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Triarc Companies, Inc.

Triarc Companies, Inc.

280 Park Avenue
New York, New York 10017
U.S.A.
Telephone: (212) 451-3000
Fax: (212) 230-3023
Web site: http://www.triarc.com

Public Company
Incorporated:
1929 as Deisel-Wemmer-Gilbert Corp.
Employees: 1,800
Sales: $853.97 million (1999)
Stock Exchanges: New York
Ticker Symbol: TRY
NAIC: 551112 Offices of Other Holding Companies; 312111 Soft Drink Manufacturing; 311942 Spice and Extract Manufacturing; 53311 Lessors of Nonfinancial Intangible Assets (Except Copyrighted Works); 42272 Petroleum and Petroleum Products Wholesalers (Except Bulk Stations and Terminals)

Triarc Companies, Inc. operates as a beverage producer, a producer of soft drink concentrates, and as a franchiser of restaurants, marketing well-known brand names that include Snapple, Mistic, Stewarts, Royal Crown Cola, and Arbys. Triarc was created in 1993 as the result of a court-ordered reorganization of the DWG Corporation, whose century-long existence established some of the businesses Triarcs management inherited. The company is led by Chairman and CEO Nelson Peltz, who spearheaded the transformation of the company into a branded consumer products concern.

19th-century Birth of a Cigar Enterprise

Triarcs predecessor, DWG, had two very different lives. The company was first established in 1890 as a small Ohio-based partnership. The founders of the Deisel-Wemmer Company (their full names have disappeared into obscurity) dealt in the importation and manufacturing of cigars. Highly popular during the early years of the 20th century, cigars were a common male accessory that indicated discretion, affluence, and manliness. The cigar trade was a very profitable business, populated with hundreds of specialty manufacturers.

Deisel-Wemmer was subsequently acquired by an investment group on January 23, 1929, and changed its name to Deisel-Wemmer-Gilbert. The new firm continued to operate as a formidable cigar manufacturer, although not on the same scale as large tobacco companies that maintained stables of several mass-produced brands. Unable to compete with the marketing muscle of these large tobacco combines, the Deisel-Wemmer-Gilbert company was forced to acquire other small competitors simply to maintain market share. It purchased the brand and manufacturing operations of Odin cigars in 1930 and the Bernard Schwartz Cigar Corporation in 1939. On May 15, 1946, the company reduced its cumbersome name to a simple set of initials, and became the DWG Cigar Corporation. The series of acquisitions resumed in 1948, when DWG took over the Nathan Elson Company. In 1955 DWG acquired A. Sensenbrenner & Sons, and a year later bought out Chicago Motor Club Cigar and Reading, Pennsylvania-based Yocum Brothers.

By this time, however, the cigar market had weakened substantially. Years of doctors advisories about the dangers of smoking, the rise of cancer deaths among smokers, and growing public intolerance with the socially brash habit caused many men to quit. But perhaps most responsible for the demise of cigar smoking was the cigarette industry. Convinced that they should abandon cigars, many men simply switched to cigarettes, which were less obtrusive and carried a less severe health stigma. In addition, cigarette advertising was feverish during the 1950s and led smokers to believe that they gained status by using brands such as Lucky Strike, Chesterfield, and Camel.

The trend toward cigarettes spelled the end for DWGs cigar operations. Quite gradually, the company began to consider other lines of business where its wholesale and distribution skills could be effectively employed. In the meantime, DWG reorganized its stagnant but still profitable tobacco operations. The company purchased the M. Trelles Company in New Orleans in 1961, and in 1963 formed a new subsidiary in Columbia to oversee the companys South American buying and processing operations. By this time, several other cigar operations had been wound up, and the product line was slimmed down. This process helped to derive new efficiencies from DWGs cigar business, but also compacted the widely varied operations into a single unit that could be disposed of quickly and easily.

Victor Posner-Led Diversification Begins in the 1960s

Ready to plunge into new markets, DWG began purchasing small stakes in other businesses, including consumer products. After an attempted takeover of the Allegheny Pepsi bottling company failed in 1965, the New York Stock Exchange delisted DWG from the big board. This removed the final obstacle that prevented DWG from a wholesale divestment of its cigar operations. The dying business was sold in one chunk, while some smaller assets were simply written off. The 1966 sell-off provided DWG with millions of dollars in new acquisition capital. In November 1966coincident with the companys adoption of a new name, DWG Corporationthe hunt for new businesses turned up an unexpected candidate. DWG purchased a 12 percent share of the National Propane Corporation. Far removed from the cigar business, National Propane marked a clean break from DWGs earlier business ventures.

But it was also at this time that a new force behind DWG came into the picture. Run for decades as a quiet company with a typical consensus-management leadership, DWG became dominated by an institutional shareholder called Security Management Company, headed by Victor Posner. Posner began in business at the age of 13, amassing a small pool of capital by delivering groceries for his father. While still a teenager in the 1930s, Posner began buying run-down houses in his native Baltimore. Reportedly, he realized huge gains on his investments by reselling the houses to economically depressed urban blacks. Aware that people could more easily afford the homes if he retained ownership of the land, Posners Security Management Company charged buyers a small amount of rent for the land the houses sat upon. Failure to pay land rent could result in foreclosure. This practice earned Posner the unsavory reputation of slumlord. It was this business, however, that formed the basis of Posners real estate operation and made him a millionaire at an early age.

In 1956, having grown weary of real estate transactions, Posner retired to Sunset Island near Miami. He spent the next ten years without engaging in commercial activity. Posner found a new hobby in 1966, when he began dabbling more actively in the stock market. Familiar with the practice of trading blocks of shares for small profits, Posner now decided to get more deeply involved in the companies he targeted. One of these companies was DWG. Having witnessed DWGs bold but slow transformation from a sleepy cigar company into a corporate raider, Posner saw huge numbers of investors abandon DWG for its failure to maintain a big board listing. From his experience in real estate, he looked upon DWG differently. Rather than seeing a shrinking company in the middle of a huge transition, he saw an undervalued firm with substantial assets.

But for Victor Posner, DWG was more than a great investment. He decided to use the company as an investment vehicle, engineering additional takeovers of other firms through DWG. In January 1967, Posner used DWG to purchase a controlling share of Wilson Brothers, then a failing shirtmaking concern. Later that year, DWG collected an additional 77 percent of the shares of National Propane. In 1969 DWG acquired 40 percent of the Southeastern Public Service Company, a medium-size utility maintenance and storage company, and the following year increased that holding to more than 50 percent.

DWG became the controlling agent for only half of Posners empire. He used another company, the vulcanized fiber manufacturer NVF, to build up a controlling interest in Pennsylvania-based Sharon Steel Corp., one of the countrys largest specialty steel manufacturers.

