dps cagny 2010

67
CAGNY CAGNY February 17, 2010 February 17, 2010

Upload: neil-kimberley

Post on 17-May-2015

1.346 views

Category:

Economy & Finance


0 download

DESCRIPTION

Dr Pepper Snapple Presentation at 2010 Consumer Goods Analyst Conference

TRANSCRIPT

Page 1: DPS CAGNY 2010

CAGNYCAGNYFebruary 17, 2010February 17, 2010

Page 2: DPS CAGNY 2010

Safe Harbor StatementSafe Harbor Statement

This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including, in particular, statements about future events, future financial performance, 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 be identified by the use of forward-looking terminology such as the words “may,” “will,” “expect,” “anticipate,” “believe,” “estimate,” “plan,” “intend” or the negative of these terms or similar expressions. These forward-looking statements have been based on our current views with respect to future events and financial performance. Our actual financial performance could differ materially from those projected in the forward-looking statements due to the inherent uncertainty of estimates, forecasts and projections, and our financial performance may be better or worse than anticipated. Given these uncertainties, you should not put undue reliance on any forward-looking statements. All of the forward- looking statements are qualified in their entirety by reference to the factors discussed under “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2008 and our other filings with the Securities and Exchange Commission. Forward-looking statements represent our estimates and assumptions only as of the date that they were made. We do not undertake any duty to update the forward- looking statements, and the estimates and assumptions associated with them, after the date of this presentation, except to the extent required by applicable securities laws.

Page 3: DPS CAGNY 2010

Premium Tea

Gourmet CSDs

Juice & Juice DrinksFlavored CSDs

Strong Portfolio of Brands with Leadership PositionsStrong Portfolio of Brands with Leadership Positions

Mixers

Page 4: DPS CAGNY 2010

Priority Focus Brands Drive Over 70% of VolumePriority Focus Brands Drive Over 70% of Volume

Page 5: DPS CAGNY 2010

And Generate Over $8bn in Retail SalesAnd Generate Over $8bn in Retail SalesEstimated Retail Sales (Millions)

$0 $200 $400 $600 $4000

Source: The Nielsen Company and company estimates of non-measured channels including fountain foodservice. Estimates include sales by third-party bottlers and distributors.

Page 6: DPS CAGNY 2010

Portfolio Also Contains Leading Regional,Portfolio Also Contains Leading Regional, New and Allied BrandsNew and Allied Brands

Page 7: DPS CAGNY 2010

Flavored CSDs Drive 80% of Our Business and Are Flavored CSDs Drive 80% of Our Business and Are GrowingGrowing

Flavored CSD Category MixFlavored CSD Category Mix

(Retail Sales Dollars)(Retail Sales Dollars)

DPS Dollar ShareDPS Dollar Share

Change 2009 vs 2006Change 2009 vs 2006

Flavored CSDs

46.3%46.3%

50.6%50.6%

47.8%47.8%48.3%48.3%

49.3%49.3%

2005 2006 2007 2008 1/2010

39.2%39.2%41.3%41.3%

+2.1pts+2.1pts

Source: The Nielsen Company –

U.S. Only

Page 8: DPS CAGNY 2010

Route to Market is Broad, Balanced and FlexibleRoute to Market is Broad, Balanced and Flexible

Fountain Foodservice ~ 10%Fountain Foodservice ~ 10%

Bottling Partners ~ 40%Bottling Partners ~ 40%

Company Owned Distribution ~ 40%Company Owned Distribution ~ 40%

Warehouse ~ 10%Warehouse ~ 10%

Page 9: DPS CAGNY 2010

SpunSpun--Off 5/08, DPS is an AmalgamationOff 5/08, DPS is an Amalgamation of Many Brand and Bottling Companiesof Many Brand and Bottling Companies

Dr Pepper/7UP Companies, Inc.

Snapple Beverage Corp.

Duffy – Mott’s Co.

