Almost 40 years after Cadbury and Schweppes joined forces, the two are once again going their separate ways. Cadbury plc made its modest debut as a pure confectionery manufacturer on the FTSE last week. This week sees its former beverage business listed in New York as DPSG – Dr Pepper Snapple Group.
Students of brand management will no doubt be familiar with one of the key brands in the DPSG portfolio – Snapple. To study Snapple is to study the very history of modern consumer branding.
It begins with founders, in this case, three entrepreneurs working in a natural food store in the East Village of New York City in 1972. They spotted that shoppers were looking for more natural products and set up a business selling natural juices and iced teas.
As with most founders, there was a distinct absence of market research, positioning or any long-term marketing strategy. Snapple grew organically via a network of corner stores. The key lesson Snapple teaches us is to let founders be founders and not be too quick to apply the artificial laws of marketing to a brand that is still led by them.
The next era for Snapple began in 1987 with the arrival of a professional marketer in Carl Gilman. He avoided making any gut decisions, instead conducting research. He then grew the brand slowly, but deliberately. Thanks to the business-school case studies written about Gilman and his decisions, he has now taught a generation of MBAs how to manage a brand: start with research, define a clear positioning, and break the rules by being true to your brand.
In 1994 the brand was acquired by the Quaker Oats company for $1.7bn. It was a huge price tag, but Quaker had already had amazing success with Gatorade and was keen to apply its proven approach to another beverage brand. However, Snapple sales tanked, and it sold the apparently ruined brand three years later for $300m less than its purchase price. The key lesson for marketers: a strategy that works for one brand will never work for another.
In 1997 a small beverage group called Triarc began to rebuild Snapple’s brand equity, and eventually its sales, by going back to its heritage. By 2000, sales were back to pre-Quaker levels and the brand was bought by Cadbury Schweppes for $1.4bn. Snapple illustrates that great brands can never be killed off by bad brand management.
Snapple now finds itself once again under new ownership. It has played every role from entrepreneurial start-up to billion-dollar acquisition and almost every position in between. The one constant has been brand equity. Those who have profited from Snapple have understood its indelible difference. Those who have floundered have ignored its distinction to their cost. Time will tell what Snapple’s next lesson in branding will be.
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2 comments
Ronnie Soud
May 9, 2008 at 9:48 am
Hey, great post. One thing about Snapple, it seems that their product is still very unique within their market, and is of very high quality. Its is nice to see that quality standards have remained high through 2 acquisitions.
Johnny Walker
May 10, 2008 at 1:41 pm
I think if you check out the latest offers from Snapple you can see the disconnected direction being lead by the new owners. The same folks at Cadbury are still in control of the brand under the Dr Pepper Snapple Group name.
All of the people connected with the original Snapple have all but gone with the layoffs and closing of the New York office at the end of 2007.
Have you ever seen the commercial for Old El Paso salsa where the cowboy looks on the back of the salsa labels and says “where’s this salsa from? NEW YORK CITY?”….
Well when you look at the New York heritage of Snapple, you can now look at the label and say “Where’s that Snapple from, PLANO TEXAS?”
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