From their 1994 peak, sales declined every year, plunging to $ 440 million in 1997. I would explain it differently: First, as every brand manager would surely agree, good brand management is explained more by process than by strategy. Quaker Oats was trademarked in 1877, and the next two decades saw three competing oat-milling companies come together to form a single conglomerate. That was about the same time they introduced two more brilliant marketing techniques, too the trial-size sample, and the prize in the box. By gaining access to each other's customer bases, both companies hoped to grow by cross-selling their product and service offerings. Major transactions seem to hit the . The company changed its name to Quaker Foods and Beverages after being acquired by PepsiCo, Inc., in 2001. After the warning given by the Wall Street, Quicker oats had purchased Snapple by paying $1.7 billion. The failure of AOL-Time Warner merger was highly attributed to the variation in the organizations culture. Within a few short months, Elements had grown to 15% of Snapples total sales. The Sad State of Corporate Innovation See how corporates are failing when it comes to innovation. It took Novell Inc. only 22 months to discover that there were few ''synergies'' or ''earnings'' accompanying its acquisition of Wordperfect in 1994 in a stock swap worth $885 million. For good reason. The merger of the legendary Walt Disney and "everything-we-create-kids-adore" Pixar was a match made in cartoon heaven. The group dissolved after Pearl Harbor, Stuart enlisted in the Army, and served in Europe. The military needed a cheap way to feed a lot of people, and soldiers across the country were introduced to the idea they could eat their horses' oats. If Snapple was about play, Gatorade was about sportabout playing to win. Other titles included (via AtariAge) names like Eggomania, Picnic, Piece o' Cake, and Name This Game, and it just goes to show that not every business venture is a good one. The. But competition in the new age category increased, even as sales slowed. * October 1994: General Electric Co. sells Kidder, Peabody & Co. to rival brokerage house PaineWebber Group for stock valued at $670 million. But consumers simply didnt want them. There was no such mismatch between Gatorade and Quaker. In 1968, the New York Central and Pennsylvania railroads merged to form Penn Central, which became the sixth-largest corporation in America. Released in 1982, it was (via Old School Gamer), a super bizarre answer to a question literally no one had ever asked: "How can I play hide-and-seek without getting up off the couch?" Search the for Website expand_more. Or how about Life Cereal? After over-paying $100 billion (according to Wall Street warnings) Quaker Oats sold Snapple to a holding company just 27 months after purchase for a mere $300 million - a loss of $1.6 million for . That has led to widening speculation that Smithburgs days as Quakers chief executive are numbered. 7 billion all stock bid. According to their design firm's Michael Connors (via AdWeek), "We took about five pounds off him.". Ben H. Bagdikian. Just the opposite. A company like Quaker would never take such a casual approach to product development, but it was standard practice at Triarcand true to Snapples back-of-the-store, back-of-the-envelope roots. Gatorade is in the sports drink segment, while Snapple is in the alternative beverage space. According to the US Army Corps of Engineers, they manufactured bombs, artillery, and ammunition ultimately sent to the Pacific theater. D) none of these above are correct. In a definitive agreement . EN English Deutsch Franais Espaol Portugus Italiano Romn Nederlands Latina Dansk Svenska Norsk Magyar Bahasa Indonesia Trke Suomi Latvian Lithuanian esk Unknown The jobs dull and the car is more safe than sporty, but at least you can get a little wild at lunch with a Mango Madness. We didnt have a lot else to tell them. Quaker Oats' management thought it could leverage its relationships with supermarkets and large retailers; however, about half of Snapple's sales came from smaller channels, such as convenience stores, gas stations, and related independent distributors. AT&T finally called it quits last December and spun off the NCR computer operations for a mere $3.4 billion. However, time and again, executives face major stumbling blocks after the deal is consummated. If a merger or acquisition fails, it can be catastrophic, resulting in mass layoffs, a negative impact on a brand's reputation, a decrease in brand loyalty, lost revenue, increased costs, and sometimes the