Manufacturing & Distribution Assets

Dallas / Fort Worth Dr Pepper Bottling CompanyDr Pepper Bottling Company of WacoSeven Up Bottling Company of WacoKemmerer BottlingSeven Up Bottling of IN / Northern KYJoyce Beverages MidwestRacine Seven UpDr Pepper Bottling Co of Houston7Up Detroit Inc.Beverage Management (OH)Full Service Beverage Co of HoustonMetro Beverages, Inc. (Eastern IN)Klages (Akron, OH)Seven Up Bottling Co. of DallasMid-Continent Bottlers, Inc.A.J. Canfield Co.American Juice Co.Iowa BeveragesAll American Bottling Corp. (Rockford, IL)Dr Pepper Bottling Co. of GalvestonBig Red Distributors, Inc. (Waco)All American Bottling Corp. (Minneapolis)Seven Up Bottling Company of TopekaAll American Bottling Corp. (WV)Corsicana Dr Pepper Bottling Co.7Up RC Bottling Company of Southern CASelect BeveragesBeverages AmericaCotton Club of Cleveland, OHIowa Beverage ManufacturersMetro Beverages, Inc. (Eastern IN)Big Red Bottling of South TXSkyline Beverages of WVWeinstein Beverage Co. of Spokane, WAAABC (CO, OK, TN, KY, AR, MI)EasleySeaBev

Page 10: DPS CAGNY 2010

Focused on Delivering Against a Set of Key PrioritiesFocused on Delivering Against a Set of Key Priorities

Build and Enhance Leading BrandsBuild and Enhance Leading Brands

Exploit Opportunities in High GrowthExploit Opportunities in High Growth and High Margin Categoriesand High Margin Categories

Increase Presence in High MarginIncrease Presence in High Margin Channels and PackagesChannels and Packages

Leverage Integrated Business ModelLeverage Integrated Business Model

Strengthen RouteStrengthen Route--toto--MarketMarket

Improve Operating EfficienciesImprove Operating Efficiencies

Page 11: DPS CAGNY 2010

Focused on Delivering Against a Set of Key PrioritiesFocused on Delivering Against a Set of Key Priorities

Build and Enhance Leading BrandsBuild and Enhance Leading Brands

Exploit Opportunities in High GrowthExploit Opportunities in High Growth and High Margin Categoriesand High Margin Categories

Increase Presence in High MarginIncrease Presence in High Margin Channels and PackagesChannels and Packages

Leverage Integrated Business ModelLeverage Integrated Business Model

Strengthen RouteStrengthen Route--toto--MarketMarket

Improve Operating EfficienciesImprove Operating Efficiencies

Page 12: DPS CAGNY 2010

Goal = 100

Priority Focus Brands Have Significant Growth OpportunitiesPriority Focus Brands Have Significant Growth Opportunities

8 oz Servings Per Capita

Goal = 20

Top StateAverage

Goal = 20

Top StateAverage

Goal = 5

Top RegionAverage Region

Juice

Top StateAverage

2626

1111

3333

55

55

33

238238

6262

Source: The Nielsen Company YTD 12/26/09

Page 13: DPS CAGNY 2010

Dr Pepper is AmericaDr Pepper is America’’s Oldest Major Soft Drink Brands Oldest Major Soft Drink Brand

Page 14: DPS CAGNY 2010

And Still Has Plenty of Room to GrowAnd Still Has Plenty of Room to Grow

20091989

#1 CSDDP #1 CSDDP

20091989

DP Volume DP Volume ––

288 oz288 oz DP Volume Share %DP Volume Share %

8 oz Servings Per Capita8 oz Servings Per Capita Household Penetration %Household Penetration %

CAGRCAGR +4%+4% +3.2 pt+3.2 pt

215215

6262

6262

3737

Source: The Nielsen Company and Nielsen Homescan

YTD 12/26/09

Page 15: DPS CAGNY 2010

R

Max & Erma’s

Fountain Expansion is Driving Awareness and TrialFountain Expansion is Driving Awareness and Trial

% Outlets

0% 20% 40% 60% 80% 100%

Source: Company specific data

Page 16: DPS CAGNY 2010

Dr Pepper Cherry is Bringing in New UsersDr Pepper Cherry is Bringing in New Users and Growing the Baseand Growing the Base

