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Dr Pepper Snapple 2012 Presentation At Barclays Back To School
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Dr Pepper Snapple 2012 Presentation At Barclays Back To School

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Presentation given to Barclays Back to School Conference in September 2012

Presentation given to Barclays Back to School Conference in September 2012

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Dr Pepper Snapple 2012 Presentation At Barclays Back To School Dr Pepper Snapple 2012 Presentation At Barclays Back To School Presentation Transcript

  • Barclays Back To SchoolSeptember 7, 2011
  • Larry D. YoungPresident and CEO
  • 3Safe Harbor StatementThis release contains forward-looking statements within the meaning of Section 27A ofthe Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Actof 1934, as amended, including, in particular, statements about future events, futurefinancial performance including earnings estimates, plans, strategies, expectations,prospects, competitive environment, regulation, and cost and availability of raw materials.Forward-looking statements include all statements that are not historical facts and can beidentified by the use of forward-looking terminology such as the words “may,” “will,”“expect,” “anticipate,” “believe,” “estimate,” “plan,” “intend” or the negative of these termsor similar expressions. These forward-looking statements have been based on ourcurrent views with respect to future events and financial performance. Our actualfinancial performance could differ materially from those projected in the forward-lookingstatements due to the inherent uncertainty of estimates, forecasts and projections, andour financial performance may be better or worse than anticipated. Given theseuncertainties, you should not put undue reliance on any forward-looking statements. Allof the forward-looking statements are qualified in their entirety by reference to the factorsdiscussed under “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K forthe year ended December 31, 2010 and our other filings with the Securities andExchange Commission. Forward-looking statements represent our estimates andassumptions only as of the date that they were made. We do not undertake any duty toupdate the forward-looking statements, and the estimates and assumptions associatedwith them, after the date of this presentation, except to the extent required by applicablesecurities laws.
  • 4Premium TeaGourmet CSDsJuice & Juice DrinksFlavored CSDsStrong Portfolio of Brands with Leadership PositionsMixersSource: The Nielsen Company 2010
  • 5Key Brands Drive Over 80% of VolumeCSDs Non CarbsSource: Internal Company Reporting
  • 6Portfolio Strong and HealthyNon Carbs63 year CAGRCSDs3 year CAGRSource: BCS per internal company reporting through Q2 2011; Share per AC Nielsen YTD 8/13/11; ACV gains for core brand/SKUs per AC Nielsen YTD 8/13/11● BCS● Share● ACV● BCS● Share● ACV
  • 7Non-Cola CSD Category Mix(Retail Sales Dollars)46.3%55.0%47.8%48.3%49.3%2005 2006 2007 2008 2010Source: The Nielsen Company (U.S.) through 8/13/11 + Company estimates51.2%2015//DPS Continues to Benefit From Ongoing Shift to Non-Colas200950.4%2011 YTD51.5%
  • 8● Non-colas have grown faster than colas for the last 20years…increased availability and clearer segmentation● For loyal CSD drinkers, cola is no longer the default● Population growth coming from Hispanics and AfricanAmericans – skew toward flavored beverages● CSD innovation biased toward non-colas – serve as amore effective platformNon-Cola CSDs Deliver on Consumer NeedsCSD category declines driven by cola fatigue.…flavors are still growing
  • 9Today, DPS Captures Only 3% of All Drinking OccasionsSource: Beverage Digest 2010 Fact Book / Institute of MedicineAnnual Beverage Consumption(8 ounce servings per person)3,920Total ServingsCSDs, 740Beer, 340Milk, 350Bottled Water, 330Coffee, 250Juices, 130Tea, 120Sports Drinks, 60All OthersIncluding TapWater, 1,600
  • 10100632011205538 oz Servings Per CapitaGoalAverageGoalAverage GoalAverageGoalAverageJuice+300 millioncases+350 millioncases+120 millioncases+15 millioncasesAlmost 800 millioncase opportunityOpportunity to Add 800 Million Cases Over TimeSource: The Nielsen Company (U.S.) + Company estimates
  • 11Build the BrandsKey PrioritiesGrow Per CapsRapid Continuous Improvement11
  • 12Build the BrandsKey PrioritiesGrow Per CapsRapid Continuous Improvement12
  • 13Build the BrandsBrand AwarenessInnovationWin the WestWin with HispanicsRediscover BrandsCaloric Transparency
  • 14Investing to Build Brand AwarenessHispanic Marketing Canada Dry Brand ExpansionSnapple Try Me FreeDiet Dr Pepper Coupons14
  • 15● Dr Pepper Pitbull● Snapple Diet Raspberry Tea● Mott’s For Tots● Dr Pepper TENCommercials15
  • 16Innovation Delivering on Taste2011 Innovation16
