FOR THE ATTACHED CASE, ANSWER THE QUESTIONS FOR YETI

CASE 13 Yeti in 2020: Can Brand Name and Innovation Keep it Ahead of the Competition? Diana R. Garza David L. Turnipseed University of the Incarnate Word University of South Alabama n early 2020, Matthew Reintjes, president and Yeti's management was aware that although the CEO of Yeti, contemplated the company's fiscal company's products were high quality, there were 2019 operations. Although the company had shown many equally high-quality competitor products avail- a 17 percent increase in revenue over fiscal 2018, able in the market: the market value of Yeti appeared with sales of $914 million, and profit of over $50 to be the market value of its brand. The management million, there were uncertainties ahead for the fast- team recognized that the path to continued success moving company. Yeti's coolers and other products for Yeti was to maintain and increase the value of the had captured the number one position in the United brand, and to position the brand to have increased States, and awareness in the domestic markets had value with larger numbers of consumers. Mr. Reintjes risen from two percent in October 2015 to 10 percent resolved to craft a strategy that would reestablish in July 2018 according to the company's own brand and maintain the upward trajectory of profits for the tracking survey. Yeti had become a cult icon for the company. hunting, fishing, boating and outdoors sports com- munities, and was rapidly expanding beyond those Two Brothers and a Cooler: groups. On almost every outing, one would see peo- From Dream to Icon ple wearing Yeti T-shirts and caps, and Yeti stickers on the rear windows of pickups and SUVs. After graduation from college, Roy (Texas Tech Yet despite the meteoric rise increase in rev- University) and Ryan (Texas A & M University) enues, market share, and profits, there were storm Seiders began searching for business plans in the out- clouds on the horizon. First, the recent tariff contro- door field. Their father had been a successful entre- versy between the United States and China, and the preneur in the fishing tackle industry and the boys European Union had the potential to increase prices were determined to follow his lead. Ryan started a and thus reduce sales of Yeti products. Second, the custom fishing-rod business and Roy began building COVID-19 global pandemic that began in early 2020 fishing boats. Roy's boats included three coolers, and its economic fallout could certainly have a nega- one of which was in the bow of the boat and used tive impact on the sales of all Yeti products, both as a fishing platform. The coolers were the least sat- domestically and foreign, for an extended period. isfactory part of the boat, and Roy began looking for Third, and perhaps most concerning, was the large better options. Brother Ryan identified an imported and increasing number of competitors across the Thai cooler at a trade show that impressed him with entire product line, ranging from large well known brands such as Otter Box, Tervis, Igloo, and Pelican Copyright @2021 by Diana R. Garza and David L. Turnipseed. All rights to numerous small brands. reserved.CvI'H ruggedness {but not design or nish). He began importing the Thai coolers and marketing them to outdoor equipment retailers and shing tackle shops. which was the market that he knew best. The Thai cooler generated sales. but warranty costs and disappointment with improvements in the design motivated the search for another manuv facturcr. The brothers located a manufacturer in the Philippines that was capable of manufacturing the cooler that Ryan had envisioned. Roy believed the time had come to start a cooler business and a brand name. The result of'a good cooler is ice retention- even after its usage for food or drink is complete. This feature. plus the input of family and friends resulted in the name Yeti-the Ice Monster. and the company was born in 2006. The company's mission was simple: \"build the cooler you'd use every day if it existed." Roy used the money from his Thai cooler busi- ness. and Ryan sold his shing-rod business to fund the Yeti prototype. The cooler was designed so that anything breakable (cg. the rope handles} could be easily replaced. The cooler was designed for durabil- ity. which came with a cost. The brothers realized that their cooler would have to be sold for about $300.00. and there was no market for a cooler in that price range. Their initial marketing and distribution plan focused on tackle shops which were offered a simple proposition: rather than compete with Wal- Mart and sell $30.00 coolers with $5.00 profit. sell $300.00 Yeti coolers with $100.00 profit. The brothers sold majority owner in Yeti to Cortec Group Management Services. LLC. a private