Snapple 2009 Annual Report Download - page 29

Retailers also buy finished beverages directly from us. Our portfolio of strong brands, operational scale and
experience in the beverage industry has enabled us to maintain strong relationships with major retailers in the
United States, Canada and Mexico. In 2009, our largest retailer was Wal-Mart Stores, Inc., representing approx-
imately 13% of our net sales.
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.
Competition
The liquid refreshment beverage industry is highly competitive and continues to evolve in response to
changing consumer preferences. Competition is generally based upon brand recognition, taste, quality, price,
availability, selection and convenience. We compete with multinational corporations with significant financial
resources. Our two largest competitors in the liquid refreshment beverage market are Coca-Cola and PepsiCo, each
representing more than 30% of the U.S. liquid refreshment beverage market by volume, according to Beverage
Digest. We also compete against other large companies, including Nestlé, S.A. (“Nestle”) and Kraft Foods Inc.
(“Kraft”). 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.
As a bottler, we compete with bottlers such as CCE, PBG,PAS and a number of smaller bottlers and distributors. We
also compete with a variety of smaller, regional and private label manufacturers, such as The Cott Corporation
(“Cott”). Smaller companies may be more innovative, better able to bring new products to market and better able to
quickly exploit and serve niche markets. We have lower exposure to some of the faster growing non-carbonated and
the bottled water segments in the overall liquid refreshment beverage market and as a result, although we have
increased our market share in the overall United States CSD market, we have lost share in the overall United States
liquid refreshment beverage market over the past several years. In Canada, Mexico and the Caribbean, we compete
with many of these same international companies as well as a number of regional competitors.
Although these bottlers and distributors are our competitors, many of these companies are also our customers
as they purchase beverage concentrates from us.
Intellectual Property and Trademarks
Our Intellectual Property. We possess a variety of intellectual property rights that are important to our
business. We rely on a combination of trademarks, copyrights, patents and trade secrets to safeguard our proprietary
rights, including our brands and ingredient and production formulas for our products.
Our Trademarks. Our trademark portfolio includes more than 2,500 registrations and applications in the
United States, Canada, Mexico and other countries. Brands we own through various subsidiaries in various
jurisdictions include Dr Pepper, 7UP, A&W, Canada Dry, RC Cola, Schweppes, Squirt, Crush, Peñafiel, Aguafiel,
Snapple, Mott’s, Hawaiian Punch, Clamato, Mistic, Nantucket Nectars, Mr & Mrs T, ReaLemon, Venom and Deja
Blue. We own trademark registrations for all of these brands in the United States, and we own trademark
registrations for some but not all of these brands in Canada, Mexico and other countries. We also own a number of
smaller regional brands. Some of our other trademark registrations are in countries where we do not currently have
any significant level of business. In addition, in many countries outside the United States, Canada and Mexico, our
rights to many of our brands, including our Dr Pepper trademark and formula, were sold by Cadbury beginning over
a decade ago to third parties including, in certain cases, to competitors such as Coca-Cola.
Trademarks Licensed from Others. We license various trademarks from third parties, which generally allow
us to manufacture and distribute throughout the United States and/or Canada and Mexico. For example, we license
from third parties the Sunkist soda, Welch’s, Country Time, Orangina, Stewart’s, Rose’s, Holland House and
Margaritaville trademarks. Although these licenses vary in length and other terms, they generally are long-term,
cover the entire United States and/or Canada and Mexico and generally include a royalty payment to the licensor.
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