The Quaker Oats Debacle

Quaker Oats acquired Snapple in 1994 for $1.7 Billion. On paper the deal was thumbs up. But beneath the surface, the deal demonstrated how critically important it is to understand a brand's loyal customers. QO believed Snapple could be distributed through the large retail channels that drove other QO's products such as Gatorade. However, what QO never saw coming was that Snapple's popularity grew through small stores, independent distributors, and a direct, hard hitting marketing style directed specifically at its loyal customers. This core oversight drove sales down almost from the start. The brand lost its cache as loyal customers ran for the hills.

Bottom line: know your valued customers, listen to them, serve their needs if you expect to maintain their loyalty. In 1997 QO sold Snapple for $300 Million taking a $1.4 Billion loss in 2.5 years.

The moral of the story: Listen to Your Customers.

We find the breaks. Fix them. Then move on.