equity firm. in 2012. Cortes: provided management services for a fee of 1 percent of sales (not to exceed 5750.000 annually}. With the advice ofan ad agency. Yeti created a tagline 'Wildly Stronger. Keep Ice Longer' and concentrated marketing on shermen and hunters. The young company hired inuential shermen and hunting guides as ambassadors for the brand. Brand awareness was also stoked by the inclu- sion of a Yeti hat or t-shirt with each cooler sold. Over the three-year period of 2015 to 2013. Yeti's customer base progressed from nine percent to 34 percent female, and from 64 percent to 20 percent under 45 years of age. Yeti brand awareness in the US. cooler and drinkware markets grew from seven percent in 2015 to 24 percent in 2017. Although Yeti continued to invest in their hunting and shing com munities. their customer base dropped from 69 to 33 PART 2 Cases in Crafting anc- Execming Strategy percent hunters during 2015-2018. as the company's appeal broadened beyond their original customer communities. Yeti's IPO and Stock In 2016. Yeti led an [PO to reduce debt and cash out its private equity owners. however, a downturn in business caused the company to withdraw its filing. The young company had considerable success in the early years and grew too rapidly. with the result of pushing excess product to its retailers and ovcrbuild- ing inventory in 20th. Also. a major retailer. Sports Authority. led for bankruptcy in 2016 and a large amount of inventory was liquidated at greatly dis- counted prices. depressing Yeti's sales. The excessive inventory buildup resulted in the company's margins and revenue suffering a downturn. Revenue declined by 23 percent in 201? and alter-tax operating profit declined from 18 percent to seven percent. The busi- ness downturn. plus a general market seiloff resulted in Yeti withdrawing its 1P0 plans in March 2018. Seven months later. on October 24. 2018. Yeti went public: the company priced its public offering at $18.00. a bit less than the $19.00 to $21.00 per share price that it originally intended. and sold 16 million shares (versus the 20 million projected): the IPO brought in approximately $288 million. Yeti received only about $42.4 million of the 1P0 proceeds: the balance of the proceeds went to the Cortex Group. which retained its majority ownership. In November 2018. Yeti used the proceeds from the [PO. plus cash on hand to reduce its debt. The management agree- ment with Cortex Was terminated with the 2018 IPO. Yeti's stock had a generally upward trajectory. reaching $34.92 in April of 2019. which was its high. The stock seesawed from that point through the begin- ning of the C0'VlD19 market sell-oil". during which it fell to $16.42 on March 20. 2020. The stock rode the market recovery back up and closed on May 15. 2020 at $26.93see Exhibit 1. Yeti's Strategy Yeti product strategy was to expand existing product groups and enter new product categories by designing new offerings based on its consumers' visions and product knowledge. The company followed a temporal progression in expanding their product line: rst was introduction of an anchor product and. second. product expansions such as new colors and sizes and then CASE 13 Yeti in 2020: Can Brand Name and -mova:ion Keep it Ahead of the Competition? EXHIBIT] CITS Yeti Holdings, lnc. Stock Price, October 2018May 2020 $35 $30 $25 Share Price $20 $15 $10 2018 2019 2019 2019 So urce: nasdaqom. offering accessories. To ensure continued success in bringing products to market, Yeti's product development and marketing teams collaborated to identify consumer needs and wants, and then employed its research and development center to design prototypes and evaluate performance. Yeti's development process was designed to provide reliable quality control while enhancing product speed-tomarket. This strategy appeared to worka May 2018 Yeti owner study. indicated that 95 percent said they had proactively recommended Yeti products to their friends. family. and others through social media or by word-of-mouth. Yeti collaborated with its 'YETI Ambassadors.' which was a diverse group of" men and women throughout the United States and select international markets. comprised of world-class anglers, surf; ers, hunters, rodeo cowboys, barbecue pitmasters, and various outdoor adventurers who embodied its brand. Yeti worked hard to cultivate relationships with experts, serious enthusiasts, and everyday cone sumers, including a combination of traditional, digi- tal. social media, and grass-roots initiatives to support the premium-priced brand. in addition to original short films and high-quality content for VETl.com. Yeti learned from the 2016-]? inventory disaster and began increasing its concentration on direct- toconsumer sales through the company's direct-to