As Posner grew more active, company presidents across the United States feared that their daily mail would bring a dreaded schedule 13D. This Securities and Exchange Commission (SEC) filing announced that someone had acquired more than five percent of their companys shares. Posner had an unusual talent for inspiring wrath in his dealings. He was often attacked, and frequently sued, for installing himself as chairman and chief executive of companies he had taken over. With the titles came paychecks, and Posner drew reasonable compensation from each of his companies. Collectively, however, Posner was one of the highest paid executives in the country, surpassing the heads of IT&T, Exxon, General Motors, and Ford Motor Company. Posner also employed his son and two brothers in important positions in his growing corporate empire. In addition, Posners Security Management Company, the ultimate parent of DWG and NVF, still collected land rent from the homes he sold in Baltimore.

In 1971 the SEC sued Posner for improperly compelling the pension fund of Sharon Steel to invest in Posner properties. Some shareholders lambasted Posner at shareholder meetings and threatened to take him to court. These actions were only occasionally successful. Posners defense was to simply point to the track record of companies he had taken over. Both DWG and Wilson had been dead on arrival, yet Posner resuscitated them. Other successful companies such as National Propane, NVF, and Sharon Steel were only marginally profitable before Posner became involved with them. Nonetheless, Posner settled his SEC suit by agreeing not to sit on his companies pension boards. But this did little to improve his image in the business community. Posners usual recipe for turning companies around mirrored his strategy with Sharon Steel; after gaining control of the steelmaker in 1969, he eliminated a quarter of the salaried jobs and held whomever remained to ambitious productivity goals. Costs were reduced, and output increased.

Company Perspectives:

The key elements of our business strategy include: focusing our resources on our consumer products businesses beverage and restaurant franchising; building strong operating management teams for each of the businesses; and providing strategic leadership and financial resources to enable the management teams to develop and implement specific, growth-oriented business plans.

By 1976, Posners Security Management Company controlled 67 percent of DWGs shares. In addition, the parent company held a 44 percent share of NVF and another quasi-investment vehicle, the Pennsylvania Engineering Corporation, a steelmaking equipment manufacturer which Posner acquired in 1966. In turn, DWG held 51 percent of Southeast Public Service Company, 42 percent of Wilson Brothers and 100 percent of National Propane. Posners corporate conglomerate held few synergiesparticularly within DWG. Through his other companies, Posner bought small shares of Burnup & Simms, a small utility service company; UV Industries, a smelting and mining company; and Foremost-McKesson, a large food and drug company. With these similarly undervalued companies in play, and the 13D form on each presidents desk, these companies scrambled to keep Posner out of their boardrooms. Their defense strategies varied. Foremost-McKesson sought out a rival bidder and UV Industries broke up. Even in cases where the companies bought up their own shares, Posner usually emerged with a handsome profit. If he met no resistance, he ended up with yet another undervalued company to turn around.

DWG traded over the counter since it was delisted by the New York Stock Exchange. Its share value fluctuated, nearly in the penny stock range, between one and four dollars. But for all its accessibility came volatility. The company could double its value in one year or plunge by half. Over the long run, however, businesses such as steel manufacturing and casting and DWGs storage operations were capable of operating with little additional investment beyond basic maintenance. As long as they continued operating, the combination of taxation, inadequate maintenance, and inflation had the effect of liquidating these marginally performing assets. Posner was allegedly draining them of resources to take advantage of high depreciation on his undervalued properties.

Meanwhile, Posner continued to use DWG to acquire other companies. In 1982 the company took over the Graniteville Company, a textile manufacturer based in South Carolina. In 1984 DWG built up a 25 percent share of Axia Incorporated, and completed a deal in which its Southeastern Public Service subsidiary acquired Royal Crown Cola, the Arbys fast food restaurant chain, a Texas grapefruit grove, and numerous other small companies. Later that year, DWG added the Evans Products fiber group, and in 1985 took over the Fischbach Corp., an electrical contracting business.

This flurry of activity proved to be the undoing of Victor Posner. The acquisition spree and subsequent earnings failures placed DWG deeply in debt. On more than one occasion Posner was forced to seek a financial bailout from one of his backers, Carl H. Lindner. Their friendly relationship came to an abrupt end in 1986 when Posner received his own 13D schedule, indicating that Lindners American Financial Corporation had acquired warrants for more than 30 percent of DWGs shares. Posner had become a victim in the takeover game. DWG was rich in assets, had steady cash flow, and was undervalued. It was exactly the kind of company that Posner himself would target. But rather than exercise his warrants on the beleaguered DWG, Lindner presented Posner with a contract that capped the chairmans salary at $3 milliondown from $8.4 million the previous year.

Meanwhile, Posner worked to shore up DWGs balance sheet by disposing of the Foxcroft and Enro shirt groups and the citrus operation, while a $200 million deal for Royal Crown fell through. He also had the benefit of talented outside managers, including Leonard Roberts, whom he hired to run Royal Crown after his acquisition of that company caused Arbys management to resign en masse. He had also placed Harold Kingsmore, a veteran of the Cannon and Avondale textile companies, in charge of Graniteville.

While the threat from Lindner subsided, another far more complex battle emerged. A financier that Posner had retained to pull Sharon Steel out of bankruptcy referred a possible sale of Posners Fischbach electrical contracting unit to his lawyer, Andrew Heine. When it appeared the deal would go through, Heine suddenly backed out and launched a bid for all of DWG. Once again, Posner was on the defensive. He immediately converted his DWG options into voting shares, but was ordered not to vote them by an Ohio judge.

Heine, through his Granada Investments Company, sued Posner for failing to take his $22 per share bid for DWG seriously. Posner countersued, maintaining that the bid was without merit. In 1991 Posner lost to Heine, whose company was awarded $5.5 million for its expenses. In addition, Judge Thomas D. Lambros, noting court investigations of Posners compensation and charges of illegal stock trading to acquire Fischbach, appointed three directors to DWGs board, with responsibility for the companys audit, compensation, and intercorporate transactions committees.

Key Dates:

1890:
Earliest predecessor, Deisel-Wemmer Co., begins manufacturing and importing cigars.
1929:
Deisel-Wemmer is acquired by investment group and incorporated as Deisel-Wemmer-Gilbert Corp.
1946:
Companys name is changed to DWG Cigar Corporation.
1966:
Victor Posner begins to exert his influence on the development of DWG Corporation.
1984:
Posner-controlled DWG acquires Royal Crown Cola and Arbys.
1992:
Posner resigns as chairman of DWG; his shares are acquired by Trian Group, led by Nelson Peltz.
1993:
DWGs name is changed to Triarc Companies, Inc.
1995:
Mistic Brands, Inc. is acquired.
1997:
Two beverage brands, Snapple and Stewarts, are acquired.
1999:
Triarc completes its transformation into a consumer products company by selling National Propane.

