SBD/7/Sponsorships Advertising Marketing

CAN THE SNAPPLE DEAL WORK FOR QUAKER?

     That's the question Greg Burns poses in this week's BUSINESS
WEEK.  The answer: "It can, but not right away.  Quaker will pay
dearly for a company whose profits dropped 74% in the third
quarter. ... Shoring up Gatorade and Snapple, both top brands
with declining market shares, probably will cost big bucks and
take more time than Quaker admits."  Distribution will "make or
break the acquisition."  Quaker sells most Gatorade in
supermarkets and convenience stores, while Snapple "made it big
with cold, single-service glass bottles through vending machines,
restaurants, and independent retailers."  Quaker needs to
convince Snapple's 300-plus distributors to carry Gatorade.  It
also needs to renegotiate their "exclusive-territory agreements
to bring Snapple into supermarkets on grocery wholesaler trucks."
Two things to looks for:  Snapple overseas and Snapple in plastic
bottles (BUSINESS WEEK, 11/14 issue).  Salomon Brothers analyst
Les Pugh "notes that the Snapple merger does little to boost
Gatorade's strength outside America" (THE ECONOMIST, 11/5 issue).
Documents filed by Snapple after Quaker's $1.7B bid for it late
last week showed that Snapple "has cut its internal earnings
projections for the rest of the year, seemingly indicating a
continuation of problems that hurt Snapple's summer performance"
(Gibson/Grossman, WALL STREET JOURNAL, 11/7).
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