Snapple 2012 Annual Report Download - page 25

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Packaged Beverages
Our Packaged Beverages segment is principally a brand ownership, manufacturing and distribution business. In this segment,
we primarily manufacture and distribute packaged beverages and other products, including our brands, third party owned brands
and certain private label beverages, in the U.S. and Canada. In 2012 our Packaged Beverages segment had net sales of approximately
$4,358 million. Key NCB brands in this segment include Snapple, Hawaiian Punch, Mott's, Clamato, Yoo-Hoo, Deja Blue, FIJI,
AriZona, ReaLemon, Nantucket Nectars, Mr and Mrs T mixers, Mistic and Rose's. Key CSD brands in this segment include 7UP,
Dr Pepper, A&W, Sunkist soda, Canada Dry, Squirt, RC Cola, Big Red, Vernors, Diet Rite and Sun Drop.
Approximately 85% of our 2012 Packaged Beverages net sales of branded products come from our own brands, with the
remaining from the distribution of third party brands such as Big Red, FIJI, AriZona, Vita Coco, Neuro and Hydrive. A portion of
our sales also comes from bottling beverages and other products for private label owners or others, which is also referred to as
contract manufacturing. Although the majority of our Packaged Beverages' net sales relate to our brands, we also provide a route-
to-market for third party brand owners seeking effective distribution for their new and emerging brands. These brands give us
exposure in certain markets to fast growing segments of the beverage industry with minimal capital investment.
Our Packaged Beverages' products are manufactured in multiple facilities across the U.S. and are sold or distributed to retailers
and their warehouses by our own distribution network or by third party distributors. The raw materials used to manufacture our
products include aluminum cans and ends, glass bottles, PET bottles and caps, paper products, sweeteners, juices, water and other
ingredients.
We sell our Packaged Beverages' products both through our Direct Store Delivery system ("DSD"), supported by a fleet of
approximately 6,000 vehicles and 13,000 employees, including sales representatives, merchandisers, drivers and warehouse
workers, as well as through our Warehouse Direct delivery system ("WD"), both of which include the sales to all major retail
channels, including supermarkets, fountain channel, mass merchandisers, club stores, vending machines, convenience stores, gas
stations, small groceries, drug chains and dollar stores.
In 2012, WalMart, the largest customer of our Packaged Beverages segment, accounted for approximately 17% of our net
sales in this segment.
Latin America Beverages
Our Latin America Beverages segment is a brand ownership, manufacturing and distribution business. This segment
participates mainly in the carbonated mineral water, flavored CSD, bottled water and vegetable juice categories, with particular
strength in carbonated mineral water, vegetable juice categories and grapefruit flavored CSDs. In 2012, our Latin America
Beverages segment had net sales of $416 million, with our operations in Mexico representing approximately 88% of the net sales
of this segment. Key brands include Squirt, Peñafiel, Aguafiel, Crush and Clamato.
In Mexico, we manufacture and distribute our products through our bottling operations and third party bottlers and distributors.
In the Caribbean, we distribute our products through third party bottlers and distributors. In Mexico, we also participate in a joint
venture to manufacture Aguafiel brand water with Acqua Minerale San Benedetto. We provide expertise in the Mexican beverage
market and Acqua Minerale San Benedetto provides expertise in water production and new packaging technologies.
We sell our finished beverages through all major Mexican retail channels, including "mom and pop" stores, supermarkets,
hypermarkets and on premise channels.
BOTTLER AND DISTRIBUTOR AGREEMENTS
In the U.S. and Canada, we generally grant perpetual, exclusive license agreements for CSD brands and packages to bottlers
for specific geographic areas. These agreements prohibit bottlers from selling the licensed products outside their exclusive territory
and selling any imitative products in that territory. Generally, we may terminate bottling agreements only for cause or change in
control and the bottler may terminate without cause upon giving certain specified notice and complying with other applicable
conditions. Fountain agreements for bottlers generally are not exclusive for a territory, but do restrict bottlers from carrying imitative
product in the territory. Many of our brands such as Snapple, Mistic, Stewart's, Nantucket Nectars, Yoo-Hoo and Orangina, are
licensed for distribution in various territories to bottlers and a number of smaller distributors such as beer wholesalers, wine and
spirit distributors, independent distributors and retail brokers. We may terminate some of these distribution agreements only for
cause and the distributor may terminate without cause upon certain notice and other conditions. Either party may terminate some
of the other distribution agreements without cause upon giving certain specified notice and complying with other applicable
conditions.