eonsumer strategy including its websites and Amazon 2019 2019 2019 Year 2020 2020 2020 Marketplace. This strategy immediately showed positive results: the directtoconsumer channel grew from eight percent of revenue in 2015 to 30 percent in 201?, 26 percent in 2018, and 42 percent in 20l9. As comparison, Dick's Sporting Goods, Yeti's largest retail partner. accounted for 14 percent of revenue in 20111 and 15 percent in 2019. The move from brick and mortar retail outlets to increasingly direct-to- consumer sales provided Yeti with benefits beyond improved revenue. Customers dealt directly with the company rather than a retail intermediary, brand ioyalty increased, the company had better ability to manage inventory, there was no retail middleman taking part ofthe profit, and thus gross margins were higher. in February 2020, Market Watch ranked Yeti number one in insulated coolers Yeti's Product Line Yeti's product portfolio comprised three categories: Coolers & Equipment; Drinkware; and Other. The company had a history of consistently broadening its premiumpriced product line to meet its expand- ing customer haSe and was quite efficient at identify- ing customer needs and wants to drive its product tine. As is shown in Exhibit 2, net sales of Coolers & Equipment, Drinkware, and Other represented 40 and 58 percent of net Sales. respectively. in 20l9. C-176 PART 2 Cases in Crafting and Executing Strategy EXHIBIT 2 Yeti Holdings, Inc.'s Net Dry gear case ($49.99), Hondo Base Camp Chair Sales by Category, 2017-2019 ($299.99), Lowlands Blanket, Trailhead Dog Bed, and (dollars in thousands) Boomer Dog Bowls. Yeti also offered several related accessories, including bottle openers, lids, and storage 2019 2018 2017 organizers. Coolers & Drinkware. Yeti drinkware was manufactured with 18/8 Equipment $368,874 $331,224 $312,237 stainless-steel, double-wall vacuum insulation, and a No Drinkware 526,241 424,164 310,287 Sweat design. The drinkware products kept beverages at Other 18,619 23,445 16,715 their preferred temperature, either hot or cold, for hours Total net sales $913,734 $778,833 $639,239 at a time without condensation. Yeti's 2020 drinkware product line comprised the Rambler Colster ($29.99), Source: Yeti Holdings, Inc. Annual Report, 2019. Rambler Lowball ($19.99), Rambler Wine Tumbler ($24.99), Rambler Stackable Pints ($24.99-$49.99), Rambler Mugs ($24.99-$29.99), Rambler Tumblers Coolers. The Coolers & Equipment line included ($34.99-$39.99), Rambler Bottles ($29.99-$49.99), and hard and soft coolers, storage, transport, outdoor liv- Rambler Jugs ($99.99-$129.99). There were also acces- ing, and accessories. The Yeti hard coolers were built sories including the Rambler Bottle Straw Cap, Rambler differently than traditional coolers, and used seam- Tumbler Handles, Rambler Jug Mount, and Rambler less rotationally-molded, or rotomolded, construct Bottle Sling. tion, making them extremely strong. To increase ice Yeti offered a broad line of YETI-branded gear retention, Yeti pressure-injected up to two inches of and accessories including shirts, hats, bottle openers, polyurethane foam into the walls and lid and utilized and ice substitutes. The LoadOut GoBox, Rambler a freezer-quality gasket to seal the lid. There were five 12-ounce Bottle with Hotshot Cap, Daytrip Lunch products in Yeti's core hard cooler category: YETI Bag, next-generation Hopper M30 Soft Cooler, Tundra (45 quart, $299.99-210 quart, $799.99), Rambler Jr. Kids Bottle, Rambler 10-ounce Stackable YETI TANK ($199.99-$249.99), YETI Roadie Mug, the Trailhead Dog Bed, Boomer 4 Dog Bowl, ($199.99), Tundra Haul wheeled cooler ($399.99), Crossroads 23 Backpack, Crossroads Tote Bag, and YETI Silo6G ($299.99). The company also Rambler 24-ounce. Mug, V Series Hard Cooler and offered accessories such as cooler locks and bever- new colorways for Drinkware, hard and soft coolers, age holders. In 2019, Yeti introduced a stainless-steel and the Camino Carryall were all launched in 2019. body YETI V Series Hard Cooler ($800.00), which Also in 2019, the company expanded distribution of combined the vacuum insulation technology used in its Camino Carryall to the wholesale channel. their Tumblers with the construction of their hard Although Yeti products were very high quality, coolers to produce more efficient insulation. they were not unquestionably the best. The Strategist The Yeti Soft Cooler line was designed to be ranked Yeti's insulated tumbler number three, behind leakproof and provide superior durability and ice two little-known tumblers, the Beast and Maars Bev retention compared to competing soft coolers. The in 2019. In July 2019, the Chicago Tribune review Hopper soft cooler product line included the Hopper also placed Yeti's Ramble tumbler number three. M30 ($299.99), Hopper