Snapple 2011 Annual Report Download - page 24

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In the CSD market in the U.S. and Canada, we participate primarily in the flavored CSD category. Our key brands are Dr
Pepper, Canada Dry, 7UP, A&W, Sunkist soda, Crush and Sun Drop, 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 Nielsen, we had a 21.1% share of the U.S. CSD market in 2011 (measured by retail sales), which decreased 0.2%
compared to 2010. 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 U.S., we participate primarily in the ready-to-drink tea, juice, juice drinks and mixer
categories. Our key NCB brands are Snapple, Hawaiian Punch, Mott’s, 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 Squirt, Peñafiel, Aguafiel, Crush and Clamato. 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 2011, we manufactured and/or distributed approximately 46% of our total products sold in the U.S. (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 U.S. Our largest brand, Dr
Pepper, is the #2 flavored CSD in the U.S., according to Nielsen, and our Snapple brand is a leading ready-to-drink tea. Overall,
in 2011, approximately 84% of our volume was generated by brands that hold either the #1 or #2 position in their category. The
strength of our significant brands has allowed us to launch innovations and brand extensions such as Dr Pepper TEN, Blue Raspberry
Crush, Snapple's Papaya Mango Tea and Tea Will Be Loved and Mott's Garden Blend in 2011. During 2011, we also launched
Sun Drop, a popular regional brand within our portfolio of CSD brands, across the U.S.
Integrated business model. Our integrated business model 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. Our manufacturing and distribution system also enables us to improve focus
on our brands, especially certain of our brands such as 7UP, Sunkist soda, A&W, Squirt, Vernors, Canada Dry, Hawaiian Punch
and Snapple, which do not have a large presence in the bottler systems affiliated with The Coca-Cola Company ("Coca-Cola") or
PepsiCo, Inc. ("PepsiCo").
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 food service 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 Stores, Inc. ("Wal-Mart"), The
Kroger Co., SUPERVALU, INC, Safeway Inc., Publix and Target Corporation, some of the largest food service customers, including
McDonald’s Corporation, Yum! Brands, Inc., Burger King Corp., Sonic Corp., Wendy's/Arby's Group, Inc., Jack in the Box, Inc.
and Subway Restaurants, and convenience store customers, including 7-Eleven, Inc. Our portfolio of strong brands, operational
scale and experience across beverage segments has enabled us to maintain strong relationships with our customers.