Snapple 2008 Annual Report Download - page 30

improve route productivity and data integrity and standards. With third party bottlers, we continue to deliver
programs that maintain priority for our brands in their systems.
Improve operating efficiency. We completed a series of restructurings in our organization from 2006 to
2008. We believe these restructurings have reduced our selling, general and administrative expenses and
improved our operating efficiency. In addition, the integration of acquisitions into our Bottling Group has
created the opportunity to improve our manufacturing, warehousing and distribution operations. For example,
we have been able to create multi-product manufacturing facilities (such as our Irving, Texas facility) which
provide a region with a wide variety of our products at reduced transportation and co-packing costs.
Our Business Operations
As of December 31, 2008, our operating structure included four business segments: Beverage Concentrates,
Finished Goods, Bottling Group and Mexico and the Caribbean. Segment financial data for 2008, 2007 and 2006,
including financial information about foreign and domestic operations, is included in Note 23 of the Notes to our
Audited Consolidated Financial Statements.
Beverage Concentrates
Our Beverage Concentrates segment is principally a brand ownership business. In this segment we manu-
facture beverage concentrates and syrups in the United States and Canada. Most of the brands in this segment are
CSD brands. In 2008, our Beverage Concentrates segment had net sales of approximately $1.4 billion before the
elimination of intersegment transactions. Key brands include Dr Pepper, 7UP, Sunkist, A&W, Canada Dry,
Schweppes, Squirt, RC, Crush, Diet Rite, Sundrop, Welch’s, Vernors and Country Time and the concentrate form
of Hawaiian Punch.
We are the industry leader in flavored CSDs with a 38.4% market share in the United States for 2008, as
measured by retail sales according to The Nielsen Company. We are also the third largest CSD brand owner as
measured by 2008 retail sales in the United States and Canada and we own a leading brand in most of the CSD
categories in which we compete.
Almost all of our beverage concentrates are manufactured at our plant in St. Louis, Missouri. The beverage
concentrates are shipped to third party bottlers, as well as to our own Bottling Group, who combine the beverage
concentrates with carbonation, water, sweeteners and other ingredients, package it in PET, glass bottles and
aluminum cans, and sell it as a finished beverage to retailers. Concentrate prices historically have been reviewed and
adjusted at least on an annual basis.
Syrup is shipped to fountain customers, such as fast food restaurants, who mix the syrup with water and
carbonation to create a finished beverage at the point of sale to consumers. Dr Pepper represents most of our
fountain channel volume.
Our Beverage Concentrates brands are sold by our bottlers, including our own Bottling Group, through all
major retail channels including supermarkets, fountains, mass merchandisers, club stores, vending machines,
convenience stores, gas stations, small groceries, drug chains and dollar stores. Unlike the majority of our other
CSD brands, 73% of Dr Pepper volumes are distributed through the Coca-Cola affiliated and PepsiCo affiliated
bottler systems.
Coca-Cola and Pepsi affiliated systems each constituted approximately 15% of the net sales of our Beverage
Concentrates segment.
Finished Goods
Our Finished Goods segment is principally a brand ownership and a bottling business and, to a lesser extent, a
distribution business. In this segment, we primarily manufacture and distribute finished beverages and other
products in the United States and Canada. Most of the beverages in this segment are NCBs, such as ready-to-drink
teas, juice and juice drinks. Most of our sales of Snapple are included in the Finished Goods segment. In 2008, our
Finished Goods segment had net sales of approximately $1.6 billion before the elimination of intersegment
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