BackFlip ($299.99) In April 2020, Outsidepursuits' review of camping Hopper Flip ($199.99-$299.99), and Daytrip Lunch coolers had placed the Yeti Tundra at number three Bag ($79.99). Yeti offered related accessories such as behind Pelican and Engel. the SideKick Dry gear case, MOLLE Zinger lanyard, and a mountable MOLLE Bottle Opener. Sales Channels Storage, Transport, and Outdoor Living. Yeti's stor- Yeti's gross sales to independent retail partners were age, transport, and outdoor living product category 22 percent and 18 percent, in 2018 and 2019, respec- included: the Panga submersible duffel bag ($299.99- tively. These partners did not provide Yeti with long- $399.99), LoadOut Bucket ($39.99), Panga Backpack term purchase commitments, and orders placed by ($299.99), Crossroads Backpack ($199.99), Crossroads these retail partners could be cancelled. Net channel Tote ($179.99), Camino Carryall ($149.99), SideKick sales are provided in Exhibit 3.CASE 13 Yeti in 2020: Can Brand Name and Innovation Keep it Ahead of the Competition? C-177 EXHIBIT 3 Yeti Holdings, Inc.'s Net over its e-commerce channel provided customers the Sales by Channel, 2017-2019 highest level of brand engagement, and built customer (dollars in thousands) loyalty, while generating attractive revenues." 2019 2018 2017 Yeti's global sales Wholesale $527,634 $491,431 $444,854 Part of Yeti's strategy was international expan- Direct-to- sion, and in June 2019, the company launched its consumer 386,100 287,402 194,385 Canadian website. Also, in mid-2019, websites were Total net sales $913,734 $778,833 $639,239 opened in Europe, the United Kingdom, and New Zealand. The company showed steady increases in Source: Yeti Holdings, Inc. Annual Report, 2019. international sales revenue as shown in Exhibit 4. Yeti's Innovation Center Yeti had significant sales concentration among its retail partners. For example, Dick's Sporting As the company moved through the developing years, Goods accounted for 16 percent and 15 percent Yeti noticed that its prototyping services and testing of gross sales in 2018 and 2019 respectively. Yeti's were being outsourced, and the back and forth com- wholesale channels sold to several large, national munication and sample development was creating retailers, including Dick's Sporting Goods, Bass Pro long timelines for new product introductions. The Shops, REI, Academy Sports + Outdoors, and Ace company was also left vulnerable to leaks and was Hardware, other retailers with a significant regional forced to relinquish a degree of control over product presence, and independent retail partners through- testing. In order to bring control back to the com- out the United States, Canada, and Australia. Yeti's pany, Yeti opened its Innovation center in August network of independent retail partners included out- 2016. Operations were streamlined and it began pro- door specialty, hardware, sporting goods, and farm totyping, product development, and testing at its own and ranch supply stores, among others. As of the end Innovation Center. This move created greater con- of 2018, Yeti sold through a diverse base of nearly trol over its products, product innovation, and speed 4,800 independent retail partners; however, the of development, as well as protected its intellectual company realized that the loss of key retail partners property. CEO Matt Reintjes believed that their could be problematic. Part of the company's growth offensive strategy was to continue to be an innova- strategy was to increase the direct-to-consumer sales; tion leader and stay ahead of the competition. however, the company had limited experience operat- The Innovation Center housed 3D printers, ing the retail e-commerce part of the strategy. which enabled Yeti to speed up the process of bring- The company sold in a direct-to-customer channel ing products to reality through prototyping capabili to consumers on YETI.com, au. YETI.com, and YETI ties. The Innovation Center also housed machines Authorized on Amazon Marketplace. Customized used for rigorous product testing or as Director of products with licensed brand marks and original art- work were sold through its corporate sales program and at YETIcustomshop.com. A full line of Yeti prod- EXHIBIT 4 Yeti Holdings, Inc.'s Net ucts were also sold in Austin, Texas, at the company's Sales by Geographic first retail store, which opened during fiscal 2017, and Region, 2017-2019 in corporate stores in Dallas, Texas; Charleston, South Carolina; and Chicago, Illinois. Yeti's direct to con- (dollars in thousands) sumer e-commerce channel allowed the company to 2019 2018 2017 directly interact with customers, more effectively con- trol its brand, better understand consumer behaviors United States $873,867 $761,880 $635,195 and preferences, and offer exclusive products and cus- International 39,867 16,953 4.044 tomization. According to Doug Schmidt, Director of Total net sales $913,734 $778,833 $639,239 Retail Operations, the goal was to "immerse custom- ers in the Yeti brand. The company believed its control Source: Yeti Holdings, Inc. Annual Report, 2019.C-l'l' Engineering. Scott Barbieri called it \"torture tests.