Snapple Case1 Study

7/29/2019 Snapple Case1 Study

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Our association with

Snapple

Aware of the

brand and the

product

(36)

Somewhat

know of theproduct and

the brand

(16)

Do not have an

idea of the

brand/product

(8)

60 students were asked about Snapple and whether they recognized it


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Founded by Hyman Golden, Arnold Greenberg and Leonard Marsh inValley Stream, NY in 1972. The word "Snapple" was introduced in the early

1980s and is derived from a carbonated apple juice. The Snappy Apple

Taste

Despite their relatively high price of $1 a bottle, these products enjoyed

some success in the New York, Boston, and Washington, D.C., areas in the

early 1980s.

Line Extensions to fruit drinks were undertaken in 1986. But it was only in

1987 that Snapple struck gold with its cool Iced Tea an essentially

summertime drink

Subsequently they introduced many flavors and, in the first six months of

1989, the company's revenues from noncarbonated beverages increased by

600 percent.


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The success of the company was predominantly due to its robust

network of 300 family owned small distributors who servicedconvenience chains, pizza stores, food service vendors, gasoline

stations and mom & pop stores.

Its quirky advertising campaigns with The Snapple Lady Wendy

Kaufman and popular endorsement on shock radio by Howard Stern

& Rush Limbaugh made it quite popular and coveted.

Snapple Sales grew from $80 mn in 1989 to $231 mn in 1992 & 516

mn in 1993. Its share of the market remained a sturdy 30 40%

during this time period

In 1994, the company which was running sales of over $674 mn

was sold to Quaker Oats for $1.7 bn through Thomas Lee & Co.

(leveraged buyout & IPO)


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Lemon Tea Kiwi Strawberry Mango Madness

Peach Tea Pink Lemonade Diet Peach Tea

Fruit Punch Raspberry Tea Diet Lemon Tea

Some of itsexciting flavors


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Quaker in 1994 was a food company with the areas of business

listed under:

Bean-basedfoods

Grain - basedfoods

Pet Foods

Quaker

Beverages

The foods ventures were relatively mature, while the Beverages

category was a growth entity.

Gatorade, another acquisition by Quaker, contributed $ 1.1 billion of

the companys turnover in 1994.


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Gatorades origin was in a research project

conducted at the University of Florida. The

product replenished body fluids lost during

exercise.

Quaker acquired the brand and took its sales

to $ 1 billion in the course of a decade.

The fantastic growth achieved was attributed

to factors like line expansion (new variants and

pack quantity introduced), promotion (visibility

in the major sports leagues) and improvements

in distribution.

Thus Gatorade was a major asset and caused

Quaker to be a constant target for acquisitions

by virtue of its existence in Quakers

repertoire.


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How Snapple fitted into Quakers plans

The idea was to strengthen Quakers position in the

beverage business.

An innovative distribution system combining the

best of both companies for optimal results through

more merchandising, more points of sale, more in-

store refrigeration equipment.

Snapple to benefit from Quakers packaging

experience, supply chain expertise and modern

information system capabilities.

Snapple would benefit from Quakers direct

connections between factory and supermarket while

Gatorade would benefit by virtue of Snapples

middlemen who would then take Gatorade to the

cold channels which it previously failed to penetrate.


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What went wrong with

Quaker Acquisition

The Quaker management felt confident about Snapple because they

had already achieved an astounding success with the sports drink

Gatorade. However, in terms of brand identity the two drinks couldnt

have been further apart. Gatorade was about sports and a high-energy, athletic image. Snapple, on the other hand, had always been

promoted as a New Agey and fashionable alternative to standard soft

drink brands.

Although Quaker executives realized that Snapples imagery was

different from Gatorades, they did not fully understand how deep the

original imagery of Snapple was entrenched in the minds of the

consumers.


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Quaker decided to promote the product, abandoning eccentric advertising

campaigns in favour of a more conservative approach. Wendy Kaufman,

Howard Stern & Rush Limbaugh were discontinued which resulted in

negative publicity. (Crapple)

The distributor channel rationalization did not go as planned. The

distributors had worked for years to get into blue-chip supermarket

accounts and were unwilling to cede Snapples supermarket accounts toQuaker in exchange for the right to distribute Gatorade to the rest of their

accounts.

Quaker made a mistake in introducing Snapple in large pack sizes as

Snapple sold best in 16 ounce single serve containers which were used forimmediate consumption. The large packs also met limitations on distributor

trucks, retail display space in the cold channels etc.