DP RegDP TM

DP TM ex CherryDP TM

% HH Penetration% HH Penetration

# of Display Growth vs. LY# of Display Growth vs. LY

2.4pts2.4pts

CherryCherry

OnlyOnly

DP CherryDP Diet

37.237.2

23.723.7

15.015.09.69.6

+10%+10%

+2%+2%

Cherry is prompting additional Cherry is prompting additional light user purchases and light user purchases and

bringing in new usersbringing in new users

Source: The Nielsen Company and Nielsen Homescan, Total US, 52 WE 10/31/09

Page 17: DPS CAGNY 2010

Snapple Premium Restage is WorkingSnapple Premium Restage is Working

2/09

ACV% 16oz 6 pack GroceryACV% 16oz 6 pack Grocery

16oz 6 pack Growth Cases vs 200816oz 6 pack Growth Cases vs 2008

88 1313

3030

49495656 6868 7373 7575 7878 7878 7777

3/09 4/09 5/09 6/09 7/09 8/09 9/09 10/09 11/09 12/09

2/09 3/09 4/09 5/09 6/09 7/09 8/09 9/09

Source: The Nielsen Company YTD 12/31/09. Volume growth cases per internal reporting.

Page 18: DPS CAGNY 2010

Exploiting $4bn ValueExploiting $4bn Value--Tea Category with MultiTea Category with Multi--Pack PETPack PET

ACV% 16.9oz 12 pack GroceryACV% 16.9oz 12 pack Grocery

Growth Cases Growth Cases vsvs

20082008

1/09 3/09 4/09 5/09 6/09 7/09 8/09 9/092/09

2020 23233030

37374747 5050 5151 5252 5151 5050 4949 5050

1/09 3/09 4/09 5/09 6/09 7/09 8/09 9/09 10/09 11/09 12/092/09

Source: The Nielsen Company YTD 12/31/09. Volume growth cases per internal reporting.

Page 19: DPS CAGNY 2010

And Testing $0.79 PreAnd Testing $0.79 Pre--Priced CansPriced Cans

Page 20: DPS CAGNY 2010

MottMott’’s #1 or #2 in Cost Advantaged Locationss #1 or #2 in Cost Advantaged Locations

# 1 or # 2# 1 or # 2

Source: The Nielsen Company –

U.S. Only

#1 or #2 position#1 or #2 position

Page 21: DPS CAGNY 2010

West Coast Capacity and Strong Innovation are Key EnablersWest Coast Capacity and Strong Innovation are Key Enablers

Page 22: DPS CAGNY 2010

Crush Expansion Exceeding ExpectationsCrush Expansion Exceeding Expectations…… Highlights Latent Potential of Our BrandsHighlights Latent Potential of Our Brands

Page 23: DPS CAGNY 2010

Dr Love

Surrounding the ConsumerSurrounding the Consumer……

Massive Sampling

Targeted Print

Merchandising and POS

National Media

Page 24: DPS CAGNY 2010

……Where They ShopWhere They Shop

Page 25: DPS CAGNY 2010

……Where They PlayWhere They Play

Page 26: DPS CAGNY 2010

……OutdoorOutdoor

Page 27: DPS CAGNY 2010

……OnlineOnline

Page 28: DPS CAGNY 2010

……On TVOn TV

Page 29: DPS CAGNY 2010

Run Commercials

Page 30: DPS CAGNY 2010

Investing Behind Our Brands While Driving Down CostsInvesting Behind Our Brands While Driving Down Costs

GRP Growth vs. LY

Q1Q1 Q2Q2 Q3Q3 Q4Q4

Cost per GRP down 10%Cost per GRP down 10%Source: GRPs

measured through The Nielsen Company, Arbitron

and internal reporting

Page 31: DPS CAGNY 2010

Brand Health Continues to ImproveBrand Health Continues to Improve

Total Brand Awareness

Q1Q1 Q3Q3

+2 pts+2 pts

Q1Q1 Q3Q3

+3 pts+3 pts

Q1Q1 Q3Q3

+2 pts+2 pts

Source: Ipsos

2009

Page 32: DPS CAGNY 2010

Key Capabilities

Strong Innovation Pipeline StartsStrong Innovation Pipeline Starts with Bestwith Best--InIn--Class R&D CapabilitiesClass R&D Capabilities