By the end of 1991, the three directors appointed by Lambros had presented Posner with a critical report on his dealings with DWG. Posner, with eight solid votes on a board of 13, adjourned meetings to discuss the report. In response, Judge Lambros converted half of Posners share in DWG into nonvoting preferred shares and compelled Posner to sell the remaining common shares. Posner, battered by years of damaging litigation, resigned his chairmanship of DWG in 1992 and walked off with $77 million from his share sales. In return, shareholders agreed to drop their longstanding lawsuits charging the 73-year-old raider with plundering DWG. His shares were purchased by the Trian Group, a New York-based investment partnership led by Nelson Peltz and Peter May.

Trian, the parent company of Triangle Wire and Cable, had amassed a series of canning and packaging companies during the 1980s. They sold Triangle Industries, the parent company of American National Can, to Pechiney S.A. for $1.36 billion. This provided the necessary investment capital to purchase DWG. Trian declared that it had no plans to break up DWG or raid its operations for capital to pay down debt. Instead, with good business prospects the partners proposed only to change the name of DWG to Triarc Companies, Inc.

Peltz was named chairman and chief executive officer of Triarc while May was named president and chief operating officer. The new team appointed a series of new heads for the companys subsidiaries. John Carson was put in charge of Royal Crown, Donald Pierce took over at Arbys, Ronald Paliughi headed National Propane, and Douglas Kingsmore was promoted to the top position at Granite ville. The ouster of Victor Posner, the change in management and, perhaps most importantly, the supervision of the companys activities by Judge Lambros did a great deal to shore up DWGs balance sheet and improve share value. These provided an important base for the company as it began its transformation into Triarc.

Triarc Takes Shape: 1990s

As Triarc set out, it comprised a jumbled mass of unrelated businesses assembled during the Posner era. Triarcs management was intent on giving the company what it had lacked for decadesa defined strategic focuswhich meant shedding disparate assets such as lamp manufacturing operations and grapefruit groves and creating a company with a much narrower operating scope. Divestitures ensued, leaving the company focused on four areas of interest: soft drinks, fast food, textiles, and liquefied petroleum gas. The companys strategic focus would be sharpened further, but initially, amid a series of divestitures, attention had to be paid to resolving the operational difficulties bred under the controversial leadership of Posner. By 1995, much of the healing work was completed, enabling executives to devote their energies toward more positive work. With the proceeds gained from asset sales, Triarc assumed an acquisitive posture and began adopting the attributes that described the company at the start of the 21st century.

In August 1995, Triarc acquired the non-alcoholic beverage assets of Joseph Victori Wines, Inc. for $97 million. The purchase added greatly to the beverage business represented by Royal Crown Company, giving the company a new brand called Mistic, a leader in the new age beverage segment. Mistic, used as the brand name for a variety of fruit drinks, iced teas, and flavored sparkling waters, was suffering from a somewhat tarnished image, but soon after gaining control of the brand, Triarc restored profitability. In doing so, the company demonstrated its talent for improving relations with distributors, its flair for marketing, and its shrewdness in developing new products for an established brand. These qualities would come to define Triarc during its first decade of business.

By the time Triarc completed its next acquisitionone that would dwarf the purchase of Misticmanagement had further refined what its core businesses included and what the company would become. Triarcs ties to the textile business were severed and its involvement in liquefied natural gas was slated to end as soon as an agreement could be reached to divest National Propane, leaving the company focused on two business segments: beverages and restaurants. Management had resolved to turn Triarc into a branded consumer products company, and moved headlong toward such an objective in 1997. In May, Triarc acquired Snapple Beverage Corporation, adding substantially to the branded beverage side of its business. Snapple was acquired from Quaker Oats, which had purchased the popular beverage company from its founders. Quaker Oats paid a staggering $1.7 billion for Snapple, and quickly saw its investment sour as the brand suffered several years of double-digit volume declines. Quaker Oats mismanagement of the brand turned into Triarcs gain, enabling the company to purchase Snapple at the drastically reduced price of $300 million. Six months later, in November, Triarc bolstered its beverage business further by acquiring Cable Car Beverage Corporation, maker of Stewarts Root Beer and other flavors.

Like Mistic, Snapple was a company in distress when Triarc management took control of the once powerful brand. Quaker Oats had attempted to assimilate the brand into its corporate culture and, consequently, drained Snapple of its strength. The conglomerate began selling Snapple in supermarkets and other large retail channels, ignoring the brands remarkable success in smaller retail formats, such as delicatessens and convenience stores. Distributors became disgruntled as sales declined, a situation exacerbated by the ouster of the widely popular Wendy Kaufman, who championed the product line in television commercials as The Snapple Lady. Triarc, which had started to create a reputation for itself as a company with an ameliorative touch following its turnaround of Mistic, cemented its reputation as a savior by quickly reversing the damage done by Quaker Oats. The company worked on improving relations with distributors, rehired Kaufman, and returned Snapple to the retail locations where it had earned its popularity. By 1998, Snapple had regained its luster, buoyed by Triarcs skill as a marketer, which was typified in new product introductions. In April 1998, Triarc launched a new Snapple beverage called WhipperSnapple, a shelf-stable line of fruit smoothies in six flavors. WhipperSnapple was selected as the New Beverage Product of the Year by Convenience Store News and awarded the American Marketing Associations Edison Award for Best New Beverage of 1998.

As its beverage business blossomed, Triarc also achieved significant strides in its other business segment. In 1997, all the company-owned Arbys restaurants were sold as part of a strategic decision to operate exclusively as franchiser of the brand. Freed from its role as a restaurant operator, Triarc was able to direct all of its attention toward marketing the Arbys brand and promoting expansion of the concept. Management expanded the restaurants menu by developing co-brands for Arbys franchisees, such as T.J. Cinnamons, which offered cinnamon rolls and premium coffees. In 1999, another Arbys co-brand, Pasta Connection, was nearing the end of its testing phase, promising the addition of pasta dishes to the Arbys concept.

As Triarc completed its first decade of business, executives completed the transformation of the company into a branded consumer products company. In 1999, Triarc sold its stake in National Propane, leaving it focused on the production and marketing of beverages and the marketing of its franchise restaurant systems. As the company prepared for the 21st century, further brand development in these two core business segments stood as the primary emphasis for the future.

Principal Subsidiaries

Triarc Consumer Products Group LLC; CFC Holdings Corporation; Mistic Brands Inc.; Cable Car Beverage Corporation; Snapple Beverage Corporation; Arbys, Inc.; Royal Crown Company Inc.

Principal Divisions

Triarc Beverage Group; Triarc Restaurant Group.

