By BERNARD BAUMOHL: JOHN GREENWALD; MICHAEL KRANTZ

DRINKING PROBLEM

For Quaker Oats, Snapple soft drinks have been proving hard to swallow. Quaker paid $1.7 billion for Snapple in 1994, only to watch the acquisition lose $100 million in 1995. Quaker's stock has fallen from $37.50 to $33 in the past year, even as the market bubbled. So CEO Bill Smithburg is under pressure to get profits flowing again at the $6.3 billion company. The board even canceled his bonus. Quaker's Gatorade sports drink is No. 1 in its category. But the company has more modest aims for Snapple, which has less than 5% of the soft-drink market and tons of competitors. Quaker is spending $40 million on a series of humorous TV spots that alternately praise rival colas and stress Snapple's determination "to be No. 3"--behind Coke and Pepsi, that is. For stockholders, it's no longer a joking matter.

GALLO TURNS A LEAF

With more than $800 million in sales, Gallo is the king of jug wines. But the company's market share has evaporated from 42% to 35% in the past five years as consumers have switched to fancier though still inexpensive varietals, such as Kendall-Jackson's $12-a-bottle Chardonnay. Now Kendall-Jackson, an industry innovator with $150 million in sales, alleges that Gallo's new Turning Leaf brand illegally copies the label and look of K-J's best seller. Sour grapes, retorts Gallo, whose distribution power has helped the Turning Leaf line make inroads into Kendall-Jackson's markets.

THAT'S MY CHEESE!

Former Mickey Mouse maven Jeffrey Katzenberg knows a sweet deal when he doesn't get one. As head of filmmaking for the Walt Disney Co., Katzenberg was entitled to 2% of the profits from films and TV shows produced under his watch, says a suit he filed last week against his old employer. That could amount to a Lion King's ransom, because Katzenberg's definition of profits includes much more than income from movie tickets. "By way of example," says the suit, "in 1994 Disney's video re-release of Snow White, an animated feature first released over 50 years earlier, generated gross revenues of some $800 million and profit of over $500 million."

Katzenberg, who reanimated Disney by honchoing such megahits as Aladdin and The Lion King, says Disney stiffed him out of $250 million in unpaid bonuses. The high drama is Hollywood's favorite feud--between Katzenberg and Disney chairman Michael Eisner. Katzenberg stormed out in 1994 when Eisner refused to promote him to president. Last week a feisty Katzenberg was calling himself "the $250 million man."

GOING CASHLESS

You have a bank card, a business card and way too many credit cards. Do you still have one card too few? Visa, MasterCard, Citibank and Chase Manhattan all think so. This fall New York City will thrill to the roll-out of cash cards, the latest salvo in the banking and credit-card industries' eternal search to replace currency with plastic. Despite promises of a cashless society, 85% of everyday transactions are in cash or checks, which generate little income for banks.

The roll-out, which will follow a similar May launch in Olympic Atlanta, will allow customers to get chip-enhanced atm cards that some banks will load with $100 in "smart money," to be used at 500 or so merchants in a 32-block section of Manhattan's Upper West Side. Shoppers who are spending, say, $1.03 for a quart of milk just slide the card through an electronic reader. No fishing for change.

Although a hundred bucks has a half-life of about five seconds in New York, the venture partners hope the cards will prove so convenient that consumers will eventually agree to fork over a small transaction fee for the privilege. Now that's what bankers would call a really smart card.