Snapple and Brand Value

Let’s start by talking about Snapple. You know Snapple by now. If not, here is Snapple. It is called, The Best Stuff on Earth. It’s a quirky friend. And there are 58 different flavors, and, this one, I’m drinking raspberry tea. Has a glass bottle, and has a [SOUND] pop-top, all right, that makes a sound that tells you it’s going to be good when you drink it.

Mm, just like that, all right? And where do you find Snapple, what is the place? It’s found in mom-and-pop stores. At least when they started, it was found only in mom-and-pop stores, and slowly they’ve started to get into grocery stores. And they started around New York City and surrounding areas. And they had, really, this whole notion about your family friendly drink that you shared with your friends. And it was you and me, it was not the corporate, and it was completely anti-corporate. And then, if you were around those days, you would remember Wendy and the commercials. It was about real people. It was something that you wrote in about Snapple.

And Wendy would come on camera, read your letter, and react to you. So it was almost social media before social media. And Snapple had all these things going, right? It had a quirky product, good price, it was distributed through mom-and-pop stores, and it was about real people, you and me. And Wendy personified the whole thing. All of that, together, led to this tremendous, exponential growth for Snapple. As you can see here, Snapple’s growth started straight around 1988 when they started to hit up on this formula which combined the product, place, price, and promotion. And the sales just took off, but, as you can imagine, it was not easy for them to keep up with all of these sales.

They have faced a lot of stock out issues, and they were really challenged. They did a great job, but theyf were challenged to keep the growth growing. And so they were bought by Quaker, and at that time, Quaker owned Gatorade. And as anybody would imagine, Gatorade said, we have a big distribution system. We know how to manage big brands. We’re going to take Snapple and merge it into the system with Gatorade, and we are going to have two brands that are going to go ballistic, they are going to go great. But what really happened? Gatorade and Snapple are two different products. Gatorade is 8 flavors. Snapple is 52 or more flavors. Gatorade is distributed to warehouses. Snapple is distributed door-to-door.

Gatorade is about Sport. Snapple is about Dixie-Peach. And Gatorade had Michael Jordan as the endorsement. Snapple had Howard Stern. So these were two different brands with two different personalities.

Quaker, in this process, trying to merge these two different brands together, destroyed about 1.4 billion of value, right? So this was a clear example of how not understanding what a brand means to the consumer, and treating all brands equally, and merging them without thought, can really destroy value. And then what happened? Triarc buys Snapple from Quaker and identifies three wrong decisions that Quaker made, and reversed them. It revamped the Snapple advertising campaign. They got the quirky back, they got back Wendy, they went back to quirky products, and made friends with the mom-and-pop distributors again. So the thing, they went back to the core of Snapple.

They went back to saying, Snapple is about the quirkiness, it’s about the flavors, it’s about real people and mom-and-pop distribution, and we’re going to bring that back. And this is what consumers think Snapple is, and we’re going to give consumers that Snapple back to them. And guess what happened? As you can see, around ‘94 is when the sales of Snapple to Quaker happened. And after that there was a downward trend. And from ‘96 onwards, you can see Triarc buying Snapple and the sales picking up again.

So you can see how valuable a brand is in terms of affecting sales, and how not understanding, or better yet, understanding customer’s relationship with the brand, can have a real influence on the sales of a brand and the value of a firm.