Principal Competitors

The Coca-Cola Company; McDonalds Corporation; PepsiCo, Inc.; Dr Pepper/7Up Companies, Inc.; KFC Corporation; International Dairy Queen, Inc.; Subway.

Further Reading

Allegheny Pepsi Board Withdraws Approval of Merger with DWG, Wall Street Journal, July 13, 1965, p. 4.

DWG Corp., Moodys Industrial Manual, 1992, pp. 2913-2914.

DWG Corp., Wall Street Journal, February 13, 1991, p. C12.

DWG Investor Group Sees No Sale of Assets, New York Times, September8, 1992, p. C2.

DWG to Seek the 11% of National Propane It Doesnt Already Hold, Wall Street Journal, May 30, 1975, p. 29.

Is Victor Posner Off His Leash? Business Week, December 30,1991, p. 39.

Loosening Posners Iron Grip, Business Week, October 22, 1990, p. 104.

The Man Who Writes His Own Paycheck, Forbes, March 15, 1974, pp. 55-58.

Ohio Judge Prevents Posner from Voting New Block in DWG, Wall Street Journal, May 23, 1989, p. C17.

Posner Agrees to Quit DWG, New York Times, October 5, 1992, p. D2.

Posner Firms to Up Axia Stake, American Metal Market, October 13, 1983, p. 3.

Posner Set to Reduce DWG Stake, New York Times, September 4, 1992, p. D3.

The Posner Touch, Barrons, November 19, 1979, pp. 4-55.

Prince, Greg W., A Triarc State of Mind, Beverage World, October 15, 1997, p. 44.

Raider Vs. Raider: Is Lindner Stalking Posner? Business Week, June 2, 1986, p. 36.

Theres Action Again in the Posner Suite, Business Week, March 29, 1976, pp. 108-14.

Three Sparkling Turnarounds: Can This Really Be Victor Posner? Business Week, July 27, 1987, pp. 56-57.

Victor Posner May Soon Taste His Own Medicine, Business Week, April 10, 1989, pp. 34-36.

Wall Street Talks, Business Week, November 4, 1967 p. 130.

John Simley

updated by Jeffrey L. Covell

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Triarc Companies, Inc. (formerly DWG Corporation)

Triarc Companies, Inc. (formerly DWG Corporation)

6917 Collins Ave.
Miami Beach, Florida 33141
U.S.A.
(305) 866-7771
Fax: (305) 868-3044

Public Company
Incorporated: January 23, 1929 as Deisel-Wemmer-Gilbert Corp.
Employees: 17,500
Sales: $995.1 million Stock Exchanges: OTC
SICs: 2211 Broadwoven Fabric MillsCotton; 6794 Patent Owners & Lessors; 5172 Petroleum Products Nec; 6719 Holding Companies Nec

Triarc Companies, Inc., a conglomerate with interests in various areas such as propane, fast food, and shirt-making, was created in 1993 as the result of a court-ordered reorganization of the DWG Corporation. The predecessor company has a long and unusual history; its activities were consistently overshadowed by the daring acquisitions of its management. While these activities led to the demise of that management group, the companies that comprise Triarc are identiacl to those under DWG. Few companies have changed so drastically during their existence as did the DWG Corporation while still retaining the same name.

DWG has had, essentially, two very different lives. The company was first established in 1890 as a small Ohio-based partnership. The founders of the Deisel-Wemmer Company (their full names have disappeared into obscurity) dealt in the importation and manufacturing of cigars. Highly popular during the early years of the twentieth century, cigars were a common male accessory that indicated discretion, affluence, and manliness. The cigar trade was a very profitable business, populated with hundreds of specialty manufacturers.

Deisel-Wemmer was subsequently acquired by an investment group on January 23, 1929, and changed its name to Deisel-Wemmer-Gilbert. The new firm continued to operate as a formidable cigar manufacturer, although not on the same scale as large tobacco companies that maintained stables of several mass-produced brands. Unable to compete with the marketing muscle of these large tobacco combines, the Deisel-Wemmer-Gilbert company was forced to acquire other small competitors simply to maintain market share. It purchased the brand and manufacturing operations of Odin cigars in 1930 and the Bernard Schwartz Cigar Corporation in 1939. On May 15, 1946, the company reduced its cumbersome name to a simple set of initials, and became the DWG Cigar Corporation. The series of acquisitions resumed in 1948, when DWG took over the Nathan Elson Company. In 1955 DWG acquired A. Sensenbrenner & Sons, and a year later bought out Chicago Motor Club Cigar and Reading, Pennsylvania-based Yocum Brothers.

By this time, however, the cigar market had weakened substantially. Years of doctors advisories about the dangers of smoking, the rise of cancer deaths among smokers, and growing public intolerance with the socially brash habit caused many men to quit. But perhaps most responsible for the demise of cigar smoking was the cigarette industry. Convinced that they should abandon cigars, many men simply switched to cigarettes, which were less obtrusive and carried a less severe health stigma. In addition, cigarette advertising was feverish during the 1950s and led smokers to believe that they gained status by using brands such as Lucky Strike, Chesterfield, and Camel.

The trend toward cigarettes spelled the end for DWGs cigar operations. Quite gradually, the company began to consider other lines of business where its wholesale and distribution skills could be effectively employed. In the mean time, DWG reorganized its stagnant but still profitable tobacco operations. The company purchased the M. Trelles company in New Orleans in 1961, and in 1963 formed a new subsidiary in Columbia to oversee the companys South American buying and processing operations. By this time, several other cigar operations had been wound up, and the product line was slimmed down. This process helped to derive new efficiencies from DWGs cigar business, but also compacted the widely varied operations into a single unit that could be disposed of quickly and easily.

Ready to plunge into new markets, DWG began purchasing small stakes in other businesses, including consumer products. After an attempted takeover of the Allegheny Pepsi bottling company failed in 1965, the New York Stock Exchange de-listed DWG from the big board. This removed the final obstacle that prevented DWG from a wholesale divestment of its cigar operations. The dying business was sold in one chunk, while some smaller assets were simply written off. The 1966 sell-off provided DWG with millions of dollars in new acquisition capital. In November of 1966coincident with the companys adoption of a new name, DWG Corporationthe hunt for new businesses turned up an unexpected candidate. DWG purchased a 12 percent share of the National Propane Corporation. Far removed from the cigar business, National Propane marked a clean break from DWGs earlier business ventures.

