Harward Business School Case Study on Crescent Pure

1. Harward Business School
Case Study
CRESCENT PURE

2. Insights
• Peter Hooper founded Crescent Pure in 2008
• All natural organic juice infused with herbal stimulants, delivered
80mg caffeine
• Sugar quotient was 70% lesser than sports and energy drinks on
average
• Sold 1,000 cases per month. 8-ounce can retailed for $3.75 apiece
• Sold out before inventory was replenished, sold out even when
retailers hiked prices by 25%

3. • Manufacturer of organic juices and sparkling water
• Revenues hit $120.5 million in 2012
• Part of the $131 billion beverage industry
• Wanted to expand into the functional beverage (sports
and energy) sector through acquisition
• Acquired Crescent in July 2013
• CEO of PDB, Michael Booth entrusted Sarah Ryan, VP
of Marketing with the brand positioning of Crescent.

4. Options
• Energy
drink
• Sports
drinks
• Organic
drinks

5. Energy drink market
• Projected market -$8.5 billion,
growing at 40%, to reach $13.5
billion by 2018 and Avg price for 8
ounce can - $2.99
Enthusiastic consumers – Men of
18-24 years old
• Sales of energy drinks with lower
levels of caffeine and purer
ingredients rising due to demand
for healthier drinks
• Negative marketing – health
risks
• Top 4 brands occupied 85%
market share.
• Only 32% of consumers had an
energy drink in past 6 months
• 11% of them decreased
consumption due to health risks

6. Sports Drink Market
• Pros
• Market revenue -$7.5 billion
• Expected to grow to $9.58
billion in 2017
• Attracted a wider consumer base
than energy drinks
• Consumers – 62% aged b/w 18-
24, 77% aged b/w 12-17
• Increasing demand for diet and
low sugar sports drinks. Market
grew by 33% in 2yrs
• Market size for diet sports
drinks expected to increase from
$1.4 to $2.97 billion in 2017
• Cons
• Negative marketing –
Childhood obesity.
• Top 2 brands occupied
94% market share.
• Slowing market –
increased only by 9%
between 2007 and 2012
• Avg $1 to $2 for 12 & 14
ounce containers
respectively
• Only 27% of consumers
are females

7. Organic Drink Market
Pros
• Growing market for products with
natural and organic ingredients
• Target a wider consumer base
• Command a premium pricing (25%
more than conventional beverages)
• Focus is one quality ingredients.
Hence target consumers who are
willing to pay more for quality
Cons
• Sole focus on health and quality -
lose out on other important
customer segments
• Appeