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Tuesday, November 21, 2006

Brand culture failures: Quaker Oats’ Snapple

Failing to understand the essence of the brand

In 1994, food giant the Quaker Oats Company bought a quirky soft-drink brand called Snapple for US $1.7 billion. The company felt confident that the drink brand was worth the price tag, because they had already achieved an astounding success with the sports drink Gatorade.

However, in terms of brand identity the two drinks couldn’t have been further apart. Gatorade was about sports and a high-energy, athletic image. Snapple, on the other hand, had always been promoted as a New Age and fashionable alternative to standard soft drink brands.

As many commentators at the time observed, Quaker Oats simply didn’t understand what the Snapple identity was all about. Specifically, there were two main reasons why Quaker’s three years in charge of Snapple diminished the brand’s value.

Reason number one has to do with distribution. Before 1994, most Snapple drinks were sold at small shops and petrol stations. However, Quaker deployed its usual mass marketing techniques and placed the brand in supermarkets and other inappropriate locations.

The other problem was the way Quaker decided to promote the product, abandoning eccentric advertising campaigns in favour of a more conservative approach. The day after Quaker announced that it would sell the Snapple drink business for US $300 million (over five times lower than the price they had bought it for), the New York Times pointed the finger at the misguided advertising campaigns. ‘Quaker discontinued its quirky campaign featuringa Snapple employee named Wendy Kaufman, and replaced it with one in which Snapple boasted that it would be happy to be third behind Coca-Cola and Pepsi in the beverage market.’ The ‘real life’ US advertising featuring Wendy Kaufman, a receptionist reading fan letters from consumers, had been a real hit, but Quaker decided to come up with a new advertising campaign using the same company which produced its Gatorade campaigns. The end result was a counterproductive advertising campaign which succeeded in ‘normalizing’ Snapple’s previously quirky identity.

As sales started to slide, Quaker believed it held the solution – send sales reps out on to the streets to ask people to try the product for free. Then the company back-tracked on the new Snapple advertising strategy with artier ads more in tune with the brand’s original identity. But it didn’t work.

Snapple was fast losing its innovative image, along with its customer base. When Quaker sold Snapple to Michael Weinstein and his colleagues, the brand was in trouble:

We inherited a brand in a deep sales slide, losing 20 percent annually, and a demoralized organization. At the time Snapple was six times the size of our company, but only two Snapple headquarters personnel from Chicago chose to join the new team in New York. Few outside observers believed a small beverage company competing with Coke and Pepsi and with a new team could turn Snapple around, but we outlined a strategy and vision of success that the entire organisation could rally around.

In an interview with Fast Company in 2001, Michael explained how his company, called Triarc, managed to undo the marketing and advertising failures which occurred under Quaker’s ownership of the brand. ‘We tried to create an atmosphere that was fun and timely,’ he said. ‘We introduced our first new product two weeks after we bought the company. That’s fast.’

Another part of the strategy was to bring back the adverts featuring Wendy the receptionist.

Gradually, Snapple’s original customer returned and the brand again increased in value. In 2000, Cadbury Schweppes bought Snapple for US $1 billion and Michael Weinstein moved with the brand. He is currently the president of ‘global innovation’ at Cadbury, and Snapple is now fully restored after its rather rocky ride.

Lessons from Snapple

  • Accept that different brands need different distribution. Quaker believed that Snapple could be pushed through Gatorade’s distribution system. ‘It turned out that Quaker’s distribution competences could not be leveraged to push Snapple because the image of the two brands is very distinct,’ says Sanjay Goel, an assistant professor at the Department of Management Studies at the University of Minnesota. Snapple’s New Agey image had been supported by the fact it had been sold through thousands of smallsized and independent distributors, Quaker decided it was best to use supermarkets and other larger outlets.
  • Understand the brand. Ultimately, Quaker failed to hold onto Snapple’s brand value because it did not understand the essence of the brand identity.

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