Snapple 2009 Annual Report Download - page 33

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We use both The Nielsen Company and Beverage Digest to assess both our own and our competitors’
performance and market share in the United States. Different market share rankings can result for a specific
beverage category depending on whether data from The Nielsen Company or Beverage Digest is used, in part
because of the differences in the sales channels reported by each source. For example, because the fountain channel
(where we have a relatively small business except for Dr Pepper) is not included in The Nielsen Company data, our
market share using The Nielsen Company data is generally higher for our CSD portfolio than the Beverage Digest
data, which does include the fountain channel.
In this Annual Report on Form 10-K, all information regarding the beverage market in the United States is
from Beverage Digest, and, except as otherwise indicated, is from 2008. All information regarding our brand market
positions in the U.S. is from The Nielsen Company and is based on retail dollar sales in 2009.
ITEM 1A. RISK FACTORS
Risks Related to Our Business
In addition to the other information set forth in this report, you should carefully consider the risks described
below which could materially affect our business, financial condition, or future results. Any of the following risks,
as well as other risks and uncertainties, could harm our business and financial condition.
We operate in highly competitive markets.
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 Nestle and 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 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.
Our inability to compete effectively could result in a decline in our sales. As a result, we may have to reduce
our prices or increase our spending on marketing, advertising and product innovation. Any of these could negatively
affect our business and financial performance.
We may not effectively respond to changing consumer preferences, trends, health concerns and other
factors.
Consumers’ preferences can change due to a variety of factors, including aging of the population, social trends,
negative publicity, economic downturn or other factors. For example, consumers are increasingly concerned about
health and wellness, and demand for regular CSDs has decreased as consumers have shifted towards low or no
calorie soft drinks and, increasingly, to NCBs, such as water, ready-to-drink teas and sports drinks. If we do not
effectively anticipate these trends and changing consumer preferences, then quickly develop new products in
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