\" Prior to Yeti's products going to market. they were given to product ambassadors who were profes- sional outdoor enthusiasts. These ambassadors pro- vided their insights into the utility of the product. placement of zippers, straps. etc. Having a more streamlined development process allowed Yeti to involve brand ambassadors in product development discussions. According to Category Manager Alex Baires. it was about starting from the ground up. and making a product as best the company could make it. The com- pany products were familiar products with renewed utility that could be employed in a number of ways. The company focused on introducing new categories of products, and bringing innovation into the market through performance. durability. quality. and design. Yeti did not target a particular audience. rather it attracted new audience segments. Yeti's Partnerships Yeti formed several partnerships to help increase and sustain brand recognition. Yeti became an official NASCAR partner and a sponsor of the Professional Bull Riders {PBR} in 20l7. in January 2020, Yeti entered into a partnership with USA Climbing. becoming the Ofcial Cooler and Drinkware Partner in support of the organization's sustainability efforts. The goal was to integrate Yeti in all aspects of the sport and provide support for the US. National team as they compete internationally. Both organizations had a commitment to sustainability and reducing singleuse plastic. Also in 2020. Yeti entered into a multiycar sponsorship agreement with Austin FC, the 27'\" Club Major League Soccer team. This partner- ship marked Yeti's formal entry into professional soccer and eSports. As official partners, Yeti was featured within Austin's FC's visual identity. The company also sponsored Austin FC's sustainability efforts to launch green initiatives that include the development of comprehensive recycling, compost. and water ll policies and practices at Austin FC's stadium. Other Yeti partnerships included a multiyear agreement with the PGA Tour for product licensing. and the exclusive rights to sell Yeti drinkware and coolers at TOUR-operated tournament retail outlets and facilities. PART 2 Cases II". Crating nod Executing Strategy Yeti's Financial Condition Yeti's consolidated balance sheets. 2018-2019 are produced in Exhibit 5. the consolidated statement of operations in Exhibit 6. and a consolidated state- ment ofoperations data in Exhibit 7. Yeti's Rivals in the Outdoor and Recreation Products Market Yeti competed primarily in the large outdoor and rec- reation market, but also competed in other markets. According to Yeti. competition was based on prod uct quality. performance. durability. styling. price. and brand image and recognition. In the coolers and equipment category. the company competed against lgloo and Coleman. as well as many other brands and retailers that offered similar competing products. Yeti believed that the popularity of their products. as well as their brand. had attracted numerous new competitors including Pelican, OtterBox. and others, as well as private label brands. [n the Drinkware cat- egory. Yeti competed against wellknown brands such as Tervis and HydroFlask. and many other brands with competing products. The outdoor and recre- ation market was highly fragmented and highly com- petitive. with low barriers to entry. Igloo Igloo was founded in a metalworking shop in [947. Igloo had approximately 1200 employees and a 1.8 million square-foot. three building facility in Katy, Texas in 20l9. Igloo sold more than 500 products through hundreds of retailers worldwide. The compa- ny's products included insulated coolers for personal and industrial use and insulated tumblers and grow]- ers. In 2014. igloo, was acquired by the private-equity firm Acon Investments. The company's Legacy stainless steel tumbler line ranged from 12 ounces ($l5.99) to 22 ounces t$l8.99). igloo offered stainless steel growlers in 36 ounces ($24.99) and 64 ounces {$34.99) sizes, stainless steel coffee mugs in lounce (5: I999) and 200unce ($20.99) sizes. and a full line of rum blers. and other drinkWare in double sided plastic. The company's hard side cooler offering was expan- sive. ranging from seven-quart coolers ($39.99) to 124-quart (5299.99) and included the very popular Playmate line. There were numerous igloo soft side coolers ranging from small lunch bags ($7.99} to 46 CASE 13 Yeti