Snapple

Introduction

From 1972-1993 Snapple Fruit Juice Company flourished while many startup premium fruit drinks struggled and, in many cases, failed. In fact, most of Snapple’s successful competitors during this time were sold to larger distribution companies allowing Snapple to create a Brand image and distribution alliance for the “smaller guy.” They were a cult classic, promoted by loud, brash promoters like Howard Stern and Rush Limbaugh who had huge followings of independent, “stick-it-to-the-man” listeners. Snapple also created the legend of Wendy Kaufman, a former truck dispatcher and employee of Snapple. She was an instant success with the kind of style and attitude that matched Snapple’s independent image. As the product began to grow so did distribution, product line, and understanding of what made the product great. Snapple and the original owners, however, sold control of the company to the Thomas H. Lee Company in 1992 for $27.9 million who then sold to Quaker in 1993 for $1.7 billion. The high-priced opportunity for Quaker was full of potential, yet after three disappointing years, Snapple was sold again. Some suggest that the purchase of Snapple was a bad move for Quaker, and the declining sales may have proved that point. However, Quaker did not understand what led to the original success of the product and tried to change the four P’s. Eventually, Quaker sold the product to Triarc and it would be Mike Weinstein’s responsibility to improve the declining sales and brand name success of Snapple. This paper will first analyze the success of Snapple from 1972-1993 under original ownership. Secondly, it will investigate Quaker from 1994-1997 determining if they made an error in purchasing the company, or if the owners managed it poorly. Third, how the Snapple brand compared to the competition will be addressed. Finally, three high priority initiatives Mike Weinstein and Triarc should implement to save Snapple will be identified.

From start-up to 1993

From 1972-1987 Snapple grew slowly, outsourcing its production and distribution across New York and the east coast. The Snapple line of products consisted of teas and juices where some lines succeeded others failed. “… premium pricing on the successful products covered losses of the failures” (Deighton 1999). Snapple’s competitors saw similar results during the same time period as several companies fought for market share and new customers. The few competitors that did create value later sold. “For example, the founders of SoHo, Connie Best and Sophia Collier, took sales to $25 million and then sold the company to liquor giant Seagram in 1989 for $15 million” (Deighton 1999). However, in the late 80’s and early 90’s, about the time that many companies exited the market via acquisition, the Snapple founders; Arnie Greenberg, Leonard Marsh and Hyman Golden with the help of professional management, created the Snapple Brand Legacy. “…brand associations enhance the core product…and are a crucial aspect of most product offerings. Brands are names or symbols that marketers have introduced to make product differentiation concrete. They assert that a firm’s products are different from those offered by competitors” (Silk 2006). The Brand of a product simply becomes the positive feeling the consumer has towards the product and is sometimes called Brand Equity. "(Brand Equity) reflects how much more consumers are willing to pay for a particular brand compared with a competing brand” (Silk 2006). The Snapple Companies brand equity was created by strong marketing with promoters like Howard Stern, Rush Limbaugh and Wendy Kaufman with huge following of consumers that were just as independent as the promoters and the company itself. The relationship between consumer and product was a huge success. To create this environment for success Snapple used the four P’s of marketing. In terms of the importance to Snapple’s success one would argue that Snapple filled each of the P’s extremely well where many companies make the mistake and focus on only a few.

Focusing on E. Jerome McCarthy four P’s of marketing called the marketing mix and Professor Joe Morelli fifth P, Positioning, we can easily see how Snapple was unbelievably successful (Table 1). McCarthy’s framework consisted of Product, Price, Place, Promotion

MARKETING MIX

4 P's Definition How Did Snapple Use

PRODUCT Brand Name, Styling, Functionality, Packaging Improved Label Design, convenience, and name recognition.

PRICE Pricing Strategy Was to focus on convenience and "coolness" of the product. Price was not an issue!

PLACE Distribution