Quaker oats gatorade snapple essay

Background

Quaker Rolled oats acquired the Gatorade brand in 1983 but the sports drink actually was developed in 1965 for the University of Florida Gators. At the time of the acquisition Gatorade sales had been about hundred buck million. However the most notoriously known sports activities drink could grow in sales to over $1. 1 billion dollars worldwide simply by 1994. Gatorade wasn’t the sole division produced by Quaker Rolled oats. The company as well had sections in breakfast foods, pet foods, glowing grains, comfort foods and international product sales in Canada, The european countries and Latina America.

Yet , Gatorade would still be the largest creating division pertaining to the Quaker company. Inspite of holding seventy seven percent from the $1. 2 billion in U. H. sports drink category supervision still moved to increase business in overseas countries. You can actually profit margins had taken a hit with the expense of underwriting Gatorade’s entry in to new region markets. Quaker looking for new ventures to excercise their location in producing/marketing beverage substitutions for sodas found buying the Snapple brand to be their answer.

Exterior Environmental Research

In 1994, Quaker Rolled oats had a stable footing inside the food and beverage organization ranking twelfth largest with worldwide revenue of $6 billion and operating fifty four manufacturing plants in 16 claims and 13 foreign countries along with sales office buildings in twenty one states and 18 international countries. Almost one third from the corporate income came from revenue outside of the United States.

With the purchase of Snapple Quaker Oats had been entering the health drink market that had much competition. Multiple companies had similar drinks and a few even experienced tea exactly like Snapple. They will have to get some type of competitive advantage to stay to help them continue to grow being a brand.

Internal Environmental Analysis

Quaker’s top administration was dedicated to achieving true earnings growth of 7 percent and rendering total shareholder returns that exceeded the S&P 500 inventory index as time passes. Management likewise believed it may enhance shareholder value by simply prudently applying leverage.

Together with the purchase of Snapple came the revelation that neither firm manufactured goods the same. Snapple had a loose manufacturing procedure that could take weeks to output when Gatorade could be manufactured in days.

SWOT Analysis

Quaker Rolled oats had many strengths that made these people already a formidable company producing-marketing beverage substitutes for soft drinks. They commanded eighty-five percent of the sports drink segment in the usa, generating worldwide sales of almost $1. two billion. We were holding the twelfth largest foodstuff and beverage company in the usa, with worldwide sales of $6 billion dollars. They had manufacturers in of sixteen states and 13 international counties, and distribution centers and product sales offices in 21 says and 18 foreign countries. Buying Snapple’s brand name and distribution push them 3rd to Coke and Pepsi and dispelled gossips of being absorbed and increased their placement as a developer and marketing expert of alternatives for sodas.

Quakers purchase of Snapple raised the company right into a non liquor powerhouse with nearly $2 billion in sales, trailing only Pepsi and Coke. However , several hours before the Quaker- Snapple contract was declared, Snapple reported a third-quarter earnings drop of seventy four percent. While using news of the purchase of Snapple and their profits drop, Quakers stock lowered 10%. Quaker took out a $2. 4 Billion dollars loan- $1. 7 Billion dollars went to pay off Snapple investors, $100 Million helped pay off Snapple’s prior debt, $350 Million went to refinance Quakers debt, and the last $250 Million was to be used while working capital.

The threats facing the company had been predicted by simply Wallstreet analyst. They aware that Quaker had overpaid for Snapple by captal up to $1 billion. Snapple’s drop in third quarter revenue was attributed to oversized inventories and intensifying competition with Pepsi and Coke. From the information supplied there did not appear to be an excellent marketing program with the acquiring Snapple.

The purchase of Snapple brought possibilities as well. Early in 1994, Snapple was the fastest developing beverage organization and the second largest owner of single-serving juices. This would give Quaker the boost they necessary in business. The integrating of the well-established Gatorade manufacturer with Snapple would allow Quaker to realize significant synergies.

Id of Issue with the Getting Snapple

The first and foremost alarming problem comes with the purchase of the Snapple company. Paying $1 billion dollars over what the Wallstreet analyst recommended the value of the business was really worth along with a declining third quarter sales on the day of the buy immediately placed the company at a deprived. The uncertainty of the industry’s future could be seen with all the decline in stock right after the purchase of Snapple.

Progress Strategic Alternatives

Using the SWOT analysis we identified several strategic alternatives. During the time if the market was becoming saturated for Snapple they required something that would give them a competitive benefit in the market. Both they had to enhance on their graphic or delve in to new products. It would be difficult for their brand to become even more exposed mainly because many previously knew about it so something new would have to be put on the table.

One alternative could be offering a version of Snapple that was zero unhealthy calories and helped people shed pounds. Using green tea herb in this version of the drink promotes body fat lose might be a selling point to consumers. In the event people may buy a glass or two in many tastes and have the great taste the love while marketing better wellness it could be popular. One thing that can happen while using launch with this product line is customers might be not wanting to try it. Several might think the green tea extract may well affect the taste and others may think it might just be a bad deal.

Another substitute would to travel in to one more sub marketplace of consumer drinks. Snapple could have develop their own bottled chilled espresso or iced latte drinks. This at the moment would open to a marketplace that had not been overly congested as normally the one they are in. It could also work well due to the fact that Snapple was doing well in convenient stores and this could attract the people away from home while they can be getting gas. The coffee route could back flames also because it is something that Snapple is new to and people tend not to associate them with coffee. It offers some good things but will not go along with the actual have become very good at over time. Make a Recommendation on Which of the Alternatives is Best

Once weighing your pros and cons of both alternatives we would recommend for Snapple to go with the zero calorie Snapple with green tea extract. It was chosen since Snapple is known for tea and this would venture right along with that when providing a unique niche available in the market that no one else acquired. The new Snapple line can have the attention of existing clients but also reach out to individuals looking for a nice tasting beverage that also provide them with health benefits. As well as having a absolutely no calorie beverage there would be simply no expense for sugar or perhaps corn viscous syrup which would drive the net income margin up compared to a product that needs that extra ingredient in creation.

Recommend an Implementation Strategy

We came to the recommendation of a absolutely no calorie drink is very likely and functional. Because this product would essentially reduce expense and be more healthy for the drink customers. They need to look for a taste that may complement the zero calorie feature. Upper management must make decisions on what flavor as well as what need to be the final say on the merchandise. Also, they need a very good flavor team in order to actually about the tasting refreshment that has zero calories in that.

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