in 2020: Can Brand Name and Innovation Keep it Ahead of the Competition? C-179 EXHIBIT 5 Yeti Holdings, Inc.'s Consolidated Balance Sheets, 2018-2019 (in thousands, except per share data) December 28, 2019 December 29, 2018 ASSETS Current assets Cash $ 72,515 $ 80,051 Accounts receivable, net 82,688 59,328 Inventory 185,700 145,423 Prepaid expenses and other current assets 19.644 12,211 Total current assets 360,547 297,013 Property and equipment, net 82,610 74.097 Operating lease right-of-use assets 37,768 Goodwill 54,293 54,293 Intangible assets, net 90,850 80,019 Deferred income taxes 1,082 7,777 Deferred charges and other assets 2,389 1,014 Total assets $629,539 $514,213 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable $ 83,823 $ 68,737 Accrued expenses and other current liabilities 42,088 53,022 Taxes payable 3,329 6,390 Accrued payroll and related costs 18, 1 19 15,551 Operating lease liabilities 7,768 Current maturities of long-term debt 15,185 43,638 Total current liabilities 170,312 187,338 Long-term debt, net of current portion 281,715 284,376 Operating lease liabilities, non-current 42,200 Other liabilities 13,307 13,528 Total liabilities $507,534 $485,242 Source: Yeti Holdings, Inc. Annual Report, 2019. can Tactical Duffle Bag coolers ($69.99) to 50 can paraffin wax, won Igloo multiple awards, including coolers ($53.99). Best in Show from Gear Junkie, at the 2019 Outdoor Igloo had a very large product offering in all of Retailer and Snow Show. Following the success of the cooler and tumbler categories, which were priced the biodegradable RECOOL cooler, Igloo intro- very competitively, plus it had the iconic Playmate duced the REPREVE soft side cooler made from cooler and was a major competitor in the industry. recycled plastic bottles and announced plans to add However, its strategy moving into 2020 appeared 20 new REPREVE bag styles to the recycled plastics to have the potential to significantly boost Igloo's line in 2020. sales revenue. In April 2019, Igloo introduced a bio- In 2020, Igloo announced development of a degradable cooler, the RECOOL, a 16-quart model bioplastic line of its Playmate cooler, made from aimed at the environmentally conscious consumer. sugarcane plants. The new bioplastic Playmate was The RECOOL, made of recycled tree pulp and scheduled for the consumer market in early 2021.C-180 PART 2 Cases in Crafting and Executing Strategy EXHIBIT 6 Yeti Holdings, Inc.'s Consolidated Statements of Operations, 2017-2019 (in thousands, except per share data) Fiscal Year Ended December 28, 2019 December 29, 2018 December 30, 2017 Net sales $913,734 $778,833 $639,239 Cost of goods sold 438,420 395,705 344,638 Gross profit 475,314 383,128 294,601 Selling, general, and administrative expenses 385,543 280,972 230,634 Operating income 89,771 102,156 63,967 Interest expense (21,779) (31,280) (32,607) Other (expense) income 734) (1,261) 699 Income before income taxes 67,258 69,615 32,059 Income tax expense (16,824) (1 1,852) (16,658) Net income $ 50,434 $ 57,763 $ 15,401 Net income per share Basic $0.59 $0.71 $0.19 Diluted $0.58 $0.69 $0. 19 Weighted-average common shares outstanding Basic 85,088 81,777 81,479 Diluted 86,347 83,519 82,972 Source: Yeti Holdings, Inc. Annual Report, 2019. EXHIBIT 7 Yeti Holdings, Inc.'s Consolidated Statement of Operations Data, 2015-2019 (in thousands, except per share data) Year Ended December 28, December 29, December 30, December 31, December 31, 2019 2018 2017 2016 2015 Net sales $913,734 $778,833 $639,239 $818,914 $468,946 Gross profit 475,314 383,128 294,601 413,961 218,701 Net Income 50,434 57,763 15,401 48,788 74,222 Net income per share-diluted $0.58 $0.69 $0.19 $0.58 $0.92 Source: Yeti Holdings, Inc. Annual Report, 2019. Also in 2020, Igloo partnered with BASF to engi- surfing; this group also included graphic designers neer a new proprietary insulation foam, Thermecool, whose designs were used on Igloo coolers. which was used for all of its hard side coolers. Igloo claimed that the new environmentally friendly insu- lation would have the net effect of removing over Tervis 86,000 cars from the American roads per year. Tervis had its beginning in post WWII Detroit, Igloo sponsored brand ambassadors who were Michigan, when its founders perfected the double active in outdoor sports such as fishing, running, and wall cup technology to keep warm things warm andCASE 13 Yeti in 2020: Can Brand Name and Innovation Keep it Ahead of the Competition? C-181 cool things cool. The name "Tervis" came from the Yeti. Their Venture coolers ranged from 25 to 65 last three letters of both founders' names: Frank quart capacity with prices from $229.99 to $349.99 Cotter and Howlett Davis. Ten years later, John and Otterbox Trooper soft side coolers, in 12 to 30 Winslow bought the