Snapple 2008 Annual Report Download - page 28

In 2008, we bottled and/or distributed approximately 44% of our total products sold in the United States (as
measured by volume). In addition, our bottling and distribution businesses distribute a variety of brands owned by
third parties in specified licensed geographic territories.
Our Strengths
The key strengths of our business are:
Strong portfolio of leading, consumer-preferred brands. We own a diverse portfolio of well-known
CSD and NCB brands. Many of our brands enjoy high levels of consumer awareness, preference and loyalty
rooted in their rich heritage, which drive their market positions. Our diverse portfolio provides our bottlers,
distributors and retailers with a wide variety of products and provides us with a platform for growth and
profitability. We are the #1 flavored CSD company in the United States. In addition, we are the only major
beverage concentrate manufacturer with year-over-year market share growth in the CSD market segment in
each of the last five years. Our largest brand, Dr Pepper, is the #2 flavored CSD in the United States, according
to The Nielsen Company, and our Snapple brand is a leading ready-to-drink tea. Overall, in 2008, more than
75% of our volume was generated by brands that hold either the #1 or #2 position in their category. The
strength of our key brands has allowed us to launch innovations and brand extensions such as Dr Pepper
Cherry, 7UP Cherry Antioxidant, Canada Dry Green Tea Ginger Ale, Mott’s for Tots and Snapple value teas.
Integrated business model. We believe our brand ownership, bottling and distribution are more
integrated than the United States operations of our principal competitors and that this differentiation provides
us with a competitive advantage. Our integrated business model strengthens our route-to-market by creating a
third consolidated bottling system, our Bottling Group, in addition to the Coca-Cola affiliated and PepsiCo
affiliated systems. Our bottling system enables us to improve focus on our brands, especially certain of our
brands such as 7UP, Sunkist, A&Wand Snapple, which do not have a large presence in the Coca-Cola affiliated
and PepsiCo affiliated bottler systems. Our integrated business model also provides opportunities for net sales
and profit growth through the alignment of the economic interests of our brand ownership and our bottling and
distribution businesses. For example, we can focus on maximizing profitability for our company as a whole
rather than focusing on profitability generated from either the sale of concentrates or the bottling and
distribution of our products. Additionally, our integrated business model enables us to be more flexible and
responsive to the changing needs of our large retail customers by coordinating sales, service, distribution,
promotions and product launches and allows us to more fully leverage our scale and reduce costs by creating
greater geographic manufacturing and distribution coverage.
Strong customer relationships. Our brands have enjoyed long-standing relationships with many of our
top customers. We sell our products to a wide range of customers, from bottlers and distributors to national
retailers, large foodservice and convenience store customers. We have strong relationships with some of the
largest bottlers and distributors, including those affiliated with Coca-Cola and PepsiCo, some of the largest and
most important retailers, including Wal-Mart, Safeway, Kroger and Target, some of the largest food service
customers, including McDonald’s, Yum! Brands and Burger King, and convenience store customers, including
7-Eleven. Our portfolio of strong brands, operational scale and experience across beverage segments has
enabled us to maintain strong relationships with our customers.
Attractive positioning within a large and profitable market. We hold the #1 position in the United States
flavored CSD beverage markets by volume according to Beverage Digest. We are also a leader in Canada and
Mexico beverage markets. We believe that these markets are well-positioned to benefit from emerging
consumer trends such as the need for convenience and the demand for products with health and wellness
benefits. Our portfolio of products is biased toward flavored CSDs, which continue to gain market share versus
cola CSDs, as well as growing categories such as teas, energy drinks and juices.
Broad geographic manufacturing and distribution coverage. As of December 31, 2008, we had 20
manufacturing facilities and approximately 200 distribution centers in the United States, as well as four
manufacturing facilities and approximately 25 distribution centers in Mexico. These facilities use a variety of
manufacturing processes. We have strategically located manufacturing and distribution capabilities, enabling
us to better align our operations with our customers, reduce transportation costs and have greater control over
4