But it was also at this time that a new force behind DWG came into the picture. Run for decades as a quiet company with a typical consensus-management leadership, DWG became dominated by an institutional shareholder called Security Management Company, headed by Victor Posner. Posner began in business at the age of 13, amassing a small pool of capital by delivering groceries for his father. While still a teenager in the 1930s, Posner began buying run-down houses in his native Baltimore. Reportedly, he realized huge gains on his investments by reselling the houses to economically depressed urban blacks. Aware that people could more easily afford the homes if he retained ownership of the land, Posners Security Management Company charged buyers a small amount of rent for the land the houses sat upon. Failure to pay land rent could result in foreclosure. This practice earned Posner the unsavory reputation for being a slumlord. It was this business, however, that formed the basis for Posners real estate operation and made him a millionaire at an early age.

In 1956, having grown weary of real estate transactions, Posner retired to Sunset Island near Miami. He spent the next ten years without engaging in commercial activity. Posner found a new hobby in 1966, when he began dabbling more actively in the stock market. Familiar with the practice of trading blocks of shares for small profits, Posner now decided to get more deeply involved in the companies he targeted. One of these companies was DWG. Having witnessed DWGs bold but slow transformation from a sleepy cigar company into a corporate raider, Posner saw huge numbers of investors abandon DWG for its failure to maintain a big board listing. From his experience in real estate, he looked upon DWG differently. Rather than seeing a shrinking company in the middle of a huge transition, he saw an undervalued firm with substantial assets.

But for Victor Posner, DWG was more than a great investment. He decided to use the company as an investment vehicle, engineering additional takeovers of other firms through DWG. In January of 1967, Posner used DWG to purchase a controlling share of Wilson Brothers, then a failing shirtmaking concern. Later that year, DWG collected an additional 77 percent of the shares of National Propane. In 1969 DWG acquired 40 percent of the Southeastern Public Service Company, a medium-size utility maintenance and storage company, and the following year increased that holding to more than 50 percent.

DWG became the controlling agent for only half of Posners empire. He used another company, the vulcanized fiber manufacturer NVF to build up a controlling interest in Pennsylvania-based Sharon Steel Corp., one of the countrys largest specialty steel manufacturers.

As Posner grew more active, company presidents across the United States feared that their daily mail would bring a dreaded schedule 13D. This Securities and Exchange Commission (SEC) filing announced that someone had acquired more than five percent of their companys shares. Posner had an unusual talent for inspiring wrath in his dealings. He was often attacked, and frequently sued, for installing himself as chairman and chief executive of companies he had taken over. With the titles came paychecks, and Posner collected reasonable compensation from each of his companies. Collectively, however, Posner was one of the highest paid executives in the country, surpassing the heads of IT&T, Exxon, General Motors, and the Ford Motor Company. Posner also employed his son and two brothers in important positions in his growing corporate empire. In addition, Posners Security Management Company, the ultimate parent of DWG and NVF, still collected land rent from the homes he sold in Baltimore.

In 1971 the SEC sued Posner for improperly compelling the pension fund of Sharon Steel to invest in Posner properties. Some shareholders lambasted Posner at shareholder meetings and threatened to take him to court. These actions were only occasionally successful. Posners defense was to simply point to the track record of companies he had taken over. Both DWG and Wilson had been dead on arrival, yet Posner resuscitated them. Other successful companies such as National Propane, NVF, and Sharon Steel were only marginally profitable before Posner became involved with them. Nonetheless, Posner settled his SEC suit by agreeing not to sit on his companies pension boards. But this did little to improve his image in the business community. Posners usual recipe for turning companies around mirrored his strategy with Sharon Steel; after gaining control of the steelmaker in 1969, he eliminated a quarter of the salaried jobs and held whomever remained to ambitious productivity goals. Costs were reduced, and output increased.

By 1976, Posners Security Management Company controlled 67 percent of DWGs shares. In addition, the parent company held a 44 percent share of NVF and another quasi-investment vehicle, the Pennsylvania Engineering Corporation, a steelmaking equipment manufacturer which Posner acquired in 1966. In turn, DWG held 51 percent of Southeast Public Service Company, 42 percent of Wilson Brothers and, as of 1975, 100 percent of National Propane. Posners corporate conglomerate held few synergiesparticularly within DWG. Through his other companies, Posner bought small shares of Burnup & Simms, a small utility service company, UV Industries, a smelting and mining company, and Foremost-McKesson, a large food and drug company. With these similarly undervalued companies in play, and the 13D form on each presidents desk, these companies scrambled to keep Posner out of their boardrooms. Their defense strategies varied. Foremost-McKesson sought out a rival bidder and UV Industries broke up. Even in cases where the companies bought up their own shares, Posner usually emerged with a handsome profit. If he met no resistance, he ended up with yet another undervalued company to turn around.

DWG traded over the counter since it was de-listed by the New York Stock Exchange. Its share value fluctuated, nearly in the penny stock range, between one and four dollars. But for all its accessibility came volatility. The company could double its value in one year or plunge by half. Over the long run, however, businesses such as steel manufacturing and casting and DWGs storage operations were capable of operating with little additional investment beyond basic maintenance. As long as they continued operating, the combination of taxation, inadequate maintenance, and inflation had the effect of liquidating these marginally-performing assets. Posner was allegedly draining them of resources to take advantage of high depreciation on his undervalued properties.

Meanwhile, Posner continued to use DWG to acquire other companies. In 1982 the company took over the Graniteville Company, a textile manufacturer based in South Carolina. In 1984 DWG built up a 25 percent share of Axia Incorporated, and completed a deal in which its Southeastern Public Service subsidiary acquired Royal Crown Cola, the Arbys fast food restaurant chain, a Texas grapefruit grove, and numerous other small companies. Later that year, DWG added the Evans Products fiber group, and in 1985 took over the Fischbach Corp., an electrical contracting business.

This flurry of activity proved to be the undoing of Victor Posner. The acquisition spree and subsequent earnings failures placed DWG deeply in debt. On more than one occasion Posner was forced to seek a financial bailout from one of his backers, Carl H. Lindner. Their friendly relationship came to an abrupt end in 1986 when Posner received his own 13D schedule, indicating that Lindners American Financial Corporation had acquired warrants for more than 30 percent of DWGs shares. Posner had become a victim in the takeover game. DWG was rich in assets, had steady cash flow and was undervalued. It was exactly the kind of company that Posner himself would target. But rather than exercise his warrants on the beleaguered DWG, Lindner presented Posner with a contract that capped the chairmans salary at $3 milliondown from $8.4 million the previous year.

Meanwhile, Posner worked to shore up DWGs balance sheet by disposing of the Foxcroft and Enro shirt groups and the citrus operation, while a $200 million deal for Royal Crown fell through. He also had the benefit of talented outside managers, including Leonard Roberts, whom he hired to run Royal Crown after his acquisition of that company caused Arbys management to resign en masse. He had also placed Harold Kingsmore, a veteran of the Cannon and Avondale textile companies, in charge of Graniteville.

