Nantucket Nectars Case Study.ppt

NantucketNectarsCaseStudy KimberlyHagnerMay3rd 2010 UnitedStates Massachusetts NantucketIsland Nantucket TheHarbor TheIsland TomandTom FirstmetatBrownUniversitywhentheywerefreshmenin1985WantedtoliveonNantucketyearround Allserve Allservewasaboatservicethatbroughtgoodstoyachts boats intheNantucketharbor Deliverednewspapers coffee laundryandothernecessitiesthatwerehardforpeopleonboatstoget Motto Ain tnothingthemboyswon tdo NantucketNectars Winterwasapproachingandthiswasgoingtobethehardpartoftheyear DuringtheirfirstwinterontheislandaftergraduatefromcollegeTom TominventedNantucketNectars TheGoingGetsTough Tom Tomnotpaidin3 5yearsEmployeesnotpaidin1yearInvesttheirlifesavings 17 000 tohiregoodbottlingcompanyandpayforinventory fruit gas Fornexttwoyears NantucketNectarscouldnottakeadvantageofthemarketandonlyhadasmallloanfromthebank Tomrecalls Wewerescrapingalong Everythingwasgoingbacktothecompany Byearly1993 ourfewemployeeshadn tbeenpaidinayearnevermindTomandIhadn tpaidourselvesinthreeandahalfyears Butweworkedallsortofoddjobsontheside especiallyduringthosewinter Itwasespeciallytoughbecausewecouldseethejuicereallytakingoff MikeEgen MikeEgen founderandCEOofAlamo thebiggestrentalcarcompanyinAmerica invests 600 000andgets50 ofthecompany IreallymadetheinvestmentbecauseitmakesmewakeupinthemorningandfeellikeI m25again tryingtogrowanothercompany MoreChallenges UsecapitaltoimprovedistributionandincreaseinventoryHadtocompetewithSnappleforqualitybottlersDistributedtheproductthemselvesandgainedgreatknowledgefromthischallenge Tomsays Weweredoingitall Weleasedsomewarehousespace boughtanoldvan andwentupanddownthestreetsellingNantucketNectarsandourpassiontomakethebrandsucceed Theretailerslovedourstoryandenjoyedseeingusstocktheshelvesourselves weoftenarrangedtheshelvestomakesurethatNNhadbetterpositionthanSnapple MoreCleverThinking BuildowndistributionarmHopetopiggybackoffstrongbrandofArizonaIcedTeaandgetinmorestores Growth Companygrowsfrom7to100employeesGofromselling2 000to30 000cases monthRepackageandreformulatetheirproductandconvinceretailerstocarrytheirproductalongsideArizonaIcedTeaByendof1994revenuespast 8million CreativeMarketing MemorablestorylineCreativepackagingWord of mouthCreateahighqualityproductandcreateapersonaSamplings give aways sponsorshiporlocalsportingevents radioads tellsstoryofDesmondcrashingvananddestroyingallthejuice anotheremployeedropsallmoneyfromsalesintotheharbor Frustrations TomSays Thefrustrationswedealtwithwereimmense Wedidn tknowwhatpoint of salewas wedidn tknowwhatpromotionwas wedidn tknowwhatmarginweshouldbemaking ProductDevelopment UsedpurecanesugarinsteadofhighfructosecornsyrupUsed4timesamountofjuicecomparedtootherbrandsBottlewas17 5ouncesversus16ouncesDeveloped27flavors SalesandDistribution Selldistributionarmafterlosing 2millionRealizethateconomicsofdistributionbusinessreallyrequiredoneofthebigbrandsoryoucouldnotovercometheoverhead expenses Focus Tom TomfocusonmarketingtheirjuiceSwitchdistributiontoin housesalesforceandoutsidedistributorsWrotemulti yearagreementswithmostofitsdistributorsCreatedprogramsdesignedtoincreaseincentivefordistributors salesdealsaimedtoincreasevisibility QuotefromTom IfwehadknownhowunattractivetheindustrydynamicswerebeforewestartedNantucketNectarsweprobablywouldnothavestartedthebusiness However nowthatwe reinthebusiness wethinkthattheoddsofsomeonereplicatingwhatwedidareveryslim Theindustrydynamicsandthefast pacedchangeswithintheindustryreallydecreasetheprobabilitiesofanearlyentrant ssuccess NantucketNectarsCaseStudyPartII KimberlyHagnerMay12th 2010 NantucketNectarsRecap NantucketNectarswasfirstcreatedbyTomFirstwhowasdeterminedtore createapeachnectarhehadinSeville SpainFounders TomFirstandTomScottcallthemselves JuiceGuys StartedsellingthejuiceintheNantucketHarborandwasabithitwiththeboaters Recap Continued InvestedtheirlifesavingstohireaqualitybottlingcompanyMikeEganinvests 600 000andgains 0 ofthecompanyFoundersalongwithNeilDesmonddecidetodistributethejuicethemselvesUsedistributionchannelsofArizonaIcedTea piggyback offofthem WhereAreWeNow Lose2millionandselldistributioncompanyin1995NantucketNectarsfirmlyonshelvesinlargeandsmallstoresUsingin housesalesforceandoutsidedistributorsConcentratingonmarketingthebrand ChallengesofNantucketNectars Distribution difficulttodistributeproductataffordablepriceLowMargins costofingredientsCompetition manynewbrandsandlargercompanieswithdistinctadvantagesenteringthemarket ProblemswithDistribution LackrelationshipwithstoresCostlytodoityourself lose2millionwhendoowndistributioneventhoughteamupwithArizonaIcedTea Margins CouldnotanticipategrowthsodidnotsecurecontractwithfruitsuppliersBadharvestmeantnocranberriesforNNUsedpurecanesugarand4x samountofjuicecompare