Snapple 2012 Annual Report Download - page 31

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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 the age and ethnic demographics 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 response, our sales could suffer. Developing and
launching new products can be risky and expensive. We may not be successful in responding to changing markets and consumer
preferences, and some of our competitors may be better able to respond to these changes, either of which could negatively affect
our business and financial performance.
We depend on a small number of large retailers for a significant portion of our sales.
Food and beverage retailers in the U.S. have been consolidating, resulting in large, sophisticated retailers with increased
buying power. They are in a better position to resist our price increases and demand lower prices. They also have leverage to
require us to provide larger, more tailored promotional and product delivery programs. If we and our bottlers and distributors do
not successfully provide appropriate marketing, product, packaging, pricing and service to these retailers, our product availability,
sales and margins could suffer. Certain retailers make up a significant percentage of our products' retail volume, including volume
sold by our bottlers and distributors. Some retailers also offer their own private label products that compete with some of our
brands. The loss of sales of any of our products by a major retailer could have a material adverse effect on our business and financial
performance.
We depend on third party bottling and distribution companies for a portion of our business.
Net sales from our Beverage Concentrates segment represent sales of beverage concentrates to third party bottling companies
that we do not own. The Beverage Concentrates segment's operations generate a significant portion of our overall segment operating
profit. Some of these bottlers, such as PepsiCo and Coca-Cola, are also our competitors. The majority of these bottlers' business
comes from selling either their own products or our competitors' products. In addition, some of the products we manufacture are
distributed by third parties. As independent companies, these bottlers and distributors make their own business decisions. They
may have the right to determine whether, and to what extent, they produce and distribute our products, our competitors' products
and their own products. They may devote more resources to other products or take other actions detrimental to our brands. In most
cases, they are able to terminate their bottling and distribution arrangements with us without cause. We may need to increase
support for our brands in their territories and may not be able to pass on price increases to them. Their financial condition could
also be adversely affected by conditions beyond our control, and our business could suffer as a result. Deteriorating economic
conditions could negatively impact the financial viability of third party bottlers. Any of these factors could negatively affect our
business and financial performance.
Our financial results may be negatively impacted by recession, financial and credit market disruptions and other economic
conditions.
Changes in economic and financial conditions in the U.S., Canada, Mexico or the Caribbean, including the outcome of
negotiations surrounding the U.S. "fiscal cliff", tax increases and potential spending cuts may negatively impact consumer
confidence and consumer spending, which could result in a reduction in our sales volume and/or switching to lower price offerings.
Similarly, disruptions in financial and credit markets worldwide may impact our ability to manage normal commercial relationships
with our customers, suppliers and creditors. These disruptions could have a negative impact on the ability of our customers to
timely pay their obligations to us, thus reducing our cash flow, or our vendors to timely supply materials. Additionally, these
disruptions could have a negative impact on our ability to raise capital through the issuance of unsecured commercial paper or
senior notes.
We could also face increased counterparty risk for our cash investments and our hedging arrangements. Declines in the
securities and credit markets could also affect our pension fund, which in turn could increase funding requirements.
Weather, climate change legislation and the availability of water could adversely affect our business.
Unseasonable or unusual weather or long-term climate changes may negatively impact the price or availability of raw materials,
energy and fuel, and demand for our products. Unusually cool weather during the summer months may result in reduced demand
for our products and have a negative effect on our business and financial performance.