While the threat from Lindner subsided, another far more complex battle emerged. A financier that Posner had retained to pull Sharon Steel out of bankruptcy referred a possible sale of Posners Fischbach electrical contracting unit to his lawyer, Andrew Heine. When it appeared the deal would go through, Heine suddenly backed out and launched a bid for all of DWG. Once again, Posner was on the defensive. He immediately converted his DWG options into voting shares, but was ordered not to vote them by an Ohio judge.

Heine, through his Granada Investments Company, sued Posner for failing to take his $22 per share bid for DWG seriously. Posner countersued, maintaining that the bid was without merit. In 1991 Posner lost to Heine, whose company was awarded $5.5 million for its expenses. In addition, Judge Thomas D. Lambros, noting court investigations of Posners compensation and charges of illegal stock trading to acquire Fischbach, appointed three directors to DWGs board, with responsibility for the companys audit, compensation, and intercorporate transactions committees.

By the end of 1991, the three directors appointed by Lambros had presented Posner with a critical report on his dealings with DWG. Posner, with eight solid votes on a board of 13, adjourned meetings to discuss the report. In response, Judge Lambros converted half of Posners share in DWG into nonvoting preferred shares and compelled Posner to sell the remaining common shares. Posner, battered by years of damaging litigation, resigned his chairmanship of DWG in 1992 and walked off with $77 million from his share sales. In return, shareholders agreed to drop their long-standing lawsuits charging the 73-year old raider with plundering DWG. His shares were purchased by the Trian Group, a New York-based investment partnership led by Nelson Peltz and Peter May.

Trian, the parent company of Triangle Wire and Cable, had amassed a series of canning and packaging companies during the 1980s. They sold Triangle Industries, the parent company of American National Can, to Pechiney S.A. for $1.36 billion. This provided the necessary investment capital to purchase DWG. Trian declared that it had no plans to break up DWG or raid its operations for capital to pay down debt. Instead, with good business prospects the partners proposed only to change the name of DWG to Triarc Companies, Inc.

Peltz was named chairman and hcief executive officer of Triarc while May was named president and chief operating officer. The new team appointed a series of new heads for the companys subsidiaries. John Carson was put in charge of Royal Crown, Donald Pierce took over at Arbys, Ronald Paliughi headed National Propane, and Douglas Kingsmore was promoted to the top position at Graniteville. The ouster of Victor Posner, the change in management and, perhaps most importantly, the supervision of the companys activities by Judge Lambros did a great deal to shore up DWGs balance sheet and improve share value. These provided an important base for the company as it began its transformation into Triarc.

Principal Subsidiaries

National Propane Corporation; Southeastern Public Service Company (64.9%); Graniteville Company (51%); Home Furnishing Acquisition Corp.; Citrus Acquisition Corp.; Wilson Brothers (54%).

Further Reading

Allegheny Pepsi Board Withdraws Approval of Merger with DWG, Wall Street Journal, July 13, 1965, p. 4.

DWG Corp., Moodys Industrial Manual 1992, pp. 29132914.

DWG Corp., Wall Street Journal, February 13, 1991, p. C12.

DWG Investor Group Sees No Sale of Assets, New York Times, September 8, 1992, p. C2.

DWG to Seek the 11% of National Propane it Doesnt Already Hold, Wall Street Journal, May 30, 1975, p. 29.

Is Victor Posner Off His Leash? Business Week, December 30, 1991, p. 39.

Loosening Posners Iron Grip, Business Week, October 22, 1990, p. 104.

The Man Who Writes His Own Paycheck, Forbes, March 15, 1974, pp. 5558.

Ohio Judge Prevents Posner from Voting New Block in DWG, Wall Street Journal, May 23, 1989, p. C17.

Posner Agrees to Quit DWG, New York Times, October 5, 1992, p. D2.

Posner Firms to up Axia Stake, American Metal Market, October 13, 1983, p. 3.

Posner Set to Reduce DWG Stake, New York Times, September 4, 1992, p. D3.

The Posner Touch, Barrons, November 19, 1979, pp. 455.

Raider vs. Raider: Is Lindner Stalking Posner? Business Week, June 2, 1986, p. 36.

Theres Action Again in the Posner Suite, Business Week, March 29, 1976, pp. 108114.

Three Sparkling Turnarounds: Can This Really Be Victor Posner? Business Week, July 27, 1987, pp. 5657.

Victor Posner May Soon Taste His Own Medicine, Business Week, April 10, 1989, pp. 3436.

Wall Street Talks, Business Week, November 4, 1967 p. 130.

John Simley

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Triarc Companies, Inc.

Triarc Companies, Inc.

280 Park Ave.
New York, New York 10017
USA
Telephone: (212) 451-3000
Fax: (212) 451-3134
Web site: www.snapple.com

RETURN OF THE SNAPPLE LADY CAMPAIGN

OVERVIEW

On June 5, 1997, Wendy Kaufman, known to millions of consumers as "the Snapple Lady," was welcomed back as a brand spokesperson after an almost two-year hiatus. The move completed a circle of sorts for Snapple, a brewer of iced teas and fruit flavored beverages that just three months earlier had been purchased by the Triarc Beverage Group. A stormy period of declining sales as a subsidiary of the Quaker Oats Company—during which the highly popular Snapple Lady was ushered out of the spotlight—was now over, and Snapple was in a mood to celebrate.

The Kaufman announcement was made in midtown Manhattan in New York City with style, flair, and a healthy dose of kitsch, all trademarks of the Snapple brand. Triarc retooled an empty storefront at 319 Fifth Avenue (at the corner of 32nd Street) to resemble an old-fashioned New York deli. Mike Weinstein, chief executive officer of the Triarc Beverage Group, stood up to welcome the media, distributors, and invited guests. Then Kaufman, escorted by several Snapple trucks, drove up to the "deli" on a parade float modeled to replicate the label of Snapple Orange Tropic, the new drink the company had formulated to commemorate her return. Kaufman then burst into the press conference to announce that she was, in fact, reunited with Snapple. A video of her latest Snapple television commercial was then played for the invited guests.

The commercial and the campaign were designed to return Snapple to its roots. This was an important strategy for a brand that had seen its sales decline by 21 percent during two years of Quaker Oats management. Triarc executives hoped the return of the Snapple Lady would energize the brand and once again put it in the forefront of American consumer consciousness.

The stakes were high for the new campaign. Triarc Companies, a holding company whose subsidiaries were engaged in beverages, restaurants, and propane distribution, spent $300 million in March 1997 to secure control of Snapple from Quaker Oats Company, the maker of Gatorade, Cap'n Crunch, and Rice-a-Roni brands. The acquisition added to the company's beverage interests, which also included subsidiaries Mistic Beverages and Stewart's. The company was also the franchiser for more than 3,000 Arby's fast-food restaurants. In addition, Triarc owned 43 percent of National Propane Partners.