permanent closure of a business. It went from local to national success and was poised to go international when the founders sold out to Quaker. And in 2012, Larry himself got a makeover. Take Quaker Oats Apple and Cranberries Instant Oatmeal. Beacon Press, 2014. He noted that Quakers loss on the purchase means Quaker lost $1.6 million for each day it owned Snapple, which makes exotic juices and iced teas. So, there you have it. The CEO of Quaker Oats William Smithsburg had his reputation disturbed and he had to fire a good number of employees as he was running out of resources due to decline in sales. While these challenges befuddled Quaker Oats, gargantuan rivals Coca-Cola (KO) and PepsiCo (PEP) launched a barrage of new competing products that ate away at Snapple's positioning in the beverage market. But at Triarc, the talk was of play and fun, parties and parades. In March 1997, Snapple had a new ownerand a very uncertain future. new product development. Quaker Oats decision to sell its Snapple Beverages unit for an enormous $1.4-billion loss is one of many acquisitions that went bad for buyers. But theyve hit a snag, A $150,000 executive protection dog? He got a color treatment in 1957, and if the iconic drawing looks a little familiar, there's a good reason for that. Triarc said it expects to complete the purchase in the second quarter of this year, pending a federal antitrust review. ", The Channel Company-CRN. "Pennsylvania Railroad and New York Central Railroad Records, 1853-1965. Absolutely, and it's no wonder their foray into gaming only lasted for such a short time. Patrick specialty dyes and chemicals businesses. Additionally, AOL executives realized that their know-how in the Internet sector did not translate to capabilities in running a media conglomerate with 90,000 employees. You can just see him serving up a piping hot bowl of oatmeal to his kids, and he's about as far from Tony the Tiger as you can get. On March 28, 1997 Quacker decided to take a $1. Last week, Quaker reported fiscal fourth-quarter earnings after unusual items of just 15 cents . The Quaker Oats has acquired in 2 different US states. In 2002, the company reported an astonishing loss of $99 billion, the largest annual net loss ever reported, attributable to the goodwill write-off of AOL. Im hardly courting controversy by asserting that a brand might fit better in one companys portfolio than in anothers. Why did the brand lose $1.4 billion in value under Quakers stewardship in just four years? Download the free 31-page State of Innovation report. Its market capitalization was $1.7024 billion. Wall Street was awash in money. Connect with the definitive source for global and local news. And finally, the politicized and turf-protecting culture of Time Warner made realizing anticipated synergies that much more difficult. On the day the merger was announced formally, both the companies registered a fall in share prices. Advertising The partnership didn't last, and the LA Times called it "one of the worst flops in corporate-merger history." It has happened to corporate giants and high-technology start-ups alike, including I.B.M., Xerox, General Motors, Sony, General Electric and Novell. POML5) A principal reason for the failed merger effort between Quaker Oats and Snapple was. Quaker is serving up wholesome goodness in delicious ways from Old Fashioned Oats, Instant Oats, Grits, Granola Bars, etc. ", Harvard Business Review. The market response to the successive changes in tone at Snapple highlights a process that my Harvard Business School colleague Susan Fournier calls the co-construction of meaning. Consumers did just as much as Arnie Greenberg or the Triarc team to form Snapples brand identity. But the swiftness with which Quakers Snapple investment eroded will make this deal a special case study of mismanagement for a generation of business students. The plan flopped for several reasons. They've gone the way of the dodo, but you can still find Dinosaur Eggs. Why not create a one-stop financial supermarket? The QO Ordnance Company was a subsidiary of Quaker Oats, and they oversaw ammunition plants in Nebraska. But a merger of two companies with related businesses, which has become so fashionable in the 1990's, is no guarantee of success, said Ken Smith, a post-merger consultant with Mercer Management Consulting. At the time, Snapple was still run by the three founders of the company. But replicating Gatorades success was more than an objectiveit was a matter of corporate survival. TimesMachine is an exclusive benefit for home delivery and digital subscribers. It's comfort