Mgt 101 - Snapple Steals Share

SNAPPLE STEALS SHARE

A Case Analysis

Submitted by:

Sheena De Jesus

Fernandez

Latido

Paula Macatangay

Bea Mojica

Juan Miguel Pamplona

GROUP 4

MGT 101 - Y

1. Point of View

Arnold Greenberg (Chief Operating Officer’s view)

        The perspective of the Chief Operating Officer, Mr. Arnold Greenberg, is chosen to be the point of view since he is the one responsible for the different strategies and marketing decisions of the company. Mr. Arnold should plan now how to deal with the competition raised by their giant drinks competitor.

1. Problem Statement

        Considering the present situation of Snapple and the objective which is to keep up with the competitions and increase their profit while utilizing their assets, a problem statement can be inferred:

        “What strategy/strategies should the company implement in order to remain competitive in the ready-to-drink iced tea industry while increasing their profit?”

1. Analysis of Relevant Case Facts

        Prior to the analysis of the company’s problem and possible solutions to it, it is significant to have an evaluation of its present condition. This will then be the basis in analysing the strengths, weaknesses, opportunities, and threats of the company.

        Snapple’s current condition is sectioned into its internal and external factors specifically that of macro, industry and internal environment.

        In 1988, Snapple introduced a lemon-flavored iced tea in the ready-to-drink beverage industry. In the past, iced teas had been manufactured in the same way that other drinks were, with flavour derived from a concentrate, sugar, preservatives and soda. After spending years perfecting the process of using natural tea and bottling it while still hot, the preservatives in the drink were eliminated. Driven by the popularity of the new iced tea product, which was soon supplemented by 11 different flavours of tea, Snapple sales took off.

        By the end of 1988, Snapple immediately gained 33% of the market share. Expanding the Snapple line to include more flavours and offering the market preservative-free drinks, the company capitalized on the health-consciousness of the 1990s. Snapple then became the market leader for the flavoured tea industry.

        Taking notice of the explosive growth of the iced tea industry and Snapple Company, Coca-Cola began a joint venture with Unilever’s Lipton and Pepsi with Nestlé’s Nestea brand to market and produce their own iced tea products. With the Coca-Cola and Pepsi’s distribution and marketing prowess, small companies like Cadbury, Schweppes, Snapple and Perrier are on the brink of being supressed.

        With the boom in the growth of the ready-to-drink iced tea industry, the softdrink industry was left behind. In 1992, the iced tea market went up by 50% compared to 1.5% increase in the market of the soda industry.

        The competition brought by the joint ventures of Pepsi-Nestea and Coca-Cola-Lipton is enormous. Being household names in the beverage industry, Pepsi and Coca-Cola have much greater financial resources and assets. Snapple is only distributed in 51 of 278 major supermarkets in the area. In addition, Snapple’s work force of 87 employees is less than that of Pepsi or Coca-Cola. Snapple also does not have production facilities of its own compared to its competitors, which have bottling companies at their disposal.

1. SWOT Analysis

        A tabular representation of the company’s strengths, weakness, opportunities and threats is illustrated in Table 1.1 with the inclusion of the possible strategies that may be materialized to help keep up with the competition the company is currently facing.

Table 1.1 Snapple Company SWOT analysis and strategies