Snapple Case Analysis

Snapple Case Analysis

In 1972, Snapple had a modest beginning in Brooklyn, New York.   Initially, Snapple beverages
were sold to health-food stores and Snapple became successful by launching innovative
products, based on fruit juices and teas, into the beverage market.   Snapple was a brash
newcomer which won over New Yorkers and soon the rest of the US.   Homemade freshness and
endearing amateurism was a part of the Snapple brand.   Some brands just want to have fun and
from birth Snapple was one of them.   In 1992, Boston-based Thomas H. Lee Co. purchased
Snapple from the original owners for $27.9 million.   Snapple's distribution channels and
promotion were unconventional and it had very little supermarket coverage.   Instead, it flowed
through the so-called cold channel:   small distributors serving hundreds of thousands of lunch
counters and delis, which sold single-serving refrigerated beverages consumed on the premises.  
Small distributors were, they aggregated into a mighty marketing force.  
Quaker CEO William D. Smithburg had bought Stokely-Van Camp in 1983, mainly for its
Gatorade, then a $90 million sports drink.   Even though he drew criticism, Smithburg turned
Gatorade into a billion dollar brand.   Quaker Oats bought Snapple in 1993 for an extravagant
$1.7 billion dollars even though industry leaders thought it was only worth $700 million.  
Smithburg's strategy was to use the strength of Snapple's distributors in the cold channel to help
Gatorade and use Gatorade's strength in the supermarkets to help Snapple.   Quaker executives
hoped that Snapple would provide the same type of benefits as their highly successful Gatorade
brand had done in previous years.   They expected to achieve these benefits by applying the
marketing expertise used for Gatorade, but they failed to understand some important differences
in the markets, distribution channels, and customer attitudes for the two types of beverages.   The
Quaker executives planned to market Snapple in the...

Snapple Case Study

Product: The Snapple product line is vast and spans many different flavors, many of which were
unpopular. Only a handful of flavors held the product afloat, this in effect was due to the
premium pricing of the product. The product in itself was marketed with the accompanying
mantra of “100% Natural” and proved to be quite popular among a very difficult to define
market segment. Snapple was neither defined as a “lifestyle” brand or a “fashion” brand, it was
somewhere in the middle, generally grouped in the “alternative” beverage category. At this point
in the Snapple brands development, there were many other “boutique” beverage brands aspiring
to appeal to the same market segment.
Price: Given the premium pricing of their product, the Snapple product was able to remain
profitable, despite several flailing product flavors. The inflated pricing was a wise decision in the
inception of the products development, pre-1987.
Promotion: What a successful mess! The promotion of Snapple was “100% Natural” and
apparently appealed to many New Yorker’s and U.S. citizens alike. Their initial ad was flawed
and was not easily recognizable to many people: “Schnapple”, by Ivan Lendl. When the brand
began using Wendy Kaufman, a real person living a real life, as their spokes model the wildfire
began nationwide. She made appearances on David Letterman and Oprah, and Howard Stern and
Rush Limbaugh became avid supporters of the beverage brand.
Place: This aspect of the Four P’s was particularly important in the Snapple case. The proximity
to New York City proved beneficial in the marketing business aspect. Access to a plethora of
media and celebrity exposure launched the beverage line into a league of national brand
recognition.
Part II.   Now look at the period from 1994 to 1997.   Did Quaker make an error in buying
Snapple or did they manage it badly?   What did they do wrong that Triarc might learn from?

There are a number of options for Mark Weinstein to choose from as he...

Snapple Case Study

Problem:
Develop a strategy for Snapple's recovery after a three year trend of declining sales under the
management of Triarc Companies.   Sales had declined almost 35% in three years (from $674
MM in 1994 to $440 MM in 1997) and had the profile that the company had achieved great
success with was diminished.
Issues
History:

• Small company origins based on authenticity and trust in consumers eyes.   (ref. Exhibit 6 –
Pivotal Characteristics)   This was evident in the initial mantra of the company "100% Natural"
even before the company became Snapple (Unadulterated Food Products, 1972).
o The purchase by Quaker and subsequent changes left the consumers feeling betrayed and left
the impression of Snapple "selling-out".
 Replacement of spokesperson ("Wendy") and termination of contracts with radio personnel
(Howard Stern) produced bad press and continued  