food to the max, and that might have to do with the smiling, friendly-looking man on the logo. Sony has pumped as much as $8 billion into its Hollywood adventure since 1989, only to suffer such blockbuster disasters as ''Last Action Hero,'' the gold-plated ouster of a string of highly paid executives and a $3.2 billion write-off in 1994. It's the breakfast food of the health-conscious today, and that's in large part due to some official FDA claims Quaker Oats made possible for everyone. consulting firms. Quaker Oats offered $14 in cash for each share of Snapple stock; the merger agreement contemplated the same payment per share. Log in Join. Take the case of the Quaker Oats-Snapple merger. There's a long-standing belief that he's the founder of Pennsylvania, William Penn. Triarc officials estimate that the Snapple brand was worth $900 million to $1 billion of that total, but no separate accounting was officially made. Cheerful, zaftig, and blessed with a Noo Yawk accent strong enough to peel paint, Wendy blossomed into a minor celebrity known to her fans as the Snapple Lady. In effect, Triarc let its distributors do its market research. I dont think that there was anyone at Quaker who had loved that brand, and it takes passion to get behind a brand and turn it around. Limited economies of scope are one reason. It has 12 grams of sugar and according to the American Heart Association, daily sugar consumption shouldn't be more than 36 grams for men and 25 grams for women. In this case, Quaker Oats was able to recoup $250 million in capital gains taxes it paid on prior deals, thanks to losses from the Snapple acquisition. The convenience factor got people interested, and Schumacher went on to figure out a way to make them cook faster. QOC produced Gatorade and sought to expand their beverage line with the merger/acquisition of Snapple Beverage Company (SBC) (History, 2011). It was an incredible thing, because the entire industry was truly built on their founders' ability to convince the public they should be eating livestock feed. The reasoning was twofold. The debacle cost both the chairman and president of Quaker their jobs and hastened the end of Quakers independent existence (its now a unit of PepsiCo). 1. We can write down positioning statements, but the Snapple trademark spills over the boundaries we put on it. The brands vitality responded better to play than to planning. But the spirit of Snapple called for another way of speaking and thinking. The Quaker Oats' largest acquisition to date was in 1994, when it acquired Snapple Beverage for $1.7B. After years of in-fighting, Quaker Oats was finally formed in 1901. According to Tim Clark who inspired his father to write the "Three Brothers" commercial the idea of a "slice-of-life commercial was nothing short of career suicide at the time (via Forbes). In just 27 months, Quaker Oats sold Snapple to a holding company for a mere $300 million, or a loss of $1.6 million for each day that the company owned Snapple. A Pyrrhic victory is a success that comes at the expense of great losses or costs, such as winning a hostile takeover bid or an expensive lawsuit. It's easy to do! Investopedia requires writers to use primary sources to support their work. Had the Snapple acquisition been a mistake? They had an uphill battle ahead of them, and according to Bustle, they started with their Dinosaur Eggs oatmeal. CHICAGO (AP) _ Quaker Oats Co., which paid $1.7 billion to buy the Snapple beverage business in 1994 and has been disappointed with its performance since, today reached agreement to sell the New Age drink line for $300 million to Triarc Cos. Inc. Quaker said the sale would reduce pre-tax profits by $1.4 billion, resulting in a loss. Sources: Bloomberg News; Times and wire reports. Complaint at 34. DEAL VALUATION Quaker paid $1.7 billion to acquire Snapple in December 2004. When Quaker bought Snapple in late 1994, many on Wall Street howled that the price was too high, perhaps $1 billion above what Snapple was worth. In the one-player game, you played against the computer. We started out loving the brand the first day, says Gilbert. We had no game plan to assure Snapples recovery, Peltz says. Along with ditching the much-despised 32- and 64-ounce bottles, the marketing team sent the distributors a clear message that they were part of the family and not an inefficiency that ought to be eliminated. A consultant would probably have cautioned against the launch, arguing that Elements slick New Age preciousness would sit uncomfortably under the Snapple logo. 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