Snapple 2014 Annual Report Download - page 10

7
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 U.S. and Canada. In 2014 our Packaged Beverages segment had net sales of approximately
$4,361 million. Key NCB brands in this segment include Snapple, Hawaiian Punch, Mott's, Clamato, Yoo-Hoo, FIJI mineral water,
Deja Blue, AriZona tea, ReaLemon, Mr and Mrs T mixers, Vita Coco coconut water, Nantucket Nectars, Mistic Garden Cocktail,
Bai 5 and Rose's. Key CSD brands in this segment include 7UP, Dr Pepper, A&W, Canada Dry, Sunkist soda, Squirt, RC Cola,
Big Red, Vernors, Diet Rite and Sun Drop.
Approximately 83% of our 2014 Packaged Beverages net sales of branded products come from our own brands, with the
remaining from the distribution of third party brands such as Big Red, FIJI mineral water, AriZona tea, Vita Coco coconut water,
Bai 5, Neuro beverages, Sparkling Fruit2O and Hydrive energy drinks. A portion of our sales also comes from bottling beverages
and other products for private label owners or others, which is also referred to as contract manufacturing. Although the majority
of our Packaged Beverages' net sales relate to our brands, we also provide a route-to-market for these 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.
We sell our Packaged Beverages' products both through our Direct Store Delivery system ("DSD") and our Warehouse Direct
delivery system ("WD"), both of which include the sales to all major retail channels, including supermarkets, fountain channel,
mass merchandisers, club stores, vending machines, convenience stores, gas stations, small groceries, drug chains and dollar stores.
In 2014, WalMart, the largest customer of our Packaged Beverages segment, accounted for approximately 16% of our net
sales in this segment.
Latin America Beverages
Our Latin America Beverages segment is a brand ownership, manufacturing and distribution business. This segment
participates mainly in the carbonated mineral water, flavored CSD, bottled water and vegetable juice categories, with particular
strength in carbonated mineral water, vegetable juice categories and grapefruit flavored CSDs. In 2014, our Latin America
Beverages segment had net sales of $532 million, with our operations in Mexico representing approximately 91% of the net sales
of this segment. Key brands include Peñafiel, Squirt, Aguafiel, Clamato, and Crush.
In Mexico, we manufacture and distribute our products through our bottling operations and third party bottlers and distributors.
In the Caribbean, we distribute our products through third party bottlers and distributors. We have also begun to distribute certain
products in other international jurisdictions through various third party bottlers and distributors. In Mexico, we also participate in
a joint venture to manufacture Aguafiel brand water with Acqua Minerale San Benedetto. We provide expertise in the Mexican
beverage market and Acqua Minerale San Benedetto provides expertise in water production and new packaging technologies.
We sell our finished beverages through all major Mexican retail channels, including "mom and pop" stores, supermarkets,
hypermarkets and on premise channels.
BOTTLER AND DISTRIBUTOR AGREEMENTS
In the U.S. and Canada, we generally grant perpetual, exclusive license agreements for CSD brands and packages to bottlers
for specific geographic areas. Many of our brands such as Snapple, Mistic, Nantucket Nectars, Yoo-Hoo and Orangina, are licensed
for distribution in various territories to bottlers and a number of smaller distributors such as beer wholesalers, wine and spirit
distributors, independent distributors and retail brokers. These agreements prohibit bottlers and distributors from selling the licensed
products outside their exclusive territory and selling any imitative products in that territory. Generally, we may terminate bottling
and distribution agreements only for cause or change in control and the bottler or distributor may terminate without cause upon
giving certain specified notice and complying with other applicable conditions. Fountain agreements for bottlers generally are not
exclusive for a territory, but do restrict bottlers from carrying imitative product in the territory.