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Quaker oats and Snapple merger failure

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by

Bronte Barratt

on 4 July 2014

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Transcript of Quaker oats and Snapple merger failure

History of Quaker Oats
Quaker Oats was founded in 1901 by the merger of four oat mills.

In 1969, Quaker acquired Fisher-Price, a toy company and spun it off in 1991.

In 1983, Quaker bought Stokely-Van Camp, Inc., makers of Gatorade
Purchase of Snapple
Quaker Oats successfully managed the widely popular Gatorade drink and thought it could do the same with Snapple.

In 1994, despite warnings from Wall Street that the company was paying $1 billion too much, the company acquired Snapple for a purchase price of $1.7 billion.

Snapple's initial success
Snapple had a strong presence and enduring appeal in the US

In 1984 the annual turnover was $4billion and that doubled in 1986

The brand was strongly connected with consumers and was a lucrative products

There was less competition from other firms
Strategy
Quaker used the same strategy that it did with Gatorade:

Cut down on advertising costs
Introduced Snapple in large containers
Tried to convince distributors to give up Snapple’s supermarket accounts
Tried to market Snapple and Gatorade complimentary
The result
There was a Decline in sales

Snapple failed to make a bigger presence in supermarkets

Gatorade and Snapple had unwarranted competition between these 2 brands

Negative publicity was provoked due to termination of contracts as firm was loosing revenue

Failure
The craze for such drinks like the exotic fruit tea’s Snapple sold became more sated and the market's growth eased just as Quaker bought the company.

Huge rivals, such as Coca-Cola Co. and PepsiCo Inc., charged into the market with new products. Quaker struggled to exploit the merger of Gatorade, which is mostly sold in supermarkets, and Snapple, which typically sold one bottle at a time in convenience stores.

Most of Snapple's sales came from smaller channels, such as convenience stores, gas stations and related independent distributors.

Advertising
Management also fumbled on Snapple's advertising campaign, and was not attuned to its branding sensitivities. Snapple's previously popular advertisements became diluted with inappropriate marketing signals to customers.

Advertising went from this To this
Quaker oats and Snapple merger failure
By Bronte
Selling of Snapple
After 27 months, Quaker Oats sold Snapple to Triarc for a mere $300 million, or a loss of $1.6 million for each day that the company owned Snapple. By the time the sale took place, Snapple had revenues of approximately $500 million, down from $700 million at the time that the acquisition took place.

The companies now
Snapple
Triarc sold it to Cadbury Schweppes for $1.45 billion in September 2000.

It was spun off in May 2008 to its current owners, Dr Pepper Snapple Group.

Quaker Oats
In August 2001, Quaker was bought out by PepsiCo because Pepsi wanted to add Gatorade to its list of beverages and thus break into the isotonic sports beverage market.

The merger created the fourth-largest consumer goods company in the world.
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