Highlights from BD's Wall Street Smarts 2006: 1) Cadbury CFO Ken Hanna says company would spend up to $200 mil over next two years to end up owning 70% of independent bottler system. 2) PBG chief customer officer Brent Franks describes bottler's "improved" and "smart" customer service initiative (BD 5/25/06). 3) Sanford Bernstein analyst Robert van Brugge lays out case for DSD in most channels for most beverages. Notes DSD does cost more than warehouse delivery, but "higher merchandising and selling cost are the primary differences for large format stores." 4) Pepsi-Starbucks general manager Tracey Doucette says partnership is based on "power" of Starbucks brand and "might" of Pepsi distribution system. In response to question whether Pepsi bottlers could take on a coffee-flavored Dr Pepper (BD 4/7/06), says system cannot carry competitive coffee-flavored beverages and continue selling partnership's products. 5) Coke senior vp North America marketing John Hackett describes how company is "re-inventing" its marketing, including its brand portfolio and how it connects with consumers. 6) Citigroup consumer products investment banker Leon Kalvaria says he does not foresee large-scale beverage company acquisitions/mergers anytime soon. 7) Morgan Stanley beverage analyst Bill Pecoriello presents new demographic data showing teens drink fewer CSD's than overall average and that diet CSDs are not taking hold with teens.
Also. 1) Brain-Twist CEO Larry Trachtenbroit presents three new brands he's developed: Slapdrinks.com energy drink line; Respect (see story page 1); "Bounce Back" anti-hangover drink. 2) CCE CFO Bill Douglas gives detailed presentation re return on capital and talks of "tightly" managing capital spending. Asked if bottler is interested in acquiring its own brands, as Coke Consolidated is doing, says: "At this juncture, that's not something that we have actively looked at." 3) Cott CFO Clyde Preslar lays out 2006 priorities. Beyond "focusing on core" CSD business and "improving margins," company aims to expand its energy drink and non-carb offerings and "improve bottled water margins."
Independent system. Cadbury recently bought stake in Dr Pepper/Seven Up Bottling Group (BG) that it did not own and completed acquisition of All-American. BD estimates Cadbury now owns about 58% of independent system. Though Cadbury gives no indication of bottlers it would seek to acquire to attain 70% stake in independent system, bottlers with large scale volume operations include: Southeast-Atlantic, Polar, Columbia Distributing, Harold Honickman's Canada Dry operations, Seven-Up San Francisco Easley and Kalil Bottling. More. Presentations from conference available now on CD-ROM. CD-ROM will be mailed to all attendees free of charge. Non-attendees may click here to order.
Special appearance. Bill Donaldson -- who co-founded investment firm Donaldson, Lufkin and Jenrette and headed S.E.C. and N.Y.S.E. -- is interviewed on-stage. Cites concerns re income disparity between top corporate executives and blue-collar workers. Plus, declares: "One of the most serious conditions that faces the investment world (is) how are we going to get the whole system off this crazy quarterly game we are playing."
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