Nantucket Nectar Essay

Nantucket Nectar is a beverage company created by Tom Scott and Tom First who met at Brown Universities. They first created Allserve, a floating convenience store that served boats in Nantucket Harbor. They then started creating and selling juices in 1990. Nantucket Nectars achieved its first year of profitability in 1995. It continued to grow and the firm was approached by six or more bidders that were interested in acquiring a position of the company. Therefore, Tom and Tom had to decide what they want to do if they wanted to grow the company but were worried about the risks involved.

First, Tom Scott had to make a decision on whether he wanted to sell part or all of the company, operate under status quo, or undergo an IPO. In order to choose, he had to clarify his objectives, which were to manage his own company and to keep the value of the brand to be quirky, eccentric and memorable. It was also clear that the founders care about their employees and they want to keep the culture of Nantucket to be casual and personal.
The founders then brainstormed and came up with a list of reasons why Nantucket Nectars succeeded.
They called them the “value drivers” and amongst them were guerrilla marketing skills and ability to exploit small, rapidly changing market opportunities. If Nantucket did form an alliance with a strategic partner, it would be advantageous for some of the value drivers as the company would be able to leverage on the financial strength of its counter part (or parent company) to obtain shelf space in supermarket chains. With extension of distribution channels, they would thus be able to gain a greater market share. The parent company would also penetrate the New Age beverage segment with a strong brand as well as provide scale economies on cost of goods sold. However, a few value drivers might be affected in a bad way like the current management team and the story behind Nantucket Nectar might be lost due to a different
ownership.

Therefore, it is important for each company to have its own unique culture. The culture not only distinguishes a company from another company but also it sets values and norms that employees follow. Tom First and Tom Scott deliberately made things as informal as possible at the beginning. There was no hierarchy, no dress code and no corporate culture. Culture therefore really matters because when employees understand and share a company’s mission and values, they tend to be more productive and the company is more successful. By forming an alliance with a strategic partner, the culture might change to that culture. For example, most firms would require employees to dress in proper business attire and the current team might have difficulties adjusting to this as it will affect their entrepreneurial spirit.

Overall, I think the founders should sell part of their company to Ocean Spray. By selling, Nantucket Nectars can leverage on the financial strength of the parent company to expand their distributions channels to include the supermarkets, and therefore increase their market shares. Nantucket Nectars should also sell to Ocean Spray specifically as they have the knowledge of making juices, which would allow Ocean Spray to get a higher margin as well as exhibit economies of scale.