Crescent pure: Case Study. This presentation has been created by Ayush Tyagi, IIT Roorkee, during a marketing internship under the guidance of Prof. Sameer Mathur, IIM Lucknow.

1. CRESCENT PURE
CASE ANALYSIS

2. CRESCENT PURE
• Founded by Peter Hooper in 2008
• Non-alcoholic functional beverage with a combination of energy-enhancing,
hydrating, and all-organic ingredients
• Healthy alternative to artificial energy drinks laden with excess sugar
• Sold 1,000 cases per month in Oregon region at a premium price of $3.75 for
an 8-ounce can

3. PORTLAND DRAKE BEVERAGES (PDB)
• Manufacturer of organic juices and sparkling waters
• Operates in $131 billion non-alcoholic beverage market
• Revenues hit $120.5 million in 2012
• Acquired Crescent Pure in July 2013 to expand its trusted and popular organic
products line

4. SITUATION
ANALYSIS
• PDB executives know that rival beverage companies are
planning to launch all-natural versions of their own
sports and energy drinks in the second half of 2015
• PDB wants a ‘soft launch’ of Crescent in three western
states (California, Oregon, and Washington) in January
2014 to gain first mover advantage
• PDB plans to spend $750,000 on advertising for Crescent
in 2014 and use that figure as a benchmark earnings goal
• PDB’s CEO Michael Booth has tasked Sarah Ryan to
finalize a product-positioning strategy for Crescent and
recommend it to the executive team

5. Which positioning
strategy would maximize
Crescent Pure’s revenue?
Energy Drink Positioning
OR
Sports Drink Positioning

7. ENERGY DRINKS

8. STRENGTHS
• All Crescent ingredients are ‘certified organic’
• The average price for 8 oz. of energy drink in the U.S. is
$2.99, above Crescent’s $2.75 price point
• Between 2010 and 2012, the market for energy drinks
had grown by a huge 40%. The projected market for
energy drinks in 2013 is $8.5 billion
• Crescent’s herbal stimulants delivered 80 milligrams of
caffeine; half the energy contained in a similar serving of
the two leading energy beverages

9. WEAKNESSES
• Together, Fright, Razor, Torque, and Stellar accounted for
85% of category revenue
• Major consumers are middle aged men only
• In a market research, some younger consumers noted
that Crescent had less energy than they had hoped, and
some others questioned PDB’s ability to deliver quality
organic ingredients at just $2.75

10. OPPORTUNITIES
• Sales of energy drinks with lower levels of caffeine and
purer ingredients were rising due to consumer demand
for healthier food and beverage choices
• The energy drinks market was projected to reach $13.5
billion by 2018
• In a market survey, most participants expected Crescent’s
price would be above $3.00 due to its organic and
energy ingredients and relative prices of other brands
• A consumer survey conducted at an outdoor music
festival indicated consumers viewed “energy” as
Crescent’s most descriptive characteristic

11. THREATS
• Concern over long-term viability of this market due to
falling consumption of energy drinks after negative
media attention
• News stories were highlighting the drinks’ alleged health
risks: A marketing survey revealed that only 32% of
consumers over 18 indicated they drank an energy drink
in the last six months, 11% of whom were drinking fewer
energy drinks than they had a year earlier, due to
concerns about health and safety

12. SPORTS DRINKS

13. STRENGTHS
• They attracted a wider consumer base than did energy
drinks, and regular users consumed them more often: 42%
of sports beverage drinkers considered sports drinks
‘anytime beverages’ and did not associate them only with
exercise
• In 2012, the market for sports drinks was $6.3 billion
• Crescent’s hydrating elements, paired with the mental
focus and energy boost, can enhance athletic performance
• Crescent’s sugar quotient (derived from organic, raw cane
sugar) was 70% less than leading brands, on average

14. WEAKNESSES
• Crescent’s $2.75 price point for an 8-oz. can will be
significantly higher than are those of similarly sized
sports drinks ($1.00 to $2.00 for 12-oz. and 24-oz.
containers ). Thus, their positioning and advertising will
have to build the case for its premium price despite their
small budget of $750,000
• The market increased only 9% between 2007 and 2012
and still has a very slow growth rate
• Two leading brands, Gleam and Drip had 73% and 21%
market share, respectively

15. OPPORTUNITIES
• New diet and low-sugar sports drinks were growth areas
for the industry. Diet and low-sugar sports beverages,
which did not exist before 2009, had grown by 33%
between 2010 and 2012, taking market share from
traditional sports drinks
• The market size for diet and low-sugar sports drinks was
expected to increase from $1.4 billion in 2012 to $2.97
billion in 2017
• The sports drinks market was projected to reach $9.58
billion by 2017

16. THREATS
• Concerns regarding rising childhood obesity rates
resulted in government-mandated guidelines to remove
high-calorie sugary drinks and snacks, including sports
drinks, from school vending machines beginning in 2014
• Very slow market growth rate
• Justification of significantly higher prices through
positioning and advertising in a small budget of
$750,000

17. Perceptual Map: Hydration vs. Energy

18. Perceptual Map: Nutrition vs. Taste

19. BREAK-EVEN ANALYSIS
• Variable costs per can = $1.02
• Variable costs per case (24 cans) = $1.02*24 = $24.48
• Wholesale price to distributors per case = $29.76
• Profit per case = $29.76 - $24.48 = $5.28
• Planned advertising cost = $ 750,000
• Required sale of cases per year = 750,000/5.28 = 142,045.45
• Required sale of cases per month = 142,045.45/12 = 11,837.12 (which is less than maximum
production capacity of 12,000 cases per month)
RESULT: Break-even is possible, provided sales exceed above calculated figures

20. Final recommendation of
complete case analysis would
be to position Crescent Pure
as an Energy Drink due to:
• Higher market growth rate
• Pricing Advantage
• Rapid rise in demand for
natural and healthier
products

22. DISCLAIMER
This presentation has been
created by Ayush Tyagi, IIT
Roorkee, during a marketing
internship under the
guidance of Prof. Sameer
Mathur, IIM Lucknow.