Snapple 2012 Annual Report Download - page 52

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SOP. SOP increased $34 million, or approximately 5%, for the year ended December 31, 2011, as compared with the year
ago period, primarily driven by the increase in net sales and a reduction in employee costs, partially offset by an increase in
marketing investments.
Volume (BCS). Volume (BCS) decreased 2% for the year ended December 31, 2011, as compared with the year ago period,
as a result of the repatriation of brands to our Packaged Beverages segment under the licensing arrangements with PepsiCo and
Coca-Cola. Excluding the repatriation, volume (BCS) increased slightly. Sun Drop had a double-digit increase due to the national
launch of the brand. Our Core 4 brands decreased low single digits, resulting from a high single-digit decline in Sunkist soda and
mid single-digit declines in A&W and 7UP, which was slightly offset by a high single-digit increase in Canada Dry. Other drivers
of the change included a high single-digit decline in Crush due to decreased promotional activity, as well as a mid single-digit
decline in Squirt. Dr Pepper increased low single digits due to increases in fountain food service due to additional restaurant
availability, as well as the launch of Dr Pepper TEN in the second half of 2011, offset by higher volumes a year ago caused by
low holiday and summer pricing by a national account that did not recur in 2011 and higher retail pricing in the second half of
2011.
PACKAGED BEVERAGES
The following table details our Packaged Beverages segment's net sales and SOP for the year ended December 31, 2011 and
2010 (in millions):
For the Year Ended
December 31,
2011 2010 Change
Net sales $ 4,292 $ 4,098 $ 194
SOP 519 536 (17)
Volume. Sales volume increased 2% for the year ended December 31, 2011, compared with the year ended December 31,
2010. Total sales volume increased 2% due to the repatriation of certain brands under the PepsiCo and Coca-Cola licensing
arrangements and 2% due to an increase in contract manufacturing. These increases were partially offset by a 1% decline in total
sales volume in each of our NCB category as well as our CSD category excluding the impact of repatriation.
Total CSD volume increased 3%, led by the repatriation of certain brands including Canada Dry and Squirt. The repatriation
of those brands favorably impacted the CSD volume by 5%. The national launch of Sun Drop added approximately 7 million cases
during the year ended December 31, 2011. Volume for our Core 4 brands, excluding the repatriation of Canada Dry and Sunkist
soda, decreased 3%. Dr Pepper volumes declined 4% for the year ended December 31, 2011, as sales volume in the prior year was
driven by low holiday and summer pricing by a national account that did not recur in 2011 and higher retail pricing in the second
half of 2011.
Total NCB volume decreased 1% compared to the year ended December 31, 2010. Declines in Mott's of 9% and Hawaiian
Punch of 4% drove the decrease in the NCB category. Mott's decline was a result of larger-than-normal price increases associated
with the significant increase in the cost of apple juice concentrate and promotional activities in the prior year that did not recur in
2011. Hawaiian Punch's decline was due to price increases partially offset by favorability due to new package innovation. These
decreases were partially offset by an 8% increase in Snapple as a result of distribution gains and package innovation.
Net Sales. Net sales increased $194 million for the year ended December 31, 2011, compared with the year ended December
31, 2010. Net sales were favorably impacted by price increases, $83 million due to the repatriation of certain brands and favorable
package mix and increases in contract manufacturing, partially offset by volume declines previously discussed.
SOP. SOP decreased $17 million for the year ended December 31, 2011, compared with the year ended December 31, 2010,
primarily due to higher costs for packaging materials, sweeteners, apple juice concentrate, fuel and other commodities, incremental
costs associated with the repatriation of brands and an $18 million legal provision associated with the ABC litigation. These cost
increases were partially offset by the increase in net sales, ongoing RCI-related and other productivity savings, lower warehouse
costs and a reduction in our IT investments in the current year. Additionally, the favorable comparison of $19 million of higher
expenses associated with labor, co-packing, unfavorable yield and an underabsorption of manufacturing overhead as a result of
the strike at our Williamson, New York manufacturing facility in the prior year further offset the costs increases in the current
year.