TO: Board of Directors

FROM: Mike Weinstein, CEO, Triarc (76013135)

SUBJECT: Business Strategy for Snapple
DATE: 28
th
October 1997

Quaker and Snapple (1)
Quaker was a food company with a relatively low product depth in the
beverage industry. Gatorade was the only product they offered in their
beverage business. Although it was successful, accounting for 18.5% of
Quakers revenues, it could not exploit the cold channels available
domestically. Quakers Gatorade was available only at 0.01% points of
sales for soft drinks in United States.
Quakers vision behind acquiring Snapple was to maximize its points of
distribution and integrate channels of distributions for the two beverages.
Snapple was strong in servicing cold channels with a network of 300 small
distributors while 60% of Gatorades sales came from warm channels that
comprised of supermarkets. Snapple was able to leverage supermarkets for
only 20% of its sales.
Another reason for Quakers acquisition was to increase the product depth in
beverages sector and thereby increase market share. With this acquisition,
Quaker was trying to expand its feet in the beverage industry.
Quaker tried to merge the Snapples entrepreneurial culture with its
corporate culture by changing positioning strategy for Snapple. Quaker
attempted to replicate its strategy that led to Gatorades success with
Snapple which didnt yield results.
Quakers Failure (2)
Quakers primary reasons for failure were:
1. Tampering with positioning strategy of already successful brand.
2. Changing the brand ambassadors for Snapple who were very popular with
the consumers and represented the brand.
3. Pushing the Gatorades sale through distributors in exchange of Snapples
supermarket accounts.
4. Altering the Snapples packaging and ignorance of Snapples consumers
traits and cultural differences.
Quaker repositioned the Snapple from fashion to lifestyle brand which
didnt fit well with the consumers who viewed Snapple as a fun and natural
drink and not as a sophisticated health drink. This created a conflict in the
established brand perception and consumers could no longer identify
themselves with the brand as they did earlier. Quaker tried to align Snapple
with Gatorade which were two very different drinks.
Snapples promotional strategy was an offbeat blend of public relations and
advertising which was diluted when Quaker fired Stern, Limbaugh and
Wendy. Wendy was strongly regarded as the face of Snapple. Customers
associated Wendys energetic traits with Snapple. When she was fired it
impacted Snapples presence in the consumers mind. Negative word of mouth
from Stern affected brand reputation as well.
Quaker was able to increase movement of Snapple through supermarkets only
by 15% by 1997 (from exhibit 3) and mismanaged the relationships with the
small distributors. Forcing the distributors to give up their supermarket accounts
in exchange for Gatorades distribution rights created a conflict of interest and
hurt the sales even in the cold channels. Quaker failed to capitalize on the
relations with both distributors and supermarkets to push Gatorade and Snapple
respectively in these channels.
Another approach that hurt Snapples sales was large sized packaging. This
required a larger shelf-space which was a constraint in the existing distribution
system and diverged with the Snapples image of individualistic drink. Unlike
Gatorade which was famous with the team settings, Snapple worked for
independent and self-improvers individuals who didnt prefer a bulk purchase
and didnt find large packaging portable. Quaker completely ignored the points
that differentiated Snapple at the first place and failed to leverage the
entrepreneurial image of the brand.
Our Way Ahead (3)
Snapple sales plummeted because it didnt fit with Quakers corporate image
and culture. Based on the SWOT analysis in Appendix 1, our strategy to
bring Snapple back on track would take the following course of action:
Reduce the product line, retreat to fashion brand image with a focus
on 100% natural message. Negotiate with the existing small
distributors and establish good relationships to reach cold channels.
Return to original packaging of single-serve containers and rehire
Wendy to generate goodwill as a parent company. Retain the original
price and focus on intense advertising and promotion.

Reduce the Product line: From exhibit 4 in the case it is clear that
ten flavors out of total fifty account for 55% sales. This indicates that
rest 40 flavors collectively generate only 45% of the sales. Though
variety in flavors provide high degree of product customization for
serving different consumers but these 40 flavors also take additional
shelf space in stores which could be attributed to more popular ones
and may incur a cost of opportunity. Also, variety in flavors increases
degree of variability and therefore higher coefficient of variation. We
should reduce the number of flavors to those which account for higher
sales percentage at the existing prices to hold our margins and control
further damage.

Intense Advertising and change in positioning: With the rising
competition from other contemporary drinks, Snapple needs to
address the changing lifestyles of consumers with a 100% natural
branding. Besides providing a competitive edge this will help in
popularizing the drink among health conscious segment. Rehiring
Wendy will help Triarc to transition Snapple from sold out brand to
consumers their own brand and employing the real time advertising
strategy can help to further strengthen this belief and capture the lost
customers. Associating with community welfare programs will
generate goodwill among customers and position Triarc as a caring
parent company. Sponsoring youth programs will help to target this
growing segment.


Improve Relationships with distributors and return to single
container packaging: Small distributors played a key role in
Snapples success and growth of its sales volume by 300% over 9
years. Establishing favorable relationship with them is absolutely
critical to brands success, its movement and availability in cold
channels. With the information from exhibit 6 it is fairly clear that
consumers prefer single container packaging to bulk purchase. This
will also reduce the shelf space required and distributors will
encourage the brand sales with low shelf space and favorable margins
per bottle.

Combined, these strategies will help Triarc to turn around the fortune of Snapple
brand. All the proposed strategies have been enforced and worked in the past
successfully.


Word Count: 1001





Appendix 1
Strengths
100% natural
Already known among consumers
Experience in the beverage
industry
Good cold channel distribution
Reputed brand recognition with
donation to community welfare
organizations
Premium Pricing

Weaknesses
Declining Sales
Assorted Packaging
Less presence in warm channels
Difference in regional preferences
Negative publicity

Threats
Emerging competitors like
AriZona and Fruitopia
Emerging alternative beverages
like bottled water and Coke
Changing lifestyle trends
Rising fashion and social
pressures
Opportunity
With the previous positioning as
fashion brand youth segment can
be targeted
With the 100% natural
advertising, health conscious
segment can be targeted
Focus on lapsed customers by
retreating to entrepreneurial brand
image