HISTORICAL CONTEXT

Founded in 1972 in Brooklyn, New York, Snapple began as a natural soda sold in health food stores. By the early 1980s the line had expanded to include fruit flavors with evocative names like Mango Madness and Tropical Fantasy. Later the company added a line of bottled teas as well. On its packaging Snapple emphasized the "natural" aspects of its beverages. The brand attracted a loyal following, particularly among college students and hip young professionals. Other companies soon moved to market similar products. By the end of the 1980s the so-called "New Age drink" market was growing briskly at 50 to 100 percent a year.

Kaufman became known as the Snapple Lady, answering mail for the Long Island-based beverage company. Majoring in film and sociology at Syracuse University, Kaufman spent eight years of dispatching trucks at her father's metal warehouse before getting a job in Snapple's order department in 1991. Having learned the workings of the beverage business, Kaufman started personally to answer consumers' letters to Snapple headquarters. Her oft-stated sentiment was that if people cared enough about Snapple to take time to write to the company, the company owed it to the consumers to respond. The company, which traded on a folksy image, decided to incorporate Kaufman into its ad campaign in 1993, and 36 award-winning television commercials between 1993 and early 1996 would ensue.

The spots were decidedly low-concept. In most of them Kaufman simply sat behind a desk and answered letters from Snapple consumers. "Hi and hello from Snapple," she predictably announced in her Long Island accent. Yet something about her authenticity and sense of humor struck a chord with audiences across the country. "I don't play the part, I am the part," she once observed, and Snapple drinkers embraced her as a company spokesperson they could relate to. As Snapple's "ambassador of goodwill," Kaufman did more than just appear in television commercials. She traveled the country performing promotional activities for the company, such as attending a prom with a New Jersey fan and dancing with the Los Angeles Classical Ballet. She even took a whirlpool bath in kiwi strawberry flavored Snapple in order to promote that new drink.

The "Snapple Lady" campaign came during a time of enormous growth for the brand. Between 1989 and1993 Snapple sales rose from $23.6 million to $516 million. The ads and promotional activities made Kaufman a minor celebrity. She appeared on television talk shows like Oprah, Regis and Kathy Lee, and The Rosie O'Donnell Show. But her time in the national spotlight would run out when cereal giant Quaker Oats bought Snapple for $1.7 billion in December 1994.

There were ominous portents almost as soon as the Quaker Oats acquisition was completed. Some analysts noted that the allure of the so-called New Age beverages, which had gained popularity across the country, was fading at the time. Quaker Oats then compounded its troubles by trying to meld the Snapple distribution network into its top-selling Gatorade network, which did not go over well with distributors.

Quaker Oats then gave the green light to a series of new television commercials, dismissing Snapple Lady Kaufman just months before the expiration of her contract. The new spots, launched in April 1996, followed a four-month television advertising blackout, during which time Quaker Oats worked intensely to develop a new strategy for the struggling brand. For the first commercials of this campaign, created by agency Kirshenbaum, Bond & Partners, the iced tea and juice marketer tapped filmmaker Spike Lee to helm one of five new television spots. Echoing the old "We Try Harder" campaign for Avis Rent-a-Car, the new Snapple spots trumpeted the fact that while Snapple was not in the same league as soft-drink giants Coca-Cola or Pepsi-Cola, it would be happy as a high-ranking also-ran. "Threedom Equals Freedom" and "We Want to Be No. 3" were the tag lines for the spots. Some viewers were confused by the abruptness of the Snapple Lady's departure from the scene. Neither Quaker Oats nor Spike Lee offered any explanation for the change. "She had her run," said Lee.

While being proud to be third might have sufficed as a quirky campaign mantra, it proved unsuccessful as a market proposition. The campaign left consumers confused about the brand's identity, and Snapple took a beating from competitors who saw its problems as an opportunity to pour new products onto the market. The high-priced ads did nothing to slow the erosion in Snapple sales. Quaker Oats executives ultimately were forced to try giving the drink away in a $40 million summer campaign to try to lure skeptical consumers back to the brand. Despite these efforts, Snapple endured a $100 million loss in 1996.

In March 1997 Quaker Oats sold Snapple to Triarc Companies, Inc,. for less than one-fourth of what it had paid for the brand. The diminution was a result of losses that totaled $160 million in 1995 and 1996 alone and sales that dropped 21 percent in two years to $550 million. Triarc Companies, Inc., was perhaps ideally suited to try to revive the sagging fortunes of Snapple. Best known for its RC Cola brand, subsidiary Royal Crown Company made flavor concentrates for private-label soft drinks. The company was run by financiers Nelson Peltz and Peter May, who profited from several large investments in the 1980s. The pair eventually bought a controlling stake in Triarc, an industrial conglomerate then known as DWG Corp., from financier Victor Posner in 1993 for $71.8 million. In the 1990s Triarc began to focus on beverages and restaurants, purchasing the Mistic teas and juice drinks and the T. J. Cinnamons restaurant chain. It operated almost 3,000 restaurants, including Arby's and P. T. Noodles.

One of Triarc's first orders of business was to renew its association with Kaufman, and the beloved Snapple Lady was soon appearing in Snapple ads once again. In addition, a new Snapple flavor, Snapple Orange Tropic, was developed as part of a new line dubbed Wendy's Tropical Inspiration. Calling Kaufman "the embodiment of Snapple's lovable, offbeat nature," company officials appointed her to the newly created post of Snapple Ambassador for Community Relations.

TARGET MARKET

The New Age segment of the beverage category began as an alternative to highly carbonated soft drinks, offering iced teas, fruit-based beverages, and flavored waters in the 1980s. In the 1990s new New Age alternatives included caffeinated waters, herbal concoctions, and "premium" sodas with less sweetness and carbonation. By this time non-colas had grown to command more than 60 percent of the soft-drink market.

Snapple was created by a trio of marketers from Long Island: Leonard Marsh and Hyman Golden, brothers-in-law who owned a window-washing company; and Arnold Greenberg, who had a health food store. Because the three did not have the financial clout of the big soft-drink makers, they marketed mainly to small stores. Along the way their beverage developed a cachet among the young and trendy. This sought-after cachet was encouraged with clever advertising and the constant introduction of new, offbeat flavors. In the late 1990s Snapple continued to market its products to those young and health-conscious consumers who preferred an alternative to colas.

COMPETITION

Beverage industry giants Coca-Cola and Pepsi were to a large degree responsible for the slump in sales in the New Age beverage category that betokened the sale of Snapple to Triarc and the return of the Snapple Lady. Their glitzy marketing campaigns and big-budget commercials helped depress Snapple sales to the point where Quaker Oats found it necessary to sell the brand. Triarc's only recourse seemed to be a "back to the roots" strategy designed to recapture Snapple's lost consumers.

