Nantucket Nectars

Nantucket Nectars

Tom Scott and Tom First started Allserve, a floating convenience store serving boats in the Nantucket Harbour during their summer holidays in college. After graduation, during the winter of 1990, First recreated a peach fruit juice drink that he came across in Spain and started a side business selling fresh juice. Everyone loved the product and they went on to open the Allserve General Store on Nantucket's Straight Wharf. They named the fruit juice "Nantucket Nectars".

Scott and First invested their collective life savings of about $17,000 to contract a bottler and finance inventory in the first two years. The next two years saw them operating in an undercapitalized state on a small bank loan. Subsequently, in order to raise funds to improve distribution and increase inventory, they sold 50% of the company to Mike Egan. Nantucket Nectars achieved its first year of profitability in fiscal year 1995. Nantucket Nectars continued to grow and in 2000, they were approached by five companies that were interested in acquiring a portion of the company. Scott and First had to decide if they should:

1) sell a part of or all of the company;

2) undergo an initial public offering (IPO); or

3) operate under status quo.

They had several questions that they would like answered. If they do proceed with the sale, how should they negotiate for a maximum price? How could they hold the meetings with the prospective buyers and not let the employees find out about the transaction prematurely? Should they organize an auction to sell the company? Will it generate adverse publicity if they decided not to sell after the auction?

As there were a lot of questions to be answered, First and Scott wondered if they should hire an adv...

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...le & Mistic) - best platform for growth - replacement of distributors

Cadbury (Schweppes Ginger Ale) - deep pockets - need to improve its management team, set up succession plan, reduce dependence on Cadbury family- not much operating improvements or increased distribution strength

Starbucks - understand the tastes and trends of the new generation- strong interest

Welch's - very similar corporate structure- reactive to market trends - thinks the rest of the industry produce faddish kinds of products

Coca- Cola - lack of success with Fruitopia products

Another important point of consideration is that Ocean Spray was private, thereby allowing Nantucket Nectars to continue operating in a similar fashion. This would allay the founders' fear that the consumers may not be able to enjoy the Nantucket Nectars story if the company was owned by a large public company.