In 1992, then upstart upstart iced-tea company, Snapple was in big trouble. Pundits were predicting it’s imminent demise.
Both Coca-Cola and Pepsi-Cola had announced their entry into the fast growing iced tea market.Coke had teamed up with Lipton and Pepsi with Nestea to market their own iced tea products.
Instead of backing down, Snapple faced the new competitors head on.
This is the story of how they won.
Snapple’s first task was to raise a financial war-chest.
Which they quickly did – raising $45 million from Thomas H. Lee partners of Boston.
Armed with the war-chest, they were able to pay to expand their distribution to supermarkets nationwide. Additionally, they expanded internationally, by distributing Snapple in US bases worldwide.
Next, Snapple focused on marketing, launching a new line of advertisements in May 1992, which featured its trademark “made from the best stuff on earth”. They began a long-lived series of live radio commercials featuring controversial disk jockeys Howard Stern and Rush Limbaugh.
At the end of the summer of 1992, Snapple conducted a five-week search for a new advertising agency that could better convey its corporate identity in preparation for a wider national push. Later that year, Snapple also signed tennis player Jennifer Capriati to endorse its products.
By the fall of 1992, these moves had started to show fruit, as Snapple pulled ahead of Nestea to become the leader in the ready-to-drink iced tea market.
Next, Snapple announced it’s IPO in December 1992. On December 15, the stock was offered at $20 a share. The IPO was an immediate hit, as the company’s stock price was driven to $33.
Within six months, Snapple stock had been split twice, as revenues continued to grow. Snapple ended the year in a stronger position than it was before Coke or Pepsi had entered the market.
Fast growth in the face of intense competition are the results of a business that is increasing repeat business. Each repeat customer not only buys for her self, she also tends to spread the word and bring in new customers.
Grow your own repeat business with RewardCamp.