Cott Corporation, together with its subsidiaries, engages in the production of beverages on behalf of retailers, brand owners, and distributors. The company reaches approximately 1.5 million customers (approximately 60% commercial and 40% residential) through approximately 2,000 routes located across its national network supported by national sales and distribution facilities, as well as a fleet of approximately 2,000 vehicles. Its portfolio allows the company to offer, on a direct-to-consumer basis, various bottled water, coffee, brewed tea, water dispensers, coffee and tea brewers and filtration equipment. During 2015, the company’s business operated through four segments, including DS Services of America, Inc. (DSS), Cott North America, Cott United Kingdom (Cott U.K.) and All Other (which includes its Mexico operating segment, Royal Crown International (RCI) operating segment and other miscellaneous expenses). DSS This segment provides direct-to-consumer bottled water, coffee and water filtration services to customers in North America. DSS products include bottled water, coffee, brewed tea, water dispensers, coffee and tea brewers and filtration equipment. Traditional Business The company’s traditional business consists of its Cott North America, Cott U.K. and All Other reporting segments. The company’s traditional business produces, either directly or through third-party manufacturers with whom it has co-packing arrangements, carbonated soft drinks (CSDs), 100% shelf stable juice and juice-based products, clear, still and sparkling flavored waters, energy drinks and shots, sports drinks, new age beverages, ready-to-drink teas, liquid enhancers, freezables, ready-to-drink alcoholic beverages, hot chocolate, coffee, malt drinks, creamers/whiteners, cereals and beverage concentrates. Strategy The key elements of the company’s strategy are to grow contract manufacturing and other beverage categories in its traditional business; focus on DSS organic growth; capture DSS synergies; pursue synergistic home and office delivery water, office coffee services and filtration tuck-in acquisitions; and evaluate mid-to-larger scale acquisitions. Customers The company’s customers include national and regional grocery, mass-merchandise, drugstore, wholesale and convenience store chains, as well as customers for whom the company manufactures beverages on a contract basis. For 2015, sales to Walmart accounted for 18.0% of the company’s total revenue, 33.2% of its Cott North America reporting segment revenue , 11.5% of its Cott U.K. reporting segment revenue , 3.7% of is All Other reporting segment revenue and 2.2% of its DSS reporting segment revenue. The company supplies Walmart and its affiliated companies, under annual non-exclusive supply agreements, with various products in North America, the United Kingdom, and Mexico, including CSDs, clear, still and sparkling flavored waters, 100% shelf stable juice, juice-based products, bottled water, energy products, sports products, new age beverages and ready-to-drink teas. In 2015, the company supplied Walmart with all of its private-label CSDs in the United States. Research and Development The company engages in various research and development activities. Its research and development costs included $2.8 million in 2015. Strategic Alliances The company has a strategic alliance with Primo Water Corporation (Primo) to bottle and distribute Primo’s 3G and 5G water bottles through retail stores. Seasonality The company’s beverage and water delivery sales are generally higher during the warmer months. Its purchases of raw materials and related accounts payable fluctuate based upon the demand for its products, as well as the timing of the fruit growing seasons. The seasonality of the company’s sales volume combined with the seasonal nature of fruit growing causes its working capital needs to fluctuate throughout the year, with inventory levels increasing in the first half of the year in order to meet high summer demand, and with fruit inventories peaking during the last quarter of the year (year ended January 2, 2016) when purchases are made after the growing season. In addition, its accounts receivable balances decline in the fall as customers pay their higher-than-average outstanding balances from summer deliveries. Trademarks The company sells the majority of its beverages under retailer brands to customers who own the trademarks associated with those products. It also owns registrations, or applications to register, various trademarks that are important to its worldwide business, including Cott and Red Rain in North America and the United Kingdom; Stars & Stripes, Vess, Vintage, So Clear , Shanstar, Harvest Classic, Chadwick Bay, Exact, Alhambra, Belmont Springs, Deep Rock, Hinckley Springs, Sparkletts, Crystal Springs, Kentwood Springs, Mount Olympus Standard Coffee and Javarama in the United States; Emerge, Red Rooster, MacB, Carters, Calypso, Mr. Freeze, Jubbly, Suso, Cafe Nueva and Ben Shaws in the United Kingdom; Stars & Stripes in Mexico; and RC mark in various formats in approximately 120 countries and territories outside of North America. It is licensed to use certain trademarks, such as Old Jamaica Ginger Beer and Ting in the United Kingdom. Competition The company faces competition in the juice category from juice brands, such as Welch’s, Ocean Spray and Mott’s. Its principal competitor in the three gallon and five gallon HOD bottled water business is Nestle, which competes with it directly in many of its markets within the United States. Regulations The production, distribution and sale in the United States of many of its products are subject to the Federal Food, Drug, and Cosmetic Act; the Federal Trade Commission Act; the Lanham Act; and state consumer protection laws, federal, state and local workplace health and safety laws. The company is a member of the International Bottled Water Association and the Water Quality Association. History Cott Corporation was founded in 1955. The company was incorporated in 1955 and is governed by the Canada Business Corporations Act.
cott corporation (BCB:Toronto)
5519 West Idlewild Avenue
Tampa, FL 33634
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