On Feb. 2, 2007, Standard&Poor's Ratings Services lowered its ratings on Toronto-based private label soft drink manufacturer Cott Corp., by one notch, including its long-term corporate credit rating, to 'B+' from 'BB-'. The outlook is negative. The downgrade reflects the many challenges Cott faces including declining organic sales and profitability, significant senior management turnover in the past couple of years, inefficient operations, weakness in internal financial controls (procurement, segregation of duties, and inventory), and participation in the difficult carbonated soft drinks (CSD) industry. Although reported revenue increased 0.9% in 2006, organic revenue declined 4.8% (excluding foreign exchange and acquisitions). The drop was primarily due to CSD softness in North America, rationalization of stock keeping units (SKUs), and a
