Sadly, one of the creators, Leonard Marsh died recently. He and two of his boyhood friends from Brooklyn created Snapple. One of his friends was Arnold Greenberg. It was Arthur's father who ran a deli which became a health food store. See the marketing implications and actions with the distribution channels, which started with health food stores and delis.
Snapple was a huge success for them. Marsh, Greenberg and other friend Hyman Golden with their part-time venture which sold organic juices to stores, including health food stores.They called their initial company," Unadulterated Fruit Juices, with the first one product being an apple soda. People called it "Snapple," from "snappy" and "apple." Paid $500 for the name when they discovered a man in Texas owned the name.
Along with unique distribution channels and decisions they were smart; they emphasized natural ingredients, retro-style glass bottles and developed new flavors. In 1987 they introduced flavored teas. They had hit it big-time.
But it became one of the biggest business blunders, along with
- AT&T’s 1991 purchase of computer maker NCR for $7.48 billion; AT&T spun off NCR in December, 1996 for $3.4 billion.
- Novell agrees to sell WordPerfect to Corel for $197 million, about a quarter of what it paid, which was nearly $1 billion.
- GE purchase Kidder Peabody for $600 million. Invested $800 million more and then sold to PaineWebber for $670 million in October ‘94.
Snapple started in 1982. Invented for the alternative drink market, by selling to health food stores as a line of natural products. They launched “ready to drink” teas, without preservatives or additives, in 1987. Consumers in taste tests said the teas tasted "really good" compared to the tin-tasting stuff on the market. They went public in 1990. From my notes in 1992, sales revenues were $200 million. Quaker had a product line that was wide and deep. It included Rice-A-Roni and Cap’n Crunch. They purchased Snapple for $1.7 billion in late 1994. Many in the financial and marketing communities said at the time that it was $1 billion over-valued. The previous owners made $800 million in selling.
But the Quaker CEO had made magic with Gatorade, which it purchased in 1983. He wanted to mesh the way Gatorade and Snapple were marketed. That was a marketing mistake. In 1996 Snapple lost $100 million, including one-time write-offs. Chairman and CEO took charge in Spring ’96 to turn around the brand. In 1995 Snapple had $600 million in sales; during the third quarter of ’96 sales dropped 23% to $523 million for the year. Their “Escape with Taste” promotion to give-away millions of bottles did not work. Objective was “To incite consumers to buy.” Summer ’96 they spent $20 million on their Summer Product giveaway. Did they really need to increase awareness and trial. It was a myriad of marketing mistakes:
- Worse sales results than the entire category.
- Tea sales fell 14%; market share was 2.5% lower. 46% of sales.
- Juice sales fell 15%; market share was down 1.1%. 54% of sales.
- Regionalization was important. They forgot simple geographics in target marketing. The Northeast was 50% of sales. West Coast was 20-25% of sales.
Why? What can we learn?
- Growth in the alternative beverage was dropping.
- Problems were in the distribution for Snapple. Plus promotion.
- Previously they were in“mom and pop” stores.
- Distribution of Gatorade was in supermarkets and Snapple was in convenience stores and “mom and pop” plus delis.
- Management decided that Snapple's distributors had to distribute to both.
- Brand had peaked.
- Howard Stern Show, as part of media mix, was pulled by Quaker Oats.
- The marketplace struck back, with new product introductions by competitors, Coca-Cola and Pepsi. Their teas were under the power house names of Lipton and Nestea.
- No proprietary product and little barriers to entry.
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I am a Forensic Marketing Expert, Advertising/Marketing consultant with Londre Marketing Consultants, LLC plus I teach Marketing and Advertising. I own a copyright for this concept, the Nine P’s/9 P's ©2007, which augments the Marketing Mix and 4P’s by the American Marketing Association, Neil Borden and Jerome McCarthy in the study and practices of Marketing. It helps identify marketing problems in a number of areas and helps develop marketing’s objectives, strategies, tactics and solutions. I consult and teach using the concepts and practices of the Nine P's/9P's of Marketing.
In the study and practice of Marketing, Marketing and Brand Managers develop plans, strategies and tactics. The Nine P’s include these important components:
- People (Segmentation and Targeting)
- Product
- Place (Distribution)
- Price
- Planning
- Promotion
- Partners
- Presentation
- Passion