Tuesday, June 7, 2011

How snapple got it's juice back - Snapple Case Study


About Snapple:
Snapple was founded by Hyman Golden, Arnold Greenberg and Leonard Marsh in Valley Stream, New York, on Long Island in 1972. The word "Snapple" was introduced in the early 1980s and is derived from a carbonated apple juice."In 1980, the company introduced a line of all-natural juices with the Snapple name, which came from one of its first products, a carbonated apple juice that had a "snappy apple taste." They first started with pure fruit drinks, and would not manufacture their first tea, lemon tea, until 1987.Currently, there are four different types of Snapple: Tea (diet and regular), juice drinks, lemonade, and bottled water.

Snapple's brand slogan is "Made from the best stuff on Earth."

Snapple was known for a popular series of TV advertisements in the early 1990s featuring Wendy Kaufman (the "Snapple lady") answering letters from Snapple fans.
The Quaker Oats Company bought Snapple for $1.7 billion in 1994 and quit using Wendy. The company ran into problems and sold it to Triarc in 1997 for $300 million. Triarc sold it to Cadbury Schweppes for $1.45 billion in September 2000.  It was spun off in May 2008 to its current owners.

Starting in May 2009, Snapple was made with sugar, not high fructose corn syrup. However, in certain areas, the old Snapple is being sold in stores, although is becoming more and more rare.

Current Scenario:
  • Currently, there are four different types of Snapple: Tea (diet and regular), Juice Drinks, Lemonade, and Bottled Water.
  • Discontinued brands: Whipper Snapple & Snapple Sodas
  • Discontinued flavours: Orange Ice Tea, Cactus Ice Tea, Cherry Lime Ricky and Cream Soda, Bali Blast and Apple Pie (seasonal) Juices
  •  Snapple's brand slogan is "Made from the best stuff on Earth.”
  •  Snapple is backed by its signature bottle and eccentric attitude
  •  It is fully integrated in its advertising and promotions (absurd television ads featuring dressed up Snapple bottles)
  •  Some brands just want to have fun, and from birth Snapple was one of them!
  •  Snapple is well-known for printing interesting numbered "facts" on the inside of their bottle caps
  •  Their target group is young adults

Situation Analysis

Snapple Enjoyed A Strong And Popular Brand Image And High Sales 

Reasons:

Unconventional promotional activities-
The brand image was built with a humorous eye towards its own product
Snapple lady - Spokes model  - Wendy Kaufman - A Snapple order-processing clerk with a  brash New York attitude

PR –
(a) Wendy Kaufman’s eccentric attitude attracted unpaid media attention
(b) The story of the three founders of Snapple
  •    Sponsored radio shows  of two very offbeat exponents of shock radio
  •   Snapple had a strong distributors’ network in the cold channel and also individual distributors
  •   Their  advertising initiatives based on the concept “Only real stuff that happens in real life” did exceptionally well
  •    Premium pricing helped increase profits and built product image
  •   Lack of its bulk presence in mainstream made them a “a fashionable, not-so-common drink”
  •   The brand Snapple connected strongly with consumers  because of  its “doing things  differently and the real way” nature and its avoidance of  marketing slickness consumers had grown suspicious 

Why did Quaker acquire Snapple?
  • They wanted to increase the sale of Gatorade in the cold channel and increase the distribution of Snapple in the warm channel (in which Gatorade did well)
  •  They felt the two products would complement each other and help Quaker to become a large beverage company, which it was not. (Gatorade had helped Quaker to enter beverage category alone)
  •  They thought it wouldn’t be difficult to transform Snapple into a mainstream, lifestyle product
  •  To stave off acquisition by larger beverage players
Snapple's sales decreased and  brand image weakened  under Quaker

Reasons:
“Big corporate sell” approach caused the downfall of Quaker’s Snapple
  •     Distributors of Snapple were not ready to exchange their supermarket accounts for  trading Gatorade in the cold channels via these distributors
  •    Changes in packaging sizes and assortments – caused decreased suitability of Snapple in the cold channels
  •   Combining  Snapple  with Gatorade gave Snapple the image of a “Less Utilitarian Beverage
  •     Caused damage and dilution of Snapple’s  positioning

What drove decreased consumption of Snapple?

