Thursday, August 18, 2016

Reader flashback: Snappled

     One more visit to the trove of spiked pieces that ended up in the Reader in the late 1990s. This was an assignment from Esquire, which asked me to look at how Quaker Oats killed Snapple. In between the time they asked me to write it, and when I turned it in, most of the magazine staff was canned. When I showed up with the article, they just sort of looked at me strangely. But the kill fee was considerable, so I wasn't too broken up, and the Reader was happy to step in and print it. The story won the Peter Lisagor award for business writing. It originally ran May 29, 1997.

     In the basement of Quaker Tower, a mundane office building on Clark Street at the Chicago River, sits a kettle of hot oatmeal. The other Quaker items in the employee cafeteria--the Gatorade and the granola bars and, until recently, the Snapple—cost the employees money.
     But the oatmeal is free. Just grab a ladle and load up as much as you can. Oatmeal is one of the cheapest foodstuffs around. Remember the slogan "Just pennies a serving"? It's even cheaper to make, and a huge profit maker to sell. Hot oatmeal built the company into what it is today.
     Selling it to the employees, well, just somehow wouldn't seem right.
     If the free oatmeal is a nod to the company's distant past, it is just that—a nod. Oatmeal is kind of boring, and not the sort of product that fires up the blood in corporate veins nowadays. Quaker is not about oatmeal anymore. Like most companies today, it is not even about profits, in and of themselves. It's about growth, and stock, and stock prices, and keeping shareholders happy.
     A common enough philosophy lately, but one that led Quaker Oats into one of the great business disasters of the 20th century: the purchase of the Snapple Beverage Company for $1.7 billion in November 1994. When Quaker finally dumped the company this past March, for $300 million, it lost a cool $1.4 billion on the transaction, not to mention the hundreds of millions frittered away on ill-conceived advertising, distribution restructuring, and fat severance contracts gagging executives who know the embarrassing details of the fiasco.
     The mind gropes in vain for a similar calamity in Chicago corporate history. The collapse of Continental Bank, maybe, but that didn't sink with the banners flying and the orchestra at full crescendo, the way Snapple did.
     It's over now. The dust from the explosion is still hanging in the air, and as it settles a question takes shape:

     What happened?

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  1. LOVE it. We pass by that (old) Quaker Oats building regularly on our boat tours, never knew this story. Appreciate not only hearing about what Gatorade was before it was "Gatorade," or Quaker Oats before it was "Quaker Oats," but the Folly of the Giants. Huge Corporations AND their big name advertising agencies foundering clueless with something uniquely brilliant. Object lesson/Cautionary tale of the first water. Encore!

  2. Interesting and no surprise on blowhard Rush L. or corporate arrogance.

  3. Interesting, and apt, commentary on how many businesses could really care less about their product and the humans involved. The ultimate goal for investors is money and, for the brokers, the numbers of transactions. Many don't even know or care whether it's good or bad, or even safe, for the consumers.

  4. Goes to show you that making a lot of money doesn't mean you're smart.


  5. My husband really liked this because he really likes oatmeal.


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