Flavors●

Sensory Science●

Sweeteners●

Antioxidants●

Vitamins & Minerals●

Approved Functional Ingredients●

Emerging Functional Ingredients●

Nutrition, Claims & Labeling●

Analytical Chemistry / Food Safety●

Process Development / Scale Up●

Technical Data Management

Page 33: DPS CAGNY 2010

2010 Line2010 Line--up is Strong andup is Strong and Supports Continued Business MomentumSupports Continued Business Momentum

Multi-Year Platforms 2010 New Products

Page 34: DPS CAGNY 2010

Focused on Delivering Against a Set of Key PrioritiesFocused on Delivering Against a Set of Key Priorities

Build and Enhance Leading BrandsBuild and Enhance Leading Brands

Exploit Opportunities in High GrowthExploit Opportunities in High Growth and High Margin Categoriesand High Margin Categories

Increase Presence in High MarginIncrease Presence in High Margin Channels and PackagesChannels and Packages

Leverage Integrated Business ModelLeverage Integrated Business Model

Strengthen RouteStrengthen Route--toto--MarketMarket

Improve Operating EfficienciesImprove Operating Efficiencies

Page 35: DPS CAGNY 2010

Mixer Restage and New Capacity on TrackMixer Restage and New Capacity on Track

Page 36: DPS CAGNY 2010

Venom Growing One Bottle at a TimeVenom Growing One Bottle at a Time

ACV% DistributionACV% Distribution

Growth Cases vs 2008Growth Cases vs 2008

3636 4141 4646 5050 5252 5353 5656 5858 5858 6060 6161

1/09 3/09 4/09 5/09 6/09 7/09 8/09 9/09

6161

1/09 3/09 4/09 5/09 6/09 7/09 8/09 9/09 10/0911/0912/092/09

2/09

Source: The Nielsen Company YTD 12/31/09. Volume growth cases per internal reporting.

Page 37: DPS CAGNY 2010

Leveraging Allied Brands to Fill in GapsLeveraging Allied Brands to Fill in Gaps and Leverage Asset Baseand Leverage Asset Base

Page 38: DPS CAGNY 2010

Focused on Delivering Against a Set of Key PrioritiesFocused on Delivering Against a Set of Key Priorities

Build and Enhance Leading BrandsBuild and Enhance Leading Brands

Exploit Opportunities in High GrowthExploit Opportunities in High Growth and High Margin Categoriesand High Margin Categories

Increase Presence in High MarginIncrease Presence in High Margin Channels and PackagesChannels and Packages

Leverage Integrated Business ModelLeverage Integrated Business Model

Strengthen RouteStrengthen Route--toto--MarketMarket

Improve Operating EfficienciesImprove Operating Efficiencies

Page 39: DPS CAGNY 2010

5 Year Cold Drink Program on Track,5 Year Cold Drink Program on Track, Despite Tough EnvironmentDespite Tough Environment

35K Incremental Coolers Per Year35K Incremental Coolers Per YearCoolers Per 10,000 Coolers Per 10,000 Head of PopulationHead of Population

2008

NowNow

SWSW

99 PacificPacific

44

NENE

99 Central/SECentral/SE

88

5 Year5 YearGOAL 23GOAL 23

2009 2010 2011 2012 2013

1010

4646

8181

116116

151151

186186

3636 3535 3535 3535 3535

2 billion serving2 billion serving occasions over occasions over

5 years5 years

Page 40: DPS CAGNY 2010

Placements Driving Awareness and ReturnsPlacements Driving Awareness and Returns

Page 41: DPS CAGNY 2010

Company Owned/ Independent SystemBottling Partners

Balanced Routes to Market Enables Full Price/Pack ParticipationBalanced Routes to Market Enables Full Price/Pack Participation

