PSDA- 2 CLEO

Submitted by-

1. Vipul Gupta- MBA (General) Section D ( A0101920181 )

2. Visivono Peseyie- MBA (General) Section A ( A0101920222 )
3. Nitesh Nanda- MBA (General) Section D ( A0101920218 )
4. Aastha – MBA (General) Section A ( A0101920226 )
5. Yash Yadav - MBA (General) Section D ( A0101920185 )

1. Discuss the factor s of success for Nantucket Nector s

2. . Examine the VENTURE DEVELOPMENT STAGES.
3. Explor e their gr owth str ategies.
4. Explor e the r ight Funding options for the company to gr ow- Do they have to go
for IPO oe sell whole or par t of the company .

Use module 3 notes

Introduction

Nantucket Nectars is an American beverage company created by Tom First and Tom Scott,
which began as a small business selling a variety of items to yachts in Nantucket,
Massachusetts. Eventually they began selling juice blends that were originally inspired by
a peach nectar Tom First had while on a visit to Spain. Today the brand is owned
by Keurig Dr Pepper and offers drinks in several different flavors.
The beverage is most commonly sold in 16-fluid-ounce glass bottles. The bottle caps feature
information about Nantucket Harbor and the history of Nantucket Nectars
The success of "Tom and Tom," as the business duo became known, has become a piece of
modern business lore. The company was featured on the Inc. 500's list of 500 fastest
growing U.S. companies for five years in a row. The story of how they grew their brand is
the subject of a popular Harvard Business School case study, which was published in 1998
by Jon Biotti, Joseph Lassiter, William A. Sahlman

1. Discuss The Factors of Success for Nantucket Nectors

1.Liquality
The collection of features and characteristics of a product that contribute to its ability to meet
given requirements. It’s the ability of the product to fulfil and meet the requirements of the
end user. For a product to be of good quality it should be reliable and perform all its functions
smoothly. The quality of the juice was one of the most important factors that contributed to
the success of Nantucket Nectars.
2.Expanding the company
They decided to make use of an old fraternity house and utilized that as their company
headquarters. Thisexpansion was very beneficial for the company,so that the business can
grow and more employees who were needed would join
3. Team work
The juice guys, Tom and Tom wanted to create a work environment that
was non hierarchical, casual and without job titles
4.ERP SYSTEM
A team from the company was chosen to accomplish this task as soon as possible because the
existing accounting system held the company back and was inefficient
5. NECTAR NET
Nectarnet was introduced in Nantucket nectars as a way to find an efficient communication
system between the sales force in Nantucket nectars and the distributors
6.CUSTOMER FEEDBACK
 Tom first and Tom scott wanted their consumers to get involved with their decision-making
process with relation to the production of juices.

Q2) VENTURE DEVELOPMENT STAGES

1. The founder used the capital to improve distribution and increase inventory.
2. They built their own distribution arm with the equity capital.
3. At the same time, the founders repackaged and reformulated their own product while
convincing small stores to carry Nantucket Nectars along side the red-hot Arizona Iced Tea.
4. Nantucket Nectars relied on creative packaging, rapid and original product introductions,
word-of-mouth and a memorable story line
5. Product development : As a means to differentiate, Nantucket Nectars committed to creating
high quality, all natural juice beverages without regard for the margins; the quality of the
product came first.
6. Sales and distribution : The founders structured their in-house distribution arm to target delis,
sandwich shops, small markets, gourmet food shops, convenience stores and food service
cafeterias. The founders concentrated on marketing their own product and developing the
Nantucket Nectars brand name. The priority at Nantucket Nectars was “moving the juice.”
7. Profitability and Cost Management : Unfortunately, high sales growth forced the founders to
focus on increasing production to meet high demand, rather than delivering quality at a
favorable cost. Their lower margins were a result of higher quality ingredients in the juices
and limited futures contracts in commodity procurement.
8. Corporate Strategy : They wanted to grow the company but were worried about the associated
risks. Given their growth needs, they needed to decide whether to sell a part or all of the
company, operate under status quo, or undergo an IPO.
9. Valuation Analysis : They decided to analyze the valuation in three different ways:
discounted cash flow, comparable acquisitions and comparable trading. Furthermore,
Nantucket Nectars had rolled out a larger-sized bottle (36 ounce bottle) for the supermarkets
but the company was having difficulty securing shelf space in the larger supermarket chains.
10. Both founders wanted to continue to run the company if possible. Lastly, the founders did
not want to have their effective sales and marketing story negatively affected because of
ownership issues.