• Distribution and subsequent growth of brand from 1987 to 1994 was in large part due to the
growth of the network of small family owned distributors.
o Quakers attempts to have the distributors cede their supermarkets in exchange for Gatorade
distributor rights in the cold market (deli's, restaurants, etc…) was met with opposition and
resulted in conflicting distribution channels.
o Upsetting the distributors that had been responsible for the growth of the cold market had
potential disastrous effects on your over all business.   In the alternative beverage category   94%
of the wholesale dollars is spent outside of the supermarket sales.   (See Exhibit 2 and 3 which
indicate that only $0.3 B is spent in supermarkets as opposed to a total of $5 B spent in the
overall category.)  

Industry/Market

• The market that Snapple products compete in is the Alternative Beverage category.   This is a
very competitive market with types of beverages within the category varying from water to
sports drinks to straight fruit juices.   With this variety within the category makes it difficult to
identify the...

Snapple Case Study

Look into the period of 1994-97.Did Quaker made an error in buying Snapple or did the manage
it badly?
      What can TRIACS MANAGERS LEARN FROM QUAKERS EXPERRIENCE? What can
they apply from their own experiences?
      Identify the three highest priority initiatives you would start tomorrow if you were in
Mikewinstein shoes. Justify them.
    4 .What would you do to make Snapple a success story in India?
ANSWERS
    Channel rationalization: They tried to push Gatorade in supermarkets at the cost of Snapple
and being successful only in ruffling the distributers.
      Unlike Quakers they should avoid upgrading Snapples from   fashion sensitive and quirky to
lifestyle brand as people are   really very average, normal people but the brand helps     them to
think of themselves as offbeat.
      They should clearly demarcate Snapple from any other product     category like chocolate
beverages or diet ones.     The triarc should not ignore the consumers research as the image of the
Snapple has been dented on account of changes instituted by The quarke.
  The Triac can use some of the following experience of their   own
      They can emulate the packaging of AriZona Iced tea to make Snapple   much more attractive
on display for the consumers
      They can reengineer the product with product development,   their own labeling and
repositioning of the product that Snapple   is for everybody
    The distributer should be made a part of the decision making process to help understand the
reorder volume and the consumers varying preferences
3.Distribution channel of Snapple has to be laid in such a way that it should be able to make each
and every variety of Snapple at all the selling point of it.The Cold channel must be the
Prority and the warm channel need to be managed properly with the help of distributing agents
  The image of the company should be reinforced as a big one which   takes a great care at
      Providing quality drinks...

Soft Drink Industry Case Study

Soft Drink Industry Case Study

Table of Contents

        Introduction     3
        Description     3
        Segments         3
        Caveats 4
        Socio-Economic   4
        Relevant Governmental or Environmental Factors, etc.     4
        Economic Indicators Relevant for this Industry   4
        Threat of New Entrants   5
        Economies of Scale       5
        Capital Requirements     6
        Proprietary Product Differences 7
        Absolute Cost Advantage 8
        Learning Curve   8
        Access to Inputs         8
        Proprietary Low Cost Production 8
        Brand Identity   9
        Access to Distribution   9
        Expected Retaliation     9
        Conclusion       10
        Suppliers       10
        Supplier concentration   10
        Presence of Substitute Inputs   11
        Differentiation of Inputs       12
        Importance of Volume to Supplier         13
        Impact of Input on Cost or Differentiation       13
        Threat of Backward or Forward Integration       13
        Access to Capital       14
        Access to Labor 14
        Summary of Suppliers     14
        Buyers   15
        Buyer Concentration versus Industry Concentration       15
        Buyer Volume     15
        Buyer Switching Cost     15
        Buyer Information       16
        Threat of Backward Integration   16
        Pull Through     16
        Brand Identity of Buyers         17
        Price Sensitivity       17
        Impact on Quality and Performance       17
        Substitute Products     18
        Relative price/performance relationship of Substitutes   18
        Buyer Propensity to Substitute   18
        Rivalry 18
        Industry Growth Rate     20
        Fixed Costs     21
        Product Differentiation 21
        Brand Identity   21
        Informational Complexity         22
        Corporate Stakes         22
        Conclusion       23
        Critical Success Factors         23
        Prognosis       24
        Bibliography     26...