Snapple 2014 Annual Report Download - page 28

25
• Changes in consumer preferences. We are impacted by shifting consumer demographics and needs. We believe marketing
and product innovations that target fast growing population segments, such as the Hispanic community in the U.S., could
drive market growth. Additionally, as more consumers are faced with a busy and on-the-go lifestyle, sales of single-serve
beverages could increase, which typically have higher margins.
• Increased competition in the LRB market. A number of our competitors are large corporations with significant financial
resources. These competitors can use their resources and scale to rapidly respond to competitive pressures and changes
in consumer preferences by introducing new products, reducing prices or increasing promotional activities, which could
reduce the demand for our products.
• Product and packaging innovation. We believe brand owners and bottling companies will continue to create new products
and packages, such as beverages with new ingredients and new premium flavors and innovative convenient packaging,
that address changes in consumer tastes and preferences.
• Changing retailer landscape. As retailers continue to consolidate, we believe retailers will support consumer product
companies that can provide an attractive portfolio of products, a strong value proposition and efficient delivery.
• Volatility in the costs of raw materials. The costs of a substantial portion of the raw materials used in the beverage industry
are dependent on commodity prices for aluminum, corn, resin, diesel, natural gas, pulp and other commodities. We are
also dependent on commodity prices for apples related to our applesauce production. Commodity price volatility has,
from time to time, exerted pressure on industry margins and operating results.
As a result of these uncertainties and other factors, we believe net sales for the year ending December 31, 2015 could be up
approximately 1% as compared to the year ended December 31, 2014. Commodity costs for the year ending December 31, 2015
could be down approximately 1% on a constant volume/mix basis as compared to the year ended December 31, 2014.
Refer to Item 1A, "Risk Factors" of this Annual Report on Form 10-K for additional information about risks and uncertainties
facing our Company.
SEASONALITY
The beverage market is subject to some seasonal variations. Our beverage sales are generally higher during the warmer months
and also can be influenced by the timing of holidays as well as weather fluctuations.
SEGMENTS
We report our business in three operating segments:
• The Beverage Concentrates segment reflects sales of our branded concentrates and syrup to third party bottlers primarily
in the U.S. and Canada. Most of the brands in this segment are CSD brands.
• The Packaged Beverages segment reflects sales in the U.S. and Canada from the manufacture and distribution of finished
beverages and other products, including sales of our own brands and third party brands, through both DSD and WD.
• The Latin America Beverages segment reflects sales in the Mexico, Caribbean and other international markets from the
manufacture and distribution of concentrates, syrup and finished beverages.
Segment results are based on management reports. Net sales and SOP are the significant financial measures used to assess
the operating performance of our operating segments.
VOLUME
In evaluating our performance, we consider different volume measures depending on whether we sell beverage concentrates
or finished beverages.
Beverage Concentrates Sales Volume
In our Beverage Concentrates segment, we measure our sales volume in two ways: (1) "concentrate case sales" and (2) "bottler
case sales." The unit of measurement for both concentrate case sales and bottler case sales equals 288 fluid ounces of finished
beverage, the equivalent of 24 twelve ounce servings.