What Quaker’s $1.7B Snapple blunder taught me about branding

A founder's off-hand reply to a simple question nearly 20 years ago continues to resonate.

In 1996, Arnold Greenberg, a co-founder of Snapple, came to speak at Columbia Business School. He told the incredible tale of how this line of beverages he and his partners created at a health food store in New York City turned into the hottest beverage brand in the land. A confluence of changing consumer tastes, a smart and unique line of products, and a quirky, memorable advertising campaign all came together to turn a local NYC brand into a beverage giant. In 1994, Quaker Oats acquired Snapple for an astounding $1.7 billion. Arnold Greenberg retired from Snapple at the time of the acquisition.

The Snapple acquisition has since gone down in business history as a disaster. Quaker, by all assessments, grossly overpaid for the company. The quirky voice of Snapple was suddenly lost in Quaker's new marketing efforts. And Quaker had a very hard time translating Snapple into a mainstream, supermarket brand. About two years after the deal, Quaker sold Snapple for a mere $300 million, a loss of over 80%!

"How do you feel..."
At the time I saw Arnold speak, Snapple was still owned by Quaker - and it was already apparent that the acquisition was on the road to failure. When the floor was opened to questions, one of the many MBAs-in-waiting asked the type of earnest, idealistic question that was on everyone's mind: "How do you feel when you see what Quaker has done to this special brand that you and your partners built? When you look at how they are bringing Snapple to market, do you feel a sense of loss of control and do you wish they could do a better job of maintaining what you created?"

Everyone in the room had seen this exciting, upstart brand watered down into that of a more conventional product. We'd all read about the challenges that Quaker Oats was having in taking advantage of the supposed synergies with their Gatorade business. Surely the creator of a brand as beloved as Snapple would have some emotional connection to his baby. Surely there would be at least a hint of regret.

Arnold's reply: "Son, I sold my company for 1 point 7 billion dollars. They can do with it whatever they want."

Branding acquisitions - B2B vs. B2C
Now, some 20 years later and having worked with numerous acquiring and acquired companies, I think often of Arnold's response. I tend to work with B2B organizations where branding decisions following an acquisition can get complex, sparking issues of brand relevance or internal structural challenges or potential for channel conflict. Yet, I am always struck by how big a role emotion plays when it comes to branding acquisitions in the B2B space, particularly in technology.

For a packaged goods consumer offering like Snapple, "brand" is an integral component of the product itself - and, as such, is highly transferable. Quaker Oats bought the Snapple brand and its products. A founder like Arnold Greenberg could just hand over the keys and walk away. In the B2B world, “brand” certainly comes through in the product or service – but success and the overall experience is highly dependent upon a company’s strengths behind the scenes: people/technologies/processes/etc.

For B2B acquisitions, leadership teams and technologies and relationships are elements that all fuse together to become the brand. When you think about small companies or technology start-ups, these elements are further infused with the blood and sweat of the leadership team. In short, there can be a huge internal emotional connection to the brand.

Generally speaking, there is a bias toward absorbing acquired B2B brands into the parent. Conversely, B2C brands are acquired to extend product lines and expand shelf space – and thus tend to be maintained. When brands are poised for elimination, emotion runs high.

The emotion paradox
It might seem paradoxical that B2B brands are wrapped up in more emotion than consumer brands – we think of consumer buying decisions as impulsive, emotional, and B2B buying decisions as analytical, considered. But when it comes to acquisitions, emotions play a big role. B2B leaders - founders especially - often bring the company name to the negotiating table, securing a promise from their new parent that their brand will be maintained. These hasty promises have their roots more in emotion than they do in sound strategy. From my years in B2B branding, I know first-hand that B2B companies most often thrive with master brands. When sub-brands brought on board through acquisitions are maintained, it leads to marketplace confusion and encourages internal silos.

Many things went wrong with the Snapple acquisition 20 years ago; it is far from a case study for success. Yet today, as I work with companies embroiled in internal naming and branding debates, Arnold Greenberg’s candor serves as a healthy reminder of the role that pragmatism and reason need to play in any of these discussions.