2005 investor seminar presentation: gil...
TRANSCRIPT
AMERICAS BEVERAGES
AMERICAS BEVERAGES
Introduction
Gil Cassagne
President and CEO,
Cadbury SchweppesAmericas Beverages
Agenda
Gil Cassagne Overview
Randy Gier Creating Brands People Love
Cindy Hennessy Accelerating Innovation
Jim Johnston Strengthening Retailer Relationships and
Route to Market
Pedro Herran Bebidas Mexico
Q&A Americas Beverages Region
AMERICAS BEVERAGES
2003 Goals
� Integrate three North American beverage units into one
fully-integrated beverage business
� Lower the region cost structure in order to re-invest in brands,
systems and people
� Develop a compelling and distinctive portfolio strategy
� Develop and implement solutions to strengthen our
route-to-market
Progress
� Allocating resources against high growth and profit opportunities
� Leveraging the strengths of our combined structure and portfolio
� Proactive strategy to ensure we�re competitive from factory
to shelf
� Continuing to reduce cost base
Regional Integration Complete
� Beginning to see benefits of leveraging combined organization
� No significant disruption
Five Key Strategic Pillars
Create sustainable competitive advantage through
our people
Seek operational
excellence and reduce our cost
base
Create brands people love
Build valued retailer
relationships
Strategically align ourRoute toMarket
Goal: Become the best beverage business in the Americas
Five Key Strategic Pillars
Create sustainable competitive advantage through
our people
Seek operational
excellence and reduce our cost
base
Create brands people love
Build valued retailer
relationships
Strategically align ourRoute toMarket
Regional Leadership Team
Chief Marketing Officer
� Joined from outside the group
� Strong consumer goods background
� Sharp technical marketing skills
Chief Financial Officer
� Joined Cadbury Schweppes with
Adams in 2003
� Joined Americas Beverages in 2005
� Focus on profitable growth/cost
agenda
Randy Gier
Bert Alfonso
Senior Leadership Team
More than 130 new members
Half are new to their roles
Region Head of Innovation
� Significant impact on innovation
pipeline
− Quality
− Quantity
Cindy Hennessy
Seek operational excellence and reduce
our cost base
Create sustainable competitive advantage through
our people
Five Key Strategic Pillars
Create brands people love
Build valued retailer
relationships
Strategically align ourRoute toMarket
Fuel For Growth Savings
On track to deliver expected $120m savings
Indirect
� Region integration reduced headcount by 250
� Hialeah & North Brunswick plants closed
Direct
� Procurement initiatives
� Value optimization projects
Key Enablers
� Replaced old systems with single integrated ERP system
Probe IT system
Shared Business Services (SBS)
� Central back office team for Americas Beverages and
Confectionery
� Savings vs cost of previous structure
� Tightened management of Accounts Receivable
� Award-winning redesign of 1 gallon
Hawaiian Punch bottle
� Lighter weight
� Lower cost
Ongoing Supply Chain Optimization
� Consolidated our advertising with Y&R
� Partner with US Confectionery on media buying
� Cut out $35m of non-working media dollars
Maximize Marketing and Trade Spend Effectiveness
Operational Excellence
Create brands
people love
Seek operational
excellence and reduce our cost
base
Create sustainable competitive advantage through
our people
Five Key Strategic Pillars
Build valued retailer
relationships
Strategically align ourRoute toMarket
Our Portfolio Has Two Major Segments
CSD Non-CSD
� Finished goods model
− Manufacture and sell to trade
� Concentrate model
− Make concentrate and sell to bottlers
Our Portfolio Strategy
� We emphasize consumer-preferred brands in selected beverage
segments
� We only play where we have brand advantage or can build it
� We focus on brands with competitive advantage and the ability to
extend those advantages
� We spend wisely to extend a relatively fixed pool of resource
Differentiated Brand Equities
Each brand must have unique features and benefits
� Insight
� Innovation
� Impact
Dr Pepper Back on Track
Dr Pepper Volumes 2001-2005
% v
olu
me c
han
ge v
syear
ag
o