They could not identify that one big differentiator that would move

Snapple from fashion water to an established brand.


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Gaps Model Applied to Quakers

handling of Snapple

Gap 1: Not knowing what customers expect

a) Insufficient marketing research

No logic behind adoption of large pack sizes. This strategy seemed to originate

from a hangover of strategizing for Gatorade for which large pack sizes were

appropriate due to the utilitarian nature of the product. Proper Marketingresearch would have revealed that a high percentage of purchases includes single

serve bottles for immediate consumption.

b) Focus on new customers than old ones

Although this was a peripheral factor, the fact was that by incorporating atransition in Snapple from edgy to mainstream, Quaker was essentially losing

touch with the consumers who had given cult status to Snapple in its original

avatar. These were the same consumers who identified with Wendy and Snapple

as a whole.


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Gap 3: Not delivering to service designs and standards

a) Failure to smooth peaks and valleys of demand

Absence of preferred flavor variants at all stores.

b) Customers who do not fulfill roles

Customers who negatively affect each other. This is evident in

fashionability and negative social pressure. For example, consumers

who say that Snapple is no longer avant-garde and lead others to

switch to newer brands.


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Snapple Who

100% natural - Real people and real situations

Experiential Factor Essentially sensual, tickles, rouses, lingers, wakes upthe mouth

Small break from the mundane everyday life

Brand Personality

Fun irreverent, playful, informal

Creative variety

Brand Associations

Wendy eccentric, a nobody now a celebrity, fun, genuine, personal

Whimsical and creative


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Snapple is defined by what it is not

Colas

Unnatural

Artificial image

Impersonal

Uniformity

Mass production

Authority

Snapple

Natural

Real

Personal

Diversity

Variety, individualism

Anti authority

Lies in the middle

Its not cola, its not as serious as a health beverage


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The alternative beverage category represents

10% of the non-alcoholic beverage industry


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On March 1997, Snapple was acquired by Triarc for $300

million, an investment company with a long history of

buying and selling troubled assets.

Triarc had built a portfolio of Juice and soda brands such as

Royal Crown and Mistic

In contrast to Quakers professional culture, Triarc had a

fun-filled culture which in fact helped Triarc executivesunderstand and embody the quirky spirit of the Snapple

brand thus making it possible for them to get behind the

brand and turn it around.


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Triarc plan was to limit the cost of failure. Instead of making

big changes and bringing in big schemes, they made little

changes and watched what works and what does not.

Therefore, the company experimented new product

launches as they were cost free. The company could come up

with a new concept for $50,000 to $75,000 investment plus

working capital for ingredients.

Distributors bought 200,000 cases of any new Snapple

product because people were interested in trying their latest

thing.


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While the alternate beverage market was growing, Snapplewas not doing well. So it clearly needed brand revitalization.

Brand revitalization was done majorly through the two

performance enhancement strategies:

1. Growing the volume of sales Entering new segments in the current markets. ELEMENTS

2. Repositioning

Real repositioning: Upgrading the product by addingfeatures, variants etc.

Psychological repositioning: Changing peoples

perception.


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The company understood that the brand needed revitalization.

Wendy was not only rehired but her picture was also wrapped

around the bottle.

Took great insights from the

report from deutsch, Inc.

And thus was born Wendys tropical

inspiration.


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The product till 1993 was still in its growth stage when it was

not acquired by Quaker. Considering that the brand was still

not in its saturation and had a long time to witness decline,changing its image under Quaker and taking out Wendy from

its communication was a branding sin. Triarc took it up from

where Snapple as an entity had left it in 1993 and attempts

were made to reinstate the same fun filled identity of Snapple

in peoples minds.


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In fact, the give it a go approach that Triarc followed had an

unstructured planning and execution where analysis and risk

estimation were preceded by fast decisions, quick movements in

order to get early success.

Triarc soon launched Snapple extension called elements, a range

of teas with flavour names like Sun, Rain and Fire.

Within a short period it sales had grown to 15% of Snapplestotal sales.


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32 & 64 ounce bottles were discontinued.

Re-establish distributor relationship by proclaiming the magic is

back.

A meeting of distributors took place and promises were made to

the distributors by well trained senior executives of Triarc.

The distributors were convinced and they responded positively

by accepting to take a little more Snapple.


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Abhijit Kumar

Abir Banerjee

Bikash Jyoti Borah

Chirmi Krishna

Priyanka Agarwal

Shefali AroraVaibhav Nahar

Documents

Snapple Case1 Study