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?

     How could a skilled, established marketer like Quaker Oats – holder, after all, of the oldest cereal trademark in the country, with marketing successes dangling from its belt like scalps, from Gatorade to granola bars to rice cakes, make such a huge and protracted blunder? Was Quaker a victim of circumstance? Was the problem something particular to Snapple itself, or to the beverage industry?
     When solving any mystery, it’s usually good to begin at the beginning. The marriage of Quaker and Snapple was certainly one of those May-December romances that so often lead to trouble.
     Quaker, incorporated in 1877, was a child of the rural midwest, begun in Ravenna, Ohio, by a trio of stern, God-obsessed millers, Henry Parsons Crowell, Henry Seymour, and William Heston. They seized upon the image of the Quaker man and, though the Society of Friends petitioned Congress trying to stop them, made him one of the most recognized trademarks in the world. Marketing innovations were always a priority with the company. Quaker Oats was the first cereal sold in a package, as opposed to out of a barrel. As a promotion, Quaker Oats carved its logo into the white cliffs of Dover, and it took an act of Parliament to have it removed.
     Snapple, on the other hand, was a child of the city. The company’s actual birthplace, a nondescript storefront of green-painted brick at 125 First Avenue on New York’s Lower East Side, is still there and still in business.
     Now called Prana Foods, it’s a modest co-op jammed with cardboard boxes of carrots, jars of wheat germ, containers of hijiki, and organic berries in plastic bins.

To continue reading, click here.