Snapple's overall success emboldened the giant soda makers to develop fruit and tea products to compete in this market. Coca-Cola spent an estimated $15-20 million to promote its Fruitopia brand of juices. Pepsi also embarked on an expensive relaunch of its Lipton's Brew brand of ready-to-drink teas.

FIFTEEN MINUTES AND COUNTING

"I never left Snapple. Snapple left me," Wendy Kaufman observed following her re-hiring by the beverage maker in 1997. "When Quaker came into the picture they decided I was no longer the image they wanted to project, that I had had my time, and that they wanted to go mainstream." That was the extent of the public bitterness expressed by Kaufman (although she did make a point of saying, "I'll never eat oatmeal again"—a not-so-veiled jab at Quaker Oats, Snapple's erstwhile parent company—at her reintroduction extravaganza). The happy-go-lucky Long Island native seemed to have accepted her so-called fifteen minutes of fame with an equanimity that other celebrities could learn from.

While away from Snapple Kaufman tried a few other show business gigs. She held a job hosting a radio call-in advice segment called "Ask Wendy" and appeared briefly in the Chevy Chase film National Lampoon's Vegas Vacation. But she could not escape the image that she had built for herself as a heartfelt iced-tea pitchwoman—especially after a Colorado disc jockey launched a "Bring Back Wendy" campaign. Kaufman even turned down an offer to promote Mistic soft drinks because her heart reportedly remained with Snapple. "I was heartbroken," she said of her dismissal. "All I wanted to be was the Snapple Lady." In March 1997 she got her wish—and so did her legions of fans worldwide.

MARKETING STRATEGY

Before Quaker Oats purchased Snapple in 1994, growth in the New Age beverage category had slowed to about 20 percent from the highs of the 1980s. By the end of 1995 Snapple sales had fallen 9 percent, and the brand lost $100 million including charges and write-offs. "What the hell is Snapple?" groused corporate brand consultant Alan Brew in March 1997. "No one knows what it means anymore." Indeed, the single greatest challenge faced by Triarc marketers in the wake of the beverage company's acquisition of Snapple was to rebuild the brand's identity. "It's not edgy anymore, but we can bring that edginess back," declared Triarc Beverage Group CEO Weinstein. He immediately entered into negotiations with Kaufman to discuss her future role with Snapple.

"Time is of the essence because summer is coming," Kaufman remarked after their initial meeting. "One more year of bad Snapple advertising would be devastating for the brand." Heeding Kaufman's advice, Triarc in May 1997 announced that it had hired the New York-based ad agency Deutsch to create advertising for Snapple. The $40 million account had been in the hands of Chicago agency Foote, Cone, and Belding. Kirshenbaum, Bond & Partners, Snapple's original agency, was contacted by Triarc but declined to offer a pitch for the account.

With Deutsch now in charge of the creative side, Kaufman was once again tapped to star in a Snapple television commercial. This spot, however, finds her venturing far afield from her previous role as a company ombudsman responding to consumer letters. The new spot traces the efforts of a search party that has set out to find the missing Snapple Lady. The searchers eventually trace her steps to an island near Bora Bora, where the rotund New Yorker is being worshiped as a god by the natives. Kaufman is ultimately located and returned to Snapple headquarters. "They need me!" she says as a rowboat whisks her away from the island paradise. The commercial ends with a humorous twist as one of the islanders mistranslates her parting words as "we can eat you" and looks menacingly on the team of rescuers. The ad plays humorously off of Kaufman's oft-repeated public pronouncement that she spends her time away from Snapple touring the tropics.

Snapple Orange Tropic, the product commemorating Kaufman's renewed association with the company, blended fruit juices and purees to conjure up "the tastes and scents of the tropics," according to a company press release. The all-natural beverage contained 12 percent juice. It also featured Kaufman on its packaging. The 16-ounce bottles of the new product were wrapped by a whimsical drawing of the Snapple Lady relaxing in her island getaway. Reclining on a chaise lounge and outfitted in a floral dress with a lei and a fruit-topped hat, Kaufman is shown surrounded by lobsters, fish, and tropical birds. Palm trees and tropical plants and flowers serve as a backdrop. The new drink was distributed for a limited time starting in June 1997.

Weinstein stressed that Kaufman's return would not be a one-time proposition. While she would not be asked to fulfill her previous role answering letters and would no longer serve as company spokesperson, the Snapple Lady would be deployed to make personal appearances and aid the brand in other ways. Although Kaufman's potency as a pitchwoman was said to be strongest on the East Coast, due to her pronounced New York accent, Weinstein also emphasized Snapple's commitment to remain a national brand.

OUTCOME

The return of the Snapple Lady seemed to generate the kind of energy around the Snapple brand that its marketing executives had hoped for. Kaufman's coming-out party was heralded with a blitz of free publicity in Snapple's core East Coast markets, as local newscasts scrambled to cover the return of the prodigal pitch-woman. The commercials themselves evaded the usual critical scrutiny as reviewers preferred to remark on the new aspects of Kaufman's reemergence.

Kaufman soon settled into her role as spokesperson emeritus for Snapple brands. She rode the Snapple Orange Tropic Float in the 24th Annual New York City Halloween Parade on October 31, 1997. Meanwhile, Triarc went about the business of crafting a long-term marketing and advertising strategy for the brand. During this period sales rebounded. For the year ending March 1, 1998, dollar sales of refrigerated teas grew 4.8 percent, with Snapple leading the market. Triarc stewardship halted a three-year sales decline and actually increased Snapple case volume slightly in the second half of 1997 compared to the second half of the previous year. The return of the Snapple Lady—along with improved distributor relationships, targeted advertising, and product innovation—was credited with the upswing.

In the spring of 1998 Snapple introduced a new tag line, "The Best Stuff Is in Here," in commercials that retained the quirkiness of previous ads but without the Snapple Lady. The product-focused spots were designed to illustrate the wide variety of Snapple flavors and were again created by Deutsch New York. Industry analysts were undecided about whether the brand's turnaround was permanent or temporary.

FURTHER READING

Beatty, Sally Goll. "Quaker Wants Snapple to Be No. 3, But Will the Strategy Bear Fruit?" The Wall Street Journal, April 2, 1996, p. B6.

Petrecca, Laura, and Judann Pollack. "Snapple's Wendy Returns via Deutsch." Advertising Age, May 19, 1997, p. 1.

"Snapple Lady Gets Her Job Back." The Baltimore Sun, June 26, 1997, p. 3E.

Wells, Melanie. "She May Be Back in a Snapple." USA Today, April 28, 1997, p. 2B.

                                       Robert Schnakenberg

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