on฀priority฀brands฀in฀Canada฀were฀up฀1฀percent,฀outpacing฀the฀liquid฀refreshment฀beverages
฀ ฀ (LRB)฀category฀by฀0.2฀percentage฀points.฀
฀ •฀Our฀Latin฀America฀Beverages฀segment฀grew฀volume฀2฀percent,฀driven฀by฀increases฀in฀Peñafiel,฀Crush,฀Clamato฀฀
฀ ฀ and฀Squirt.฀In฀Mexico,฀we฀grew฀dollar฀share฀of฀total฀LRB฀by฀0.2฀points.
฀ •฀We฀increased฀trial฀and฀sampling฀opportunities฀at฀the฀fountain,฀adding฀more฀than฀45,000฀valves฀and฀growing
฀ •฀With฀a฀focus฀on฀quality฀placements
฀ ฀ cold-drink฀equipment.฀
฀ •฀We฀increased฀display฀tie-in฀rates฀by
฀ •฀Since฀beginning฀our฀rapid฀continuous
Growing Our Business
In 2012, we continued to execute disciplined pricing in the marketplace, invest behind our well-loved brands and drive
productivity improvements with RCI.
For the year, net sales increased 2 percent as price increases and favorable mix offset flat CSD volumes and
a 5 percent decline in non-carbonated beverages. Segment operating profit was up 2 percent, reflecting contributions
from net sales growth and ongoing productivity improvements partially offset by higher packaging and ingredient
costs, inflation in labor and benefits costs and increased marketing investments. We reported core earnings of $2.92
per diluted share, an increase of 2 percent compared to 2011.
Going forward, opportunities remain to build our business by increasing distribution and availability across
high-growth and high-margin packages, categories and channels. With a focus on excellence in execution,
we will optimize shelf and display space and expand our immediate consumption presence through fountain
and cold-drink placements.
Leading With Flavor
Having gained steadily on colas over the past two decades, flavored CSD sales now represent nearly 51 percent
of total retail sales of CSDs. This growth has largely been driven by demographics such as the growing Hispanic
population, who strongly prefer flavors to colas, and millennial consumers, who seek variety. As the flavor leader,
DPS฀is฀uniquely฀positioned฀to฀continue฀to฀capitalize฀on฀these฀trends.฀In฀fact,฀we’re฀adding฀incremental฀sales฀to฀the฀
CSD category through flavorful innovations such as our new TEN products, which provide options for consumers
who want fewer calories but prefer the full flavor of a regular CSD. TEN represents a strategic platform for DPS,
and we believe it has tremendous potential not only for our business, but for the CSD category as a whole. Far from
being฀a฀line฀extension,฀TEN฀is฀a฀critical฀part฀of฀a฀long-term฀strategy฀designed฀to฀increase฀consumption฀frequency฀and฀
capture lapsed users.
We’re creating value for retailers and consumers by providing more package sizes, such as SnapTea gallons under
the Snapple trademark and six-pack half-liter bottles for CSDs. We’re adding more product options, such as Hawaiian
Punch Aloha Morning, to provide convenience for moms and increase opportunities for consumers to enjoy our brands
more times throughout the day.
Building Our Brands
Our฀iconic฀flavors฀and฀their฀devoted฀followers฀are฀driving growth for our brands. Still, we have opportunities to
introduce more consumers to our flavor portfolio. To that end, we’re developing innovative media and marketing
programs that deliver fun as well as flavor. Promotions such as our Facebook® Credits Program, the teaming up of
Snapple with America’s Got Talent®, and our wildly popular Dr Pepper Tuition Giveaway have strengthened our
brand awareness with consumers while bringing new flavor fans into our fold.
Driving Executional Excellence
We’re putting the shopper in the center of our plans to inform our marketing programs. This approach, combined
with a commitment to excellence in retail execution, is delivering strong results for DPS in the dollar channel, where
flavors฀have฀grown฀21฀percent฀over฀the฀last฀three฀years.฀In฀California,฀there’s฀a฀new฀sales฀team฀in฀town฀–฀our฀Latino฀
Street Force – and they’re dedicated to connecting with Hispanic consumers at local retail and community events.
These efforts are helping to drive growth in key Hispanic accounts by gaining incremental display space for brands
such as Clamato.
Creating Shareholder Value
At DPS, we’re focused on driving profitable volume and sales growth to create strong shareholder value over time.
Through RCI, we are freeing up critical resources – people, time and money – that we can redirect toward building our
brands, growing our business and providing strong total shareholder returns in the years ahead. In 2012, we used RCI
to develop an inventory replenishment strategy. As a result, DPS is now world class among large consumer packaged
goods (CPG) companies in the food and beverage industry for maintaining the lowest days sales in inventory.
value,฀one฀thing฀remains฀the฀same:฀When฀it฀comes฀to฀liquid฀refreshment,฀taste฀is฀king.฀In฀2013,฀our฀unrivaled฀brand฀
around฀goal฀deployment,฀ensuring฀alignment฀across฀functions฀and฀cultivating฀a฀Lean฀mindset฀in฀our฀senior฀leaders฀and฀
our฀leaders฀and฀their฀teams฀through฀our฀Mobilizing฀for฀ACTION฀initiative.฀The฀talent฀and฀commitment฀of฀our฀employees฀
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