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
7%
2002 2003
2004 1H 2005
2001
Cherry Vanilla Adds New Consumers
85% of volumes have been incremental to CSAB
More in Store for 2006…
� Focus on Regular Dr Pepper � new advertising, packaging
and promotions
� Expansion of successful Hispanic test
� Trial blitz for Diet and Diet Cherry Vanilla Dr Pepper
� Second soda fountain classic: Dr Pepper Cream
7UP in Line with Expectations Through Transfer Period
Volumes 2003 - 2005
% V
olu
me c
han
ge v
syear
ag
o
-20%
-15%
-10%
-5%
0%
H1 '03 H2 '03 H1 '04 H2 '04 H1 '05
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
H196
H296
H197
H297
H198
H298
H199
H299
Profile Resembles Sunkist & A&W Transfer Periods
-10%
-5%
0%
5%
10%
15%
20%
H196
H296
H197
H297
H198
H298
H199
H299
Sunkist Volumes 1996 - 1999 A&W Volumes 1996 - 1999
% V
olu
me
chan
ge
vsye
ar
ago
% V
olu
me
chan
ge
vsye
ar
ago
Building a Foundation for Future Growth
Tactical activity to date
� Increasing placement of cold drink equipment
� Improving merchandising
� Increasing feature and display activity
Repositioning the brand
� �Better choice�
� Launch of 7UP PLUS
Strong Performance from Diet CSDs
0%
5%
10%
15%
20%
25%
H1 03 H2 03 H1 04 H2 04 H1 05
% V
olu
me c
han
ge v
syear
ag
o
Volumes 2003 - 2005
Consistently Outperforming the CSD Market Share
-0.4
-0.2
0
0.2
0.4
0.6
0.8
1
Q104 Q204 Q304 Q404 FY04 Q105 Q205 Q3*05 YTD
Source: AC Nielsen *Q3 is Nielsen periods 19 June to 10 September 2005
Ch
an
ge in
vo
lum
e s
hare
(p
oin
ts)
CSAB share of US CSD: Jan 04 - Sep 04
Portfolio Segments
CSD Non-CSD
� Finished goods model
− Manufacture and sell to trade
� Concentrate business model
− Make concentrate and
sell to bottlers
Our Core 4 Non-Carbonates
Improving Core 4 Non-Carbonate Momentum%
ch
an
ge v
syear
ag
o
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
H104 H204 H105
Volumes Sales
Mott’s: Growing Trademark and Volumes
Q3 is Nielsen periods 19 June to 10 September 2005
Vo
lum
es
% C
han
ge v
syear
ag
o
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
35%
H104 H204 H105 Q3*05
Restoring Growth to Snapple
� Realign priorities and investment
� Increase investment to build brand equity
� Establish value-based innovation strategy
Snapple Volumes are Responding
Base Snapple Volumes 2003 - 2005
% v
olu
me C
han
ge v
syear
ag
o
-10%
-8%
-6%
-4%
-2%
0%
2%
4%
H103 H203 H104 H204 H105
Innovation Key to Restoring Sustainable Growth
Non Carbonate Momentum
� Solid progress since 2003-2004
� Encouraging progress since HY05
Build valued retailer
relationships
Seek operational
excellence and reduce our cost
base
Create sustainable competitive advantage through
our people
Five Key Strategic Pillars
Create brands people love
Strategically align ourRoute toMarket
Top Ten Food Supplier to US Grocery Trade
$ % Chg vs YAG
1. Altria Group 1.5
2. Pepsico 3.5
3. Nestle Holdings 6.3
4. General Mills 0.7
5. Coca-Cola Company 2.6
6. Conagra -3.8
7. Kellogg Company 1.0
8. Unilever Group 1.3
9. Campbell Soup 0.6
10. Cadbury Schweppes 2.9
Source: Neilsen
Focus on Category Solutions
� �Supplier of the Year� � Wal-Mart
� Target
− Category captain for premium beverages
− Co-captain for CSDs
� Grocery Channel
− Partnerships with Safeway, Food Lion, Publix, Meijer and Kroger
� Portfolio approach driving success in fountain food service
Strategically align our Route to Market
Seek operational
excellence and reduce our cost
base
Create sustainable competitive advantage through
our people
Five Key Strategic Pillars
Create brands people love
Build valued retailer
relationships
Route to Market Overview
� CSDs sold through
− Independent bottlers
− Red & Blue cola bottling systems
� Non-CSDs sold through
− Direct store
− Warehouse delivery
− Company owned distribution in
New York City & San Francisco
Improving Bottler Alignment
� Commercial
� Financial
� Portfolio
� Operational
� Aligned planning
Summary
Goal 1 Business combination is complete
Goal 2
Goal 3
Goal 4
Fuel for Growth savings on track
Develop compelling & distinctive portfolio strategy andrestore growth to Dr Pepper & Snapple and stabilize 7UP
Grow business through existing RTM and work tostrengthen RTM for the longer term