Page 42: DPS CAGNY 2010

Focused on Delivering Against a Set of Key PrioritiesFocused on Delivering Against a Set of Key Priorities

Build and Enhance Leading BrandsBuild and Enhance Leading Brands

Exploit Opportunities in High GrowthExploit Opportunities in High Growth and High Margin Categoriesand High Margin Categories

Increase Presence in High MarginIncrease Presence in High Margin Channels and PackagesChannels and Packages

Leverage Integrated Business ModelLeverage Integrated Business Model

Strengthen RouteStrengthen Route--toto--MarketMarket

Improve Operating EfficienciesImprove Operating Efficiencies

Page 43: DPS CAGNY 2010

Changing LandscapeChanging Landscape Requires Continuous ImprovementRequires Continuous Improvement

●●

Consumer InsightsConsumer Insights●●

Shopper InsightsShopper Insights

●●

InnovationInnovation●●

Local Marketing /Local Marketing /

Customer DevelopmentCustomer Development●●

Demand Planning /Demand Planning /

Vendor Managed InventoryVendor Managed Inventory●●

Technology (ASN, EDI, RFID, etc.)Technology (ASN, EDI, RFID, etc.)

Page 44: DPS CAGNY 2010

Customer Results And Feedback Are ClearCustomer Results And Feedback Are Clear

Page 45: DPS CAGNY 2010

Focused on Delivering Against a Set of Key PrioritiesFocused on Delivering Against a Set of Key Priorities

Build and Enhance Leading BrandsBuild and Enhance Leading Brands

Exploit Opportunities in High GrowthExploit Opportunities in High Growth and High Margin Categoriesand High Margin Categories

Increase Presence in High MarginIncrease Presence in High Margin Channels and PackagesChannels and Packages

Leverage Integrated Business ModelLeverage Integrated Business Model

Strengthen RouteStrengthen Route--toto--MarketMarket

Improve Operating EfficienciesImprove Operating Efficiencies

Page 46: DPS CAGNY 2010

Hub and Spoke DistributionFive Regional Centers

5 Year Supply Chain Optimization Journey Nearing Completion5 Year Supply Chain Optimization Journey Nearing Completion

1.1.

South (2006South (2006--07)07)2.2.

Southeast (2008Southeast (2008--09)09)3.3.

Northeast (2009)Northeast (2009)

4.4.

West Coast (2009West Coast (2009--10)10)5.5.

Midwest (2010Midwest (2010--11)11)

Page 47: DPS CAGNY 2010

Victorville, CA Regional Center on Schedule and on BudgetVictorville, CA Regional Center on Schedule and on Budget

Page 48: DPS CAGNY 2010

Core IT Infrastructure in PlaceCore IT Infrastructure in Place Expanding SAP to Warehouse Direct Business and MexicoExpanding SAP to Warehouse Direct Business and Mexico

Page 49: DPS CAGNY 2010

1. Laying the Foundation 2. Mobilizing

Call to ACTION Workshops

Tying Performance to Operational

Metrics

Instilling One Set of BehaviorsInstilling One Set of Behaviors…… the Foundation of Our People Strategythe Foundation of Our People Strategy

3. Building Our Bench

DPS Campus

Page 50: DPS CAGNY 2010

Ensuring Environmental Sustainability as We OptimizeEnsuring Environmental Sustainability as We Optimize

Page 51: DPS CAGNY 2010

Focused on Delivering Against a Set of Key PrioritiesFocused on Delivering Against a Set of Key Priorities

Improve Operating EfficienciesImprove Operating Efficiencies

Build and Enhance Leading BrandsBuild and Enhance Leading Brands

Exploit Opportunities in High GrowthExploit Opportunities in High Growth and High Margin Categoriesand High Margin Categories

Increase Presence in High MarginIncrease Presence in High Margin Channels and PackagesChannels and Packages

Leverage Integrated Business ModelLeverage Integrated Business Model

Strengthen RouteStrengthen Route--toto--MarketMarket

Page 52: DPS CAGNY 2010

Building Revenue and Margin Management CapabilitiesBuilding Revenue and Margin Management Capabilities