  • The brand failed to sustain its Brand value – No initiatives were taken for Brand sustenance. Hence consumers drifted back to water, sodas etc.
  •  Product – packaging misfit  - Consumers didn’t want the more profitable 32 and 64 ounce bottles. Instead they still preferred the 16 ounce bottle which they could consume in one sitting
  •  Bad publicity as “Crapples” – Terminating the RJ’s – Stern and Limbaug
  •  Dropping of the Snapple lady from the ads and the brand associations
  •  The brand stopped evolving – Hence it was no longer ‘offbeat’ and ‘new’
  •  Hence the youth left Snapple for newer, fashionable ‘the in thing’ brands like Arizona. The older age groups didn’t find it innovative and novel
 Natural attrition caused by problems of ineffective distribution
  • Increased health consciousness among middle aged groups raised doubts about the health factor of Snapple
  •  The premium pricing of Snapple raised questions about the product’s  authenticity among price sensitive  youth and young adults. Especially when real fruit juices were cheaper than Snapple
  •  Weak product differentiation – Snapple was seen more as some “fashion water” rather than as an established brand. It lacked or rather was  weak on its utilitarian factor.
  •  Snapple’s image as a Superficial product that didn’t have a compelling position in daily rituals and routines
  •  Increased Competition from brands such as  Lipton, Nestea and Coca Cola’s new Fruitopia
  •  Low involvement product – 1) hence a high percentage of purchases are single bottles for immediate consumption. 2) The amount of Snapple consumed depends heavily on the social reinforcement of his/her surroundings
  •  Snapple was never seen as a Social beverage. It was always seen as an “individualistic indulgence”.
How did Triarc restore most of Snapple's brand value that was lost under Quakers’ stewardship in less than three years?

  • Corporate culture of Triarc – In alignment with the brand essence of Snapple. Triarc’s casual approach towards product development resonated with the Snapple’s back-of-the-store, back-of-the-envelope roots. Triarc developed passion for the brand
  •  Triarc has a varied and rich portfolio of juice and soda brands. Hence, has a rich experience back-up for approaching new cases of beverage brands
  •  Approach towards Snapple was “What not to do to stop further fatal mistakes?”
  •  Triarc’s risk orientation style- Cost free and experimental
  •  Triarc perceive new products as opportunities rather than as risks
  •  Triarc team used themselves as a test market- more authentic and reliable 
Problem Identification

Strengths:
         Brand has inherent strength
         People feel good about it
         Snapple’s brand ambassador ‘Wendy’

Weaknesses:
         Cannot be on the lines of Gatorade beverages

Opportunities:
         Popularity of natural no-preservative fruit juices

Threats:
         Acquisitions shifted Snapple’s positioning in the consumer market

Conclusion:
The  Triarc team has done appropriate amount of work which had to be done to restore the brand again by following their instincts about the brand. They were as impulsive as the brand in itself and hence it clicked directly with the audience , since they could find the brand connect which was lost due to Quaker acquisition.
"We're not in the soft-drink business; we're in the fashion business."
- Michael Weinstein, former CEO of Triarc Beverages Corporation, in December 1998

Snapple had become popular over the years because of its unconventional promotion methods. Unlike its competitors  who stuck to conventional marketing practices, Snapple adopted a more offbeat approach to promotion and followed a grassroots marketing strategy. It’s a good example of how a conventional product can be marketed in an unconventional fashion.  The brand used various innovations and marketing strategies to remain popular in the market, and also built up a loyal fan following.

Recommendations:
  1. They could have product extensions  into health food and salads. Not the general serious health foods but positioned as “Fun to be Fit” foods not losing the core image of the brand
  2. They could also move on to  associating with  a food chain, like burger king or Starbucks and start selling their product in that store. This would not make it lose its exclusive brand image and would help build its equity.
  3. Look for other distinctive opportunities where the brand can appear. It has to have that little bit of element of surprise. It can be on pizza boxes, fortune cookies etc. On the similar lines it should come up with new innovative ways to connect with the consumers and maintain the spunk, impulsive and fun brand that Snapple is.