Quaker Sees Salvation In Hot Summer

The Quaker Oats Co., no longer feeling the heat for its failure with the Snapple tea and fruit-juice line, is hoping for a sizzling summer to turn things around.

The Chicago-based maker of Cap’N Crunch cereals and Gatorade sports drink is counting on a hot summer to fuel consumers’ thirst for Gatorade, while maintaining strong cereal sales amid heavy competition.

By focusing on and expanding its core businesses, Quaker could prevent a possible takeover, analysts said.

After completing the sale of Snapple in May to Triarc Cos. for a mere $300 million, Quaker once again has become the subject of takeover rumors.

PepsiCo. and Coca-Cola Co. reportedly would like to get their hands on Gatorade. Top cereal makers might be interested in acquiring Quaker’s cereal line.

Quaker’s independence depends in part on who is selected to replace William D. Smithburg as chief executive in coming months, said analyst John McMillan at Prudential Securities Inc. Smithburg announced his resignation after the Snapple debacle but remains until a successor is chosen.

“Everybody’s kind of waiting with baited breath for the new CEO to be chosen,” McMillan aid. “They’re wondering, ‘Will the new head be a caretaker until a takeover, or will he be a young growth manager looking to take the company higher?”’

Another factor in Quaker’s fortunes is the weather. A cool, wet summer could spell disaster for top-performing Gatorade. Quaker saw Gatorade sales slump last year because of an unusually cool spring and summer in the key Northeast region.

“They got rid of their biggest problem, Snapple, and now need to keep Gatorade and cereals humming along,” McMillan said. “The key to their independence is keeping Gatorade up, and to do that they need a good, hot summer.”

Quaker already has seen strong early sales of its new, three-drink Gatorade Frost line.

And for those parents who also find it too hot to whip up the kids’ favorite snacks, the company this year is spending $23 million to introduce Cap’N Crunch Bars - marshmallow treats to rival Kellogg’s Rice Krispies Treats.