rights to the tumbler, moved quart sizes, were priced from $199.99 to $299.99. the manufacturing to Osprey, Florida, and founded The company offered a large line of insulated tum- Tervis Tumbler Co. Winslow sold the cups door-to- blers, ranging from small 10-ounce coffee cups door and dock-to-dock, and soon the tumbler became (424.99), wine tumblers ($19.99), to 20-ounce tum- a Florida favorite. The company produced primar blers ($29.99), and growlers in 28-ounce ($34.99) ily state novelty cups, primarily Gulf and Atlantic to 64-ounce ($69.99) sizes. There was also an coast states; however, other decals could be inserted expansive line of hard and soft cooler and tumbler between the two layers of plastic. Tervis made a shift accessories. from primarily state novelty cups to a national prod- uct in 1995 when it began licensing college sports HydroFlask and, later, major league sports logos. The company's newest products include wine glasses, sippy cups for Hydro Flask was founded in 2009 in Bend, Oregon. toddlers, and metal insulated cups. The company was a manufacturer of high-perfor- The Tervis line of drinkware was primarily plas- mance insulated products ranging from beverage and tic, however it offered several stainless-steel prod- food flasks, to their Unbound Series Soft Coolers. ucts, including tumblers ranging from 20 ounces Hydro Flask products utilized TempShield double- ($29.99) to 30 ounces ($39.99). Tervis began a part- wall vacuum insulation and 18/8 stainless steel to nership with Bed, Bath, & Beyond, and launched its maintain temperatures in their products. HydroFlask E-commerce site in 2008. In 2009, despite the Great had become popular among millennials and Gen Zers Recession, Tervis's revenues rose 40 percent, from due to its trendy aesthetics. There were a variety of $34 million in 2008, to $47.6 million, and its employ- sizes, from a 12-ounce kids' bottle to a 64-ounce jug, ees increased from 200 to 275. In 2009, Tervis's standard or wide mouth bottles and multiple lids to products were sold in more than 6,000 outlets nation- fit each. HydroFlask's stainless steel tumblers ranged wide, and in company stores in Osprey, Fort Meyers, from 16 ounces ($27.95) to 32 ounces ($39.95). Palm Beach, and The Villages in Florida. Their large line of products included 12 ounces to 20 ounces coffee flasks priced from $29.95 to $34.95; 64-ounce. beer growlers ($64.95); drink bottles in Otter Box 12-ounce to 64-ounce sizes ($29.95-$64.95); and Like many start-up companies, OtterBox began with insulated totes ($44.95-$64.95). The company's line of Unbound soft side coolers and totes ranged from a dream. Curt Richardson started the company 15 liters ($174.95) to 22 liters ($199.85). Tumblers in a garage in 1998, and created the first OtterBox and other drinkware carried a lifetime warranty, and product, which was a waterproof case. Starting with coolers and totes had a five-year warranty. a simple box, OtterBox built upon the fundamen tals of hard work, taking risks, and being consumer focused to pursue its mission: "We Grow to Give." Corkcicle OtterBox was a seven-time honoree on the Inc. Corkcicle was founded in 2010 by Ben Hewitt. 5000 list of fastest-growing private companies in the Hewitt, an avid chardonnay drinker, who thought United States. The company was also named one of there had to be a better idea to keep wine cold that "America's Most Promising Companies' by Forbes did not involve a messy ice bucket. His initial idea Magazine, one of the 'Healthiest Companies to Work involved putting the content of a gel pack into a test For in America' by Greatist, and ranked as a 'Great tube and covering it with a Kendall-Jackson cork. Place to Work' by Fortune, Forbes, and Entrepreneur During Corkcicle's first holiday season, the company Magazine. The company was headquartered in Fort sold roughly 300,000 corkcicles. This gave way to the Collins, Colorado, with offices in San Diego, Hong creation of other products such as the Chillsner that Kong, and Cork, Ireland. kept bottled beer cold, the Artican that would keep Otterbox manufactured a line of coolers, drink- canned beverages chilly, and the crafted canteen that ware and accessories that directly competed with keeps beverages cool for up to 25 hours or warm forC-182 PART 2 Cases in Crafting and Executing Strategy up to 12 hours. Corkcicle products included stain- Pelican less steel tumblers ($27.95-$37.95), stemless wine cups ($24.95-$29.95), hybrid canteens ($39.95), Pelican was founded in 1976 by Dave and Arline coffee mugs ($39.95), lunch boxes ($39.95), and Parker in their Torrance, California garage. Dave, who cooler bags ($129.95-$174.95). As of January 2020, had been a scuba diver since age 11, recognized the Corkcicle entered into a strategic partnership with