  • 17West Coast and Hispanic Focus Driving GrowthWin the West Win with HispanicsSource: The Nielsen Company YTD 7/16/11Juice/Juice DrinksShare+~1ptDr Pepper /PJ Awards10MM viewers
  • 18Repatriated Brands Provide New Opportunities…
  • 19Increasing Caloric Transparency19Clear onCalories
  • 20Key PrioritiesGrow Per CapsRapid Continuous ImprovementBuild the Brands20
  • 21Building Per Capita Growth● Create localawareness● Increase frequency ofthe light user● Increase householdpenetration● ACV distribution –grocery / C&G● Immediateconsumption● Fountain/FoodserviceBrandAvailability21
  • 22Building Availability in GroceryGrocery ACV% Base SKUs● CSD Base SKUs: Regular & Diet product in 12 pack, 2 liter and 20 oz● Snapple Base SKUs: 6 pack 16 oz glass Lemon, Diet Lemon, Peach and Diet Peach; 12 pack 16.9 oz PETPeach Green and Diet Peach Green● Mott’s Base SKUs: Apple Juice in 64 oz and 128 oz; Mott’s For Tots Apple in 64 oz and White Grape in 64 ozGoal22Source: The Nielsen Company YTD 8/13/11
  • 23Building Availability in C-storeC-store ACV Base SKUsGoal● CSD Base SKUs: Regular & Diet product in 12 pack, 2 liter and 20 oz23Source: The Nielsen Company YTD 8/13/11
  • 24Increasing Single Serve Occasions% ACV Core Skus +30K Fountain Valves Per Year0% 20% 40% 60% 80% 100%+35K Cold Drink Assets Per Year2008 2009 2010 2011 2012 2013104636 35 35 352 billionservingoccasionsover 5 yearsDietNot AvailableRegularNot Available31RMax & Erma’s% Fountain Availability7611114618124Source: Internal Company Reporting
  • 25Key PrioritiesRapid Continuous ImprovementBuild the BrandsGrow Per Caps25
  • Marty EllenChief Financial Officer
  • 273% – 5%Expect Consistent Growth Over TimeNet SalesGrowthHigh-single digitsNet IncomeGrowth Mid-single digitsHigh-single digitsEarnings PerShare>100%Net Income toFree Cash Conversion
  • 28Building Revenue Margin Management CapabilitiesPrice●Price points to maximize lift and provide strong ROIPackage●Right package, right brand, right market, right channelMerchandising●Ads and displays with correct frequency and duration●Outstanding execution of the RIGHT promotion
  • 29Packaging and Ingredients Drive 75% of COGS• Sweeteners• Apple / JuiceConcentrates• Flavors / Colors• Cans / Ends• Bottles / Caps• Glass• Corrugated / Paperboard• Labels / FilmsCOGSKey Ingredient ComponentsKey Packaging ComponentsIngredients~25%Packaging~50%2010: $2.2 billion
  • 30Hedging and Procurement Practices Ensure Cost Visibility● Aluminum● PET● Apple Juice Concentrate● Net Corn● Sucrose● Heating Oil● Natural GasKey ItemsCovered● Min / max coveragepolicies● Commodity PolicyCommitteeGovernance
  • 31Opportunity to Eliminate Waste is Significant$3.2 billion annuallyPurchasedProductSelling &LogisticsManufacturingGeneral &AdministrativeCapexWorkingCapital
  • 32Rapid Continuous Improvement…SafetyQualityDeliveryProductivityGrowthPeopleTimeMoneyCUSTOMERFOCUSFreeing up……to grow the business
  • 33● Specify value in the Eyes of the Customer● Identify the value stream and Eliminate Waste● Make value Flow at the Pull of the customer● Involve and Empower employees● Continuously Improve in pursuit of perfectionRapid Continuous Improvement Underpinned by thePrinciples of Lean
  • 342011 2012 2013 2014+By 2013, RCI is Expected to Generate At Least $150 Millionof Annualized ProductivityAnnualized ProductivityCapexWorkingCapitalP&LProductivity$150MM
  • 35● Pull replenishment / inventoryreduction● Flavor / package changeoversWhile Still Early Days, RCI Mindset is Taking Hold Acrossthe Entire Organization● Sales order process● Warehouse / DC consolidation● Shell & pallet recovery● Cold drink speed to market● POS speed to market● New product development● Pricing error reductions● License/data rationalization● New hire process● Route auditsSupply ChainSalesMarketingFinance / IT / HR
  • 36● Senior leadership engagement● Highly qualified & competent RCI team● Strong cross-functional participation in each event● Outcomes consistently better than going inexpectations● Each event identifying additional opportunities &future eventsRCI Key Wins and LearningsActivity + Engagement = Results67 Projects />700 EmployeesLicensed to Kaizen
  • 37Over Time RCI Supports DPS’ Focus on TotalShareholder ReturnNet IncomeGrowth(mid-single digit)Healthy FreeCash FlowYield(high-single digit)StrongTotalShareholderReturnOver Time
  • 38Attractive Dividend Yield…Expect to Grow Consistently OverTime. Remaining Excess Cash to Go to Share Repurchases.38Share RepurchasesDividends2009 -2010$0.60$1.00$1.282010 -2011 2011 -2012Grow consistentlyover time with earnings$1,113MM$400MM -$500MM2010 2011Remaining excess cash
  • 39● Strong portfolio of brands with leadershippositions● Consistently executing against our strategy● RCI gaining traction● Brands + Execution = Long Term Growth● Committed to returning excess cash toshareholdersKey Takeaways