Snapple 2009 Annual Report Download - page 30

Licensed Distribution Rights. We have rights in certain territories to bottle and/or distribute various brands
we do not own, such as AriZona tea and FIJI mineral water. Some of these arrangements are relatively shorter in
term, are limited in geographic scope and the licensor may be able to terminate the agreement upon an agreed period
of notice, in some cases without payment to us.
Intellectual Property We License to Others. We license some of our intellectual property, including
trademarks, to others. For example, we license the Dr Pepper trademark to certain companies for use in connection
with food, confectionery and other products. We also license certain brands, such as Dr Pepper and Snapple, to third
parties for use in beverages in certain countries where we own the brand but do not otherwise operate our business.
Marketing
Our marketing strategy is to grow our brands through continuously providing new solutions to meet
consumers’ changing preferences and needs. We identify these preferences and needs and develop innovative
solutions to address the opportunities. Solutions include new and reformulated products, improved packaging
design, pricing and enhanced availability. We use advertising, media, sponsorships, merchandising, public relations
and promotion to provide maximum impact for our brands and messages.
Manufacturing
As of December 31, 2009, we operated 23 manufacturing facilities across the United States and Mexico.
Almost all of our CSD beverage concentrates are manufactured at a single plant in St. Louis, Missouri. All of our
manufacturing facilities are either regional manufacturing facilities, with the capacity and capabilities to man-
ufacture many brands and packages, facilities with particular capabilities that are dedicated to certain brands or
products, or smaller bottling plants with a more limited range of packaging capabilities. We will open a new, multi-
product manufacturing facility in Southern California during 2010.
We employ approximately 5,000 full-time manufacturing employees in our facilities, including seasonal
workers. We have a variety of production capabilities, including hot-fill, cold-fill and aseptic bottling processes, and
we manufacture beverages in a variety of packaging materials, including aluminum, glass and PET cans and bottles
and a variety of package formats, including single-serve and multi-serve packages and “bag-in-box” fountain syrup
packaging.
In 2009, 89% of our manufactured volumes came from our brands and 11% from third party and private-label
products. We also use third party manufacturers to package our products for us on a limited basis.
We owned property, plant and equipment, net of accumulated depreciation, totaling $1,044 million and
$935 million in the United States and $65 million and $55 million in international locations as of December 31,
2009 and 2008, respectively.
Warehousing and Distribution
As of December 31, 2009, our distribution network consisted of 176 distribution centers in the United States
and 27 distribution centers in Mexico. Our warehouses are generally located at or near bottling plants and are
geographically dispersed to ensure product is available to meet consumer demand. We actively manage trans-
portation of our products using combination of our own fleet of more than 5,000 delivery trucks, as well as third
party logistics providers.
Raw Materials
The principal raw materials we use in our business are aluminum cans and ends, glass bottles, PET bottles and
caps, paper products, sweeteners, juice, fruit, water and other ingredients. The cost of the raw materials can
fluctuate substantially. In addition, we are significantly impacted by changes in fuel costs due to the large truck fleet
we operate in our distribution businesses.
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