Marketing and Snapple Quaker

From 1972 to 1993, why did Snapple flourish when so many small start-up premium fruit drinks stayed small or disappeared? * Premium pricing allowed the company to introduce a variety of products, many of which were unsuccessful, while still remaining profitable * Hired a professional management team that used focus groups to improve label design, increased the advertising budget, and intensified the independent distributor system throughout the East Coast * Successful advertising and public relations (e.g. Wendy Kaufman, Howard Stern, Rush Limbaugh, Snapple Convention) * “100% Natural” * Quirky commercials * Loyal customer following

Now look at the period from 1994 to 1997. Was Quaker's error to acquire Snapple in the first place or did they just manage it badly? * Why it made sense to acquire Snapple: * $5 billion “Alternative Beverage” category that was showing “Explosive Growth” (pg 4) * Snapple had the highest market share, 35% (Exhibit 3) * Quaker had experience in the beverage industry (Gatorade) * Quaker had strong customer relationships, distribution expertise, and modern information systems that could theoretically benefit Snapple * Quaker had financial resources and management expertise to grow Snapple * Why it did not make sense to acquire Snapple * Quaker did not have the expertise in the channels in which Snapple was distributed * Expensive: 2.5x revenue * Snapple had a very different culture than Quaker, which would make integration difficult * Mistakes Quaker made after acquiring Snapple * Did not develop an appropriate channel strategy for Snapple: * Snapple with a premium niche brand, which made the transition to being widely distributed in Grocery/Mass stores difficult. Quaker management did not seem to fully appreciate that fact. * Was not able to achieve channel rationalization * Did not do a smooth job