●●

InsightsInsights to improve decisionto improve decision--makingmaking●●

TransparencyTransparency into what worksinto what works

●●

EnableEnable better conversationsbetter conversations with our customerswith our customers

Drive Productivity to Fuel GrowthDrive Productivity to Fuel Growth

Page 53: DPS CAGNY 2010

Making Better Decisions with RealMaking Better Decisions with Real--TimeTime and Consistent Informationand Consistent Information

●●

Improved salesImproved sales and route analyticsand route analytics

●●

Better fleetBetter fleet utilizationutilization

●●

Greater salesGreater sales efficiencyefficiency

●●

ImprovedImproved Customer ServiceCustomer Service

Page 54: DPS CAGNY 2010

●●

8 step strategic sourcing process8 step strategic sourcing process

●●

Formula and packaging optimizationFormula and packaging optimization

●●

Reverse engineering of flavorsReverse engineering of flavors

●●

Indirect and capital procurementIndirect and capital procurement

●●

Low cost country sourcing Low cost country sourcing

Leveraging BestLeveraging Best--inin--Class Procurement ProcessesClass Procurement Processes

2010 Priorities

Page 55: DPS CAGNY 2010

Productivity Office Funding Continuous Improvement InitiativesProductivity Office Funding Continuous Improvement Initiatives

Productivity Office Savings Impact

20092009 20102010 20112011 20122012 20132013 20142014

Annual InvestmentsAnnual Investments

Ongoing SavingsOngoing Savings

Page 56: DPS CAGNY 2010

Results Show Our Focused Strategy is WorkingResults Show Our Focused Strategy is Working

Build and Enhance Leading BrandsBuild and Enhance Leading Brands

Exploit Opportunities in High GrowthExploit Opportunities in High Growth and High Margin Categoriesand High Margin Categories

Increase Presence in High MarginIncrease Presence in High Margin Channels and PackagesChannels and Packages

Leverage Integrated Business ModelLeverage Integrated Business Model

Strengthen RouteStrengthen Route--toto--MarketMarket

Improve Operating EfficienciesImprove Operating Efficiencies

Page 57: DPS CAGNY 2010

++

Volume/Price/MixVolume/Price/Mix++

Distribution gainsDistribution gains

++

Cold drink equipmentCold drink equipment++

InnovationInnovation

Net SalesNet Sales Growth 3Growth 3--5%5%

Brands + Execution = Long Term GrowthBrands + Execution = Long Term Growth

++

Revenue growthRevenue growth++

Operating efficiencies/ Operating efficiencies/ crush costscrush costs

++

BelowBelow--thethe--line leverageline leverage

EPS GrowthEPS Growth HighHigh--singlesingle--digitdigit

Page 58: DPS CAGNY 2010

Challenges Responses

Confident in LongConfident in Long--Term AlgorithmTerm Algorithm Despite Significant HeadwindsDespite Significant Headwinds

Consumer insights Consumer insights

Product / package innovationProduct / package innovation

Availability Availability ––

Coastal, Hispanic, etc.Coastal, Hispanic, etc.

●●

Changing Changing consumer needs consumer needs and demographicsand demographics

●●

Economic Economic uncertaintyuncertainty

●●

Commodity costsCommodity costs

●●

US/Canada/US/Canada/

Mexico focusMexico focus

Constantly delivering consumer value Constantly delivering consumer value

Crushing costsCrushing costs

Balanced pricingBalanced pricing

Mix managementMix management

World class supply chain/procurementWorld class supply chain/procurement

Productivity / Supply chain efficiencyProductivity / Supply chain efficiency

Leading brands with significantLeading brands with significant

growth opportunitiesgrowth opportunities

Execution excellenceExecution excellence……..

distribution and availabilitydistribution and availability

Page 59: DPS CAGNY 2010

COGS

Key Packaging Components

Key Ingredients Components

Packaging and Ingredients Drive 65% of COGSPackaging and Ingredients Drive 65% of COGS

Sweeteners•

Apple / Juice

Concentrates

Flavors

/ Colors

Cans / Ends•

Bottles / Caps

Glass•

Corrugated / Paperboard

Labels / Films

PackagingPackaging~45%~45%

Ingredients Ingredients ~20%~20%

Page 60: DPS CAGNY 2010

Hedging and Procurement Best PracticesHedging and Procurement Best Practices Ensure Cost VisibilityEnsure Cost Visibility

●●

AluminumAluminum●●

Net CornNet Corn

●●

Apple Juice ConcentrateApple Juice Concentrate●●

Natural GasNatural Gas

●●

Heating OilHeating Oil

●●

Min / max coverage Min / max coverage policiespolicies

●●

Commodity Commodity Purchasing CommitteePurchasing Committee

Key ItemsKey Items CoveredCovered

GovernanceGovernance

Page 61: DPS CAGNY 2010

Net Income to Free Cash Conversion %

20062006 20072007 20082008 2009 Q3YTD2009 Q3YTD

Consistently Delivering Strong Net IncomeConsistently Delivering Strong Net Income to Free Cash Flow Conversionto Free Cash Flow Conversion

86%86%75%75%

87%87%

124%124%

Source: Reconciliation of non-GAAP financial measures can be found under the investor section at www.drpeppersnapple.com.

Page 62: DPS CAGNY 2010

Opportunities Exist to Drive AdditionalOpportunities Exist to Drive Additional Working Capital ProductivityWorking Capital Productivity

A/R

Reduce invalid deductions•

Credit to cash process optimization

Drive forecast accuracy•

Vendor managed inventory

Safety stock management

INVENTORY

Early pay discounts•

Vendor management

Terms standardization•

Organizational capabilities

A/P

CASH CONVERSION CYCLECASH CONVERSION CYCLE……KEY OPERATIONAL METRICKEY OPERATIONAL METRIC

Page 63: DPS CAGNY 2010

Continuing to Invest in the Business to Fuel GrowthContinuing to Invest in the Business to Fuel Growth

Capex % Net Sales

20082008 20092009 20102010 20112011 20122012

Growth / EfficienciesGrowth / EfficienciesMaintenanceMaintenance

5%5% 5%5% 5%5% 5%5% 5%5%

Page 64: DPS CAGNY 2010

Adjusted* TotalAdjusted* Total Debt / EBITDADebt / EBITDA Target = 2.25xTarget = 2.25x

Rapidly Approaching Our Target Capital Structure Rapidly Approaching Our Target Capital Structure

20102010 20112011 20122012 20132013 20182018 20382038//// ////$0$0

$400$400 $450$450

$655$655

$1,200$1,200

$250$2502 yr note 2 yr note @ 1.70%@ 1.70%

3 yr note 3 yr note @ 2.35%@ 2.35%

5 yr note 5 yr note @ 6.12%@ 6.12%

10 yr note 10 yr note @ 6.82%@ 6.82%

30 yr note 30 yr note @ 7.45%@ 7.45%

Credit Credit Facility Facility L + 200 L + 200 ($405)($405)

*Adjusted for unfunded pension liabilities, operating leases, stock-based compensation expenses and other items

Page 65: DPS CAGNY 2010

Priorities for Free Cash Flow are ClearPriorities for Free Cash Flow are Clear

●●

Achieve and maintain target capital Achieve and maintain target capital structurestructure

●●

Build modest cash reserves to maintain Build modest cash reserves to maintain liquidity and financial flexibilityliquidity and financial flexibility

●●

Return excess cash to shareholders Return excess cash to shareholders over timeover time

Page 66: DPS CAGNY 2010

●●

Strong portfolio of brands with leadershipStrong portfolio of brands with leadership positionspositions

●●

Journey to integrate collection of powerfulJourney to integrate collection of powerful assets on trackassets on track

●●

Focused on delivering against a set ofFocused on delivering against a set of key prioritieskey priorities

●●

Brands + Execution = Long Term GrowthBrands + Execution = Long Term Growth

Key TakeawaysKey Takeaways

Page 67: DPS CAGNY 2010