Snapple 2009 Annual Report Download - page 25

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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, Jack in the Box 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, but also focuses on emerging categories such as teas, energy drinks and juices.
Broad geographic manufacturing and distribution coverage. As of December 31, 2009, we had 19
manufacturing facilities and 176 distribution centers in the United States, as well as four manufacturing
facilities and 27 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 oper-
ations with our customers, reduce transportation costs and have greater control over the timing and coor-
dination of new product launches. In addition, our warehouses are generally located at or near bottling plants
and geographically dispersed to ensure our products are available to meet consumer demand. We actively
manage transportation of our products using our own fleet of more than 5,000 delivery trucks, as well as third
party logistics providers on a selected basis.
Strong operating margins and stable cash flows. The breadth of our brand portfolio has enabled us to
generate strong operating margins which have delivered stable cash flows. These cash flows enable us to
consider a variety of alternatives, such as investing in our business, reducing our debt, paying dividends to our
stockholders and repurchasing shares of our common stock.
Experienced executive management team. Our executive management team has over 200 years of
collective experience in the food and beverage industry. The team has broad experience in brand ownership,
manufacturing and distribution, and enjoys strong relationships both within the industry and with major
customers. In addition, our management team has diverse skills that support our operating strategies, including
driving organic growth through targeted and efficient marketing, reducing operating costs, enhancing
distribution efficiencies, aligning manufacturing and distribution interests and executing strategic acquisitions.
Our Strategy
The key elements of our business strategy are to:
Build and enhance leading brands. We have a well-defined portfolio strategy to allocate our marketing
and sales resources. We use an on-going process of market and consumer analysis to identify key brands that
we believe have the greatest potential for profitable sales growth. We intend to continue to invest most heavily
in our key brands to drive profitable and sustainable growth by strengthening consumer awareness, developing
innovative products and brand extensions to take advantage of evolving consumer trends, improving distri-
bution and increasing promotional effectiveness.
Focus on opportunities in high growth and high margin categories. We are focused on driving growth in
our business in selected profitable and emerging categories. These categories include ready-to-drink teas,
energy drinks and other beverages. We also intend to capitalize on opportunities in these categories through
brand extensions, new product launches and selective acquisitions of brands and distribution rights. For
example, we believe we are well-positioned to enter into new distribution agreements for emerging, high-
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