SNAPPLE: REVITALIZING A BRAND
In the 1990s, Snapple Corporation was one of the leading “New Age” beverage brands when the category was just beginning to take off. With the combination of a unique product, package design, and quirky advertising, the company grew form a regional underground favorite toa nationally recognized brand.
Snapple’s rise in the beverage industry was crowned in 1994, when the Quaker Oats Company purchased Snapple for $1.7 billion. Quaker expected to make Snapple a major player in the industry, as it had done with Gatorade. However, the company was unable to capitalize on the brand’s previous success.
In 1997, Quaker sold Snapple to Triarc Beverage Group for $300 million. Triarc faced a number of challenges, including reversing the sales slide, revamping the distribution system, and creating new products that will enable growth. Most importantly, Triarc had to find a way to reconnect the brand with its consumers. Triarc successfully resurrected the Snapple brand, and in 2000 sold Snapple to Cadbury Schweppes for $1.45 billion. Cadbury Schweppes then faced the challenge of maintaining Snapple’s brand strength in an increasingly competitive beverage environment.
THE EMERGENCE OF SNAPPLE
The roots of Snapple Corporation date back to 1972 in Brooklyn, New York when brothers-in-law, Leonard Marsh and Hyman Golden, left their window-washing business and teamed up with Marsh’s childhood friend and health food store owner Arnold Greenberg to sellpure fruit juice as the “Unadulterated Food Products Co.” In 1978, they created an apple soda that fizzled - so much that several bottles exploded - inspiring the “snap” in the drink’s eventual name. They bought the rights to the name from a man in Texas for what then seemed like a very expensive price of $500. Over time they established themselves as the “first company to produce a complete line of all-natural beverages,” that were “Made from the Best Stuff on Earth.”
In the 1980s, Snapple essentially created the non-carbonated segment of ready-to-drink beverages with its introduction of ready-to-drink fruit juices and iced teas. Snapple was also the first company to sell its drinks in single serving, wide-mouthed glass bottles,rather than the ubiquitous aluminum cans. The company clad its bottles in unique, bright labeling and introduced a new process called “hot-packing” (where they filed bottles with 180oF liquid to sterilize the contents) that eliminated the need for preservatives and enable it to extend its “all natural” claims to its entire line of products. Its goal was to “make a natural product and make sure it tastes good, and looks good.” Although Snapple remained a small niche brand throughout much of the decade, the strategy had begun towork. By the late 1980s, growing ranks of health-conscious consumers were snapping up Snapple products as an alternative to soda. By 1991, Snapple emerged as a nationally recognized brand.
In the spring of 1992, Snapple management raised capital by selling amajority stake of the firm to Thomas H. Lee, a Boston-based investment firm, for $140 million. Marsh, Golden, and Greenberg maintained control of the company and continued to improve operations. In December of the same year, the company went public by selling 4 million shares of common stock at a price of $20 per share. The offering was oversubscribed and, by the day’s end, the share price had risen 45 percent. A month later, Snapple shares traded at $34, and by the end of 1993, Snapple shares had exploded to $516 million, more than double its 1992 figures. The stock price had risen to five times its initial offering price and Snapple was a household name. Yet, operating costs were also on therise. Sales, and general and administrative expenses had grown from $22.7 million to $59 million from 1992 to 1993, and operating margins had fallen 2.3 percent.
The Snapple Formula
Over time, Marsh, Golden, and Greenburg had developed a set...
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