need for rugged flashlights and cases that wouldn't Gemline, a promotional supplier of bags, business leak or fail and set out to build a better product than accessories, drinkware, gifts, and writing instruments any other on the market. After years of work, Pelican for product sales and distribution. Products became a reality with its first product pat- ent, the Pelican FloatTM. The SabreLiteTM flashlight Coleman and Protector Cases soon followed. Pelican's prod- uct line and company grew steadily over the years Coleman had its beginning with a gas-powered and, in 2004, the company was acquired by private lantern designed by W. C. Coleman. In 1905, equity firm, Behrman Capital. Shortly thereafter, the the first night football game was lit by Coleman company experienced a tremendous global growth lanterns, and during WWII, Coleman camping trend under its new CEO Lyndon Faulkner. The com- stoves transformed the way soldiers ate in the field. pany added coolers and drinkware to its product line Coleman designed and manufactured outdoor in 2012. recreational products. Coleman's products included The Pelican line of Dayventure soft side coolers coolers, tents, sleeping bags, canopies, camping included nine-quart ($149.95) and 19-quart ($249.95) items, and lighting. Coleman products had been sold models, and its hard side cooler line ranged from domestically and internationally since the 1920s. 20-quart ($153.95) to 150-quart ($648.95) models. Their strong market position was attributable to its The company's hard coolers were 30 percent lighter well-recognized trademarks, its broad product line, than roto-molded coolers, and had two-inch solid wall and product quality. The company did not sell direct, construction, stainless-steel latches, built-in cupholders, rather through numerous big box retailers (e.g., Bass and were guaranteed for life. Pelican's stainless steel Pro Shops, Cabela's, Home Depot, Dick's Sporting Dayventure tumbler line ranged from 10oz. ($19.95) to Goods, Target, and Walmart), as well as Amazon. 22oz. ($29.95), and its insulated stainless bottles ranged The large Coleman line of hard coolers ranged from 18oz. ($24.95) to 64oz. ($49.95). from small 28-quart models ($22.61) to 54-quart steel belted coolers ($119.95), and included a 52-quart Xtreme model ($51.00) that would keep drinks Numerous Small Brands cold for a week in temperatures up to 90 degrees Coolers and especially insulated tumblers and acces- Farenheit, and a 150-quart Marine cooler that would sories were rather simple and inexpensive to manu- keep 223 can cold for 6 days in 90 degree Farenheit facture and within the abilities of a large number temperatures. Coleman's soft side coolers ranged of manufacturing companies. Consequently, many from small, 4-quart models ($11.25) to 36-quart mod- small specialty retailers contracted with manufac els ($65.55), and their stainless-steel tumbler line tures for these products and competed with Yeti (and ranged from a 13oz. Rocks Glass ($12.00) to a 30oz. other large companies). Companies such as ORCA, tumbler ($19.99). Monoprice Polar Bear, RTIC, K2, Domestic, IceMule, Coleman's 2019-20 partnerships included Jeep Ozark, Titan, Frosted Frog, CaterGater, Engel, RovR, Jamboree USA, an outdoor family oriented adven- and Xspec were examples of smaller retailers com- ture trip; Stagecoach Country Music Festival; Seven peting in the insulated cooler market. The insulated Peaks Music Festival; Great American Beer Festival; tumbler market was equally crowded, with companies and park districts. Coleman also partnered with such as Klean Kanteen, Mira, Sunwill, Beast, Drinco, Team Rubicon, an organization that provided relief Maars Bev, RTIC, Umite Chef, Atlin, Baroon, Ozark to those affected by natural disasters, and Convoy of Trail, Zojirushi, Sipworksw, Mukoko, Bugga Keg, Hope, a nonprofit community outreach and disaster Ultra Fyt, MalloMe, and others selling tumblers that relief organization. directly competed with Yeti.CASE 13 Yeti in 2020: Can Brand Name and Innovation Keen it Ahead of ['10 Competition? Yeti's Strategic Situation in Mid~2020 Going into mid2020, Yeti management sought to cap itaiize on its nancial and market success with contin- ued growth. The company's products resonated with consumers, with sates increasing in both in the United States and internationally. There were opportunities for management to improve the company's internal {3-183 operations and strategy, but external factors were among the most worrisome issues facing the company. It was imperative that the company prepare itself for the impact of unfavorable tariffs. prolonged effects of the COVlD-l9 pandemic, and the proliferation of rivals seeking to unseat Yeti as the leading premium brand of coolers, drinkware, and related products