Snapple Case Study

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                    VARUN SHARMA

                           72618168

1)What reasons did Quaker give for buying Snapple and what was their strategy for Snapple?

Reasons that Quaker Gave to Buy Snapple’s

• Create Innovative Distribution System – Use Snapple’s strength in Cold Channel to improve sales for Gatorade and use Gatorade’s efficiency in warm channel to increase sales for Snapple at touch points such as super markets.
• Enhance Value for Trade Partners – By increasing merchandising, point of sales and in store refrigeration equipment. Example -  Better display designs
• More choice and availability for customers -  By leveraging distribution system of Gatorade and Snapple.

Intended Strategy for Snapple  

• Improving Gatorades’ sales in “Cold Channel” and promoting Snapple in “Warm Channel” – Quaker wanted to use Snapple’s middlemen to improve Gatorade’s performance in cold channel and eliminate high cost of middle men for Snapple in “Warm Channel”.
• Diversify Beverage Division – Even though Gatorade was growing strongly beyond $ 1.1 Billion in sales per year, Quaker felt a strong need to diversify its beverage division.
• More SKUs/ Better Shelf Space – The acquisition would have helped Quaker to increase the visibility of Quaker owned brands at the point of purchase by taking more shelf space, which was expected to grow Planned, Suggested and Impulsive purchases.
• Addressing growth in “alternative beverage category” – With increasing changes in consumer demand and preferences, owning a strong brand such as Snapple would have helped Quaker to cater to a broader set of market and capitalize growth in Alternative beverage industry.

2) What root causes were responsible for Quaker’s failure with Snapple? Be specific and provide evidence to support your arguments.

A mix of Operational and Marketing failures fueled Quakers failure with Snapple –

Operational Glitches –

• Larger Pack Sizes in greater assortments – This caused problems in distribution and display in “Cold Channel”. Quaker ignored limitations such as storage and display inefficiencies faced by street vendors, restaurants, delicatessens etc. Unlike Gatorade, Snapple was best sold in 16 Ounce Single serve containers. This discouraged “on the move purchase” of Snapple which contributed largely to its overall sales.
• Disagreement with Snapple Distributors – Unable to reach any rationalization with 300 Snapple distributors and trying to coax them in to Ceding Snapple’s warm channel accounts, Quaker damaged relations with distributors, who played a very strong role in cold channel sales for Snapple. 

Marketing Glitches:  

• Pushing Snapple from a Fashion to a Lifestyle Brand -  Quaker ended the contracts with Wendy Kauffman, Howard Stern and Rush Laumbergh, stripping the strong brand image that existed for Snapple. Stern created a lot of negative publicity for Snapple after the contract was terminated.

Snapple consumers (As the research suggests) were very average normal people and Snapple helped them feel offbeat. In an effort to move Snapple “from the edge to the mainstream”, Quaker went against the principals of Snapple and consumers felt betrayed.

3) As CEO of Triarc, what will you do to turn Snapple around? Explain how your plan addresses the root causes of the problem and why your plan is the best course of action considering its risks and benefits and those of other alternatives?