Britvic

Growth, efficiency and enabling

Britvic aims to deliver strong revenue and profit growth and realise attractive cash returns. To achieve these aims, Britvic will use a strategy built around growth, underpinned by improvements in efficiency and enabling employee performance. We believe this strategy, launched ten years ago and still evolving, has driven growth since that time.

Growth

We believe that the breadth of Britvic’s balanced portfolio of market-leading brands, the existing customer relationships and its scale of operations provide Britvic with a solid base for revenue generation. In addition, its proven consumer insight and brand development expertise mean that Britvic is well positioned to capitalise on consumer trends providing it with significant opportunities to drive future revenue growth at a rate ahead of the market average.

We believe that Britvic’s revenue growth will largely result from increased volumes, with potential for both higher prices and margins in stills. We believe that:

• stills will continue to drive the majority of revenue growth, with Britvic capitalising on its strong portfolio offering and targeting the key growth and higher margin sub-categories; and
• carbonates will continue principally to provide scale to Britvic’s operations with Pepsi providing a key point of entry to customers in the licensed on-premise and leisure and catering channels.

To assist in delivering the growth of the brands, Britvic will continue to:

• develop its portfolio through innovation to meet evolving consumer preferences;
• drive brand awareness around its major growth products through advertising and promotion; and
• use its own and outsourced sales capability and distribution network to further increase availability of its products across all channels and making further investment in chillers and vending machines.

Management also continues actively to evaluate acquisition opportunities and will consider making complementary acquisitions if they satisfy the Group’s strategic and financial criteria.

Efficiency

Britvic intends to generate further cost savings across the Group, particularly capitalising on the investment in the Business Transformation Programme, Product Value Optimisation (see above) and supply chain improvements.

Enabling

Britvic intends to further develop the skill base of its employees.

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Britvic’s Six Pillars approach

To deliver this strategy, we will continue to follow a six pillars approach which defines Britvic’s key aims and their means of delivery:

• to grow stills sales aggressively;
• to grow the Group’s share in the carbonates markets it operates in;
• to become the supplier of choice;
• to leverage the PepsiCo Systems;
• to generate efficiencies in all parts of the Group’s operations; and
• to make Britvic a great place to work.

Grow stills sales aggressively

Aim: To be the biggest player in the stills category with a significant brand presence in all major growth subcategories.

Britvic’s GB plans:

• to continue to re-balance its portfolio to address the ‘‘better for you’’ trend through the development of its water offering by:
• continuing the growth and penetration of Pennine Spring as the main water brand across the licenced channel;
• continuing the growth and penetration of the relaunched premium water brand, Drench, to target sales in the impulse and take-home channels; and
• maintain Fruit Shoot H20’s No 1 kids water brand position
• to continue to drive the growth of J2O and Fruit Shoot by:
• promoting Fruit Shoot and J2O to customers who currently buy a less profitable product and packaging mix (for example, customers who buy dispense products);
• to continue to launch in category gaps. Example of recent launches include:
• Britvic Pressed and Squeezed, a premium, not from concentrate, ambient juice range under the Britvic brand into the licensed on-premise and leisure and catering channels
• Robinsons Smooth juice, an ambient take-home pure juice, free of artificial colours, flavours and preservatives
• Fruit Shoot 100% juice, an ambient kids pure juice, free of artificial colours, flavours and preservatives
• the full launch of Gatorade to give Britvic an increased presence in the growing sports drinks sub-category;
• the full launch of V Water which further strengthens Britvic’s presence in the fast growing functional water sub-category

Grow share of GB carbonates market

Aim: To grow Britvic’s share of the carbonates market by focusing on the low calorie/no added sugar segment.

Britvic plans:

• to develop its carbonates offering to target the ‘‘better for you’’ trend
• to increase availability of its carbonates in the higher margin single-serve chilled format, through the installation of additional chillers and vending machines; and
• to continue to deliver large scale themed promotions such as Pepsi football during football tournaments.

To become the supplier of choice

Aim: To be the preferred FMCG supplier to do business with across all channels.

Britvic plans:

• to strengthen and extend its customer relationships by using its consumer insight and category expertise and position as an acknowledged category leader to help its customers to generate further soft drinks sales in their outlets (for example, providing range, display and pricing advice to customers in take-home and the licensed on-premise);
• enhancing customer satisfaction through the quality and effectiveness of its supply and distribution arrangements (for example, offering deliveries at the factory gate to customers with established supply chains); and
• to make a targeted sales effort to industry and businesses and in respect of particular geographical areas.
• to leverage the Britvic-patented Pepsi Xtra Cold dispense/fountain technology in the licensed channel to drive value and share

To leverage the PepsiCo Systems

Aim: To be PepsiCo’s preferred partner to drive the value of PepsiCo’s brands.

Britvic plans:

• to apply PepsiCo’s experience in product and packaging systems and marketing to the development of the Britvic product offering; and
• to apply PepsiCo’s brand development expertise and technological know-how to refine further Britvic’s innovative processes and brand development capability.

To generate efficiencies across all parts of the Group’s operations

Aim: To outperform the FMCG sector in terms of ROIC.

Britvic plans:

• to extract further efficiencies from the Business Transformation Programme and the related re-design of its business processes so as to maximise promotional efficiency, provide more reliable management data, improve employee productivity and reduce its operating costs (for example, by providing real-time key performance indicators to the production team to improve decision-making);
• to implement SAP and Siebel in Ireland from 2009;
• to seek opportunities for further vertical integration in its production processes (for example, manufacturing pre-forms for PET bottle blowing);
• to adopt a systematic approach to product value optimisation across the Britvic portfolio;
• to continue to improve the effectiveness of its pricing, packaging and promotional strategies; and
• to utilise even more efficiently its existing warehousing and distribution infrastructure (for example, increasing the number of ‘‘direct-from-factory’’ deliveries).

To make Britvic a great place to work

Aim: To provide the working environment, development opportunities and benefits packages which enables Britvic to retain and attract the best people.

Britvic plans:

• to continue to develop its training and development programmes and opportunities for employees to broaden their skill base; and
• to develop its employee incentivisation structure so as to align more closely employee benefits with performance and provide incentives to out-perform the targets set for the business.

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