Snapple 2009 Annual Report Download - page 24

In the CSD market in the United States and Canada, we participate primarily in the flavored CSD category. Our
key brands are Dr Pepper, 7UP, Sunkist soda, A&W, Canada Dry and Crush, and we also sell regional and smaller
niche brands. In the CSD market we are primarily a manufacturer of beverage concentrates and fountain syrups.
Beverage concentrates are highly concentrated proprietary flavors used to make syrup or finished beverages. We
manufacture beverage concentrates that are used by our own Packaged Beverages and Latin America Beverages
segments, as well as sold to third party bottling companies. According to The Nielsen Company, we had a 21.0%
share of the United States CSD market in 2009 (measured by retail sales), which increased from 19.7% in 2008. We
also manufacture fountain syrup that we sell to the foodservice industry directly, through bottlers or through third
parties.
In the NCB market segment in the United States, we participate primarily in the ready-to-drink tea, juice, juice
drinks and mixer categories. Our key NCB brands are Snapple, Mott’s, Hawaiian Punch and Clamato, and we also
sell regional and smaller niche brands. We manufacture most of our NCBs as ready-to-drink beverages and
distribute them through our own distribution network and through third parties or direct to our customers’
warehouses. In addition to NCB beverages, we also manufacture Mott’s apple sauce as a finished product.
In Mexico and the Caribbean, we participate primarily in the carbonated mineral water, flavored CSD, bottled
water and vegetable juice categories. Our key brands in Mexico include Peñafiel, Squirt, Clamato and Aguafiel. In
Mexico, we manufacture and sell our brands through both our own manufacturing and distribution operations and
third party bottlers. In the Caribbean, we distribute our products solely through third party distributors and bottlers.
In 2009, we manufactured and/or distributed approximately 44% of our total products sold in the United States
(as measured by volume). In addition, our businesses manufacture and 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 company with year-over-year market share growth in the CSD market 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 2009, approximately 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, manufacturing 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 in addition to the Coca-Cola Company (“Coca-Cola”) and PepsiCo, Inc.
(“PepsiCo”) affiliated systems. Our manufacturing and distribution system enables us to improve focus on our
brands, especially certain of our brands such as 7UP, Sunkist soda, A&W and 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 manufacturing 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 beverage 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.
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