6. Explore the growth Strategies.

Nantucket Nectars was established by Top First and Tom Scott in 1985 under the original
brand of All serve, "a floating 7-Eleven." Before entering the beverage segment, the company
was a convenience store serving boats in Nantucket. After employing unique marketing and
sales strategies and offering a competitive product--high quality, all natural juice--Nantucket
Nectars become the interests of a number of bidders. The present Harvard Business School
case discusses a then-difficult decision the founders were forced to make. They could
maintain status quo, sell a part or the entirety of the company or undergo an IPO. If they sell,
the company founders pondered potential concerns: how can they keep the negotiation
process discreet so not to disturb their employees? How many bidders should they engage
with and who should set the lowest bid? And, would selling the company hinder the lax
working environment or the stable management structure. First and Scott were also worried
that should they sell to a big company, they would lose their "memorable story" and with it
the loyalty of their customers. As First and Scott were quoted saying, "they have made every
mistake in the book" growing and scaling up their company. In fact, if they knew how
unattractive the dynamics of the New Age beverage business was, they would not even begin
their own company. Yet, through rather unconventional methods such as promotional events
having employees dress up as fruits and delivering and stocking their own product, the
founders were able to break through in the industry. Despite the hard work and serendipity,
the two Toms eventually did sell the company. Nantucket Nectars was sold to Ocean Spray in
1997.

I believe this was the right choice for two main reasons. Nantucket Nectars did have a
competitive advantage in the product they have offered. And, with the Super Nectars they
excelled at product innovation even when products were scarce.
In 1991, based on their products' success on Nantucket, the owners had begun looking into
new markets. While Boston seemed an obvious choice for expansion, first was surprised to
find that the juice did not sell there as well as expected. Believing the product's success on
Nantucket was related to the founders' presence on the island and their relationship with local
retailers, First and Scott decided they should become beverage distributors in addition to
suppliers.
For a while, First took on product distribution himself, quickly moving beyond Nantucket
and Boston into Washington, D.C. Eventually, however, the founders decided to begin
distributing other companies' beverages alongside their own line.
That's when "the nightmare" began, says First. In addition to working until 2 or 3 a.m. most
days, the two entrepreneurs had to cope with employee accidents, theft, incorrect orders, and
pressure from clients. Within 12 months, First and Scott lost $2.5 million, an experience that
First jokingly refers to as the $2.5 million M.B.A. Threatened with losing their main investor,
the pair had six months to turn the company around. Their first step was to sell the
distribution business.
"We went back to doing what we should have been focusing on all along -- Nantucket
Nectars," said First. "We [were] not distributors and we could not be distributors. It is a tough
business, and we learned that the hard way." Nantucket Nectars has been profitable since
1994, the year First and Scott got out of the distribution business.
The unusual marketing strategy that First and Scott developed may have contributed as much
to their company's success as their attention to quality. Anyone who knows Nantucket
Nectars is likely to be familiar with Tom and Tom, their dogs Pete and Becky, and the juice's
Nantucket beginnings. Even the label of the Nantucket Nectars bottle, a picture of the two
Toms and their boat, is replete with details of the company's history, including an account of
their friend who jumps naked off roofs into the harbour. And underneath the bottle caps, juice
drinkers can always find odd facts about the company, its employees, or historic Nantucket
landmarks. This same down-home, let's-just-tell-our-story approach characterizes the
company's radio ads, which feature the two Toms talking, unrehearsed, about themselves,
their friends, and the juice.

According to First, he and Scott are happy just being "juice guys." They rely entirely on
outside distributors and describe themselves as "the most distributor-friendly suppliers
around." About his decision to become an entrepreneur, First admits that he was driven
initially by a desire to live on Nantucket year-round and run a business. So far, he has met
both those goals. (In 1998 Ocean Spray bought half of the company for an undisclosed sum.
Nantucket Nectars continues to operate independently)

4.)

 Nantucket Nectars a $30 million brand is one of the few independent juice maker.

 In 1994 they faced a huge losses, followed by 1995.

 Death valley curve is the financial risk faced by start-ups to survive the initial years of
business, from initial contribution to generating revenues.

 They were successful in formulating strategies on order to survive .

 They had funding from Mike Egan, 1 round of funding.

 Later it was acquired by cadbury in the second round of funding

 They were successful in making changes in the existing product. There were 27 flavors
across 3 products line so , the company can try to increase the product line to bring a new
product in the market to boost up the name.

 Super Nectars was a great hit as people became more health concious.

 There were various product under Super Nectars such as Vital-C, Green Angel, Protein
Smoothie with the same almost same price.

 Single serve product were demanded by convenience stores, delis, educational

institutions, health and gourment stores which should be supplied on time and never be
out of stock.

 Multiple product were demanded by supermarkets and should be increased..

 They were on a cost stabilizing structure, prices were same almost the same hence a new
variant could have been produce with completely different price segment.

 Geographical expansion capabilities: current sales base and future sales base should be
expanded.

 IPO is a better decision because the company is selling some of it’s shares to raise the
fund from public.

 In my opinion Merger and Acquisition is a bad decision because we are selling the
company as a whole.
Conclusion

Some of the skills observed in this case study, which were portrayed by the entrepreneurs are
as follows-

•Business management skills

•Teamwork and leadership skills
•Communication and listening
All the qualities of a successful entrepreneur are present -
•Customer service skills
•Financial skills
•Analytical and problem-solving skills
•Critical thinking skills
•Strategic thinking and planning skills
•Technical skills
•Time management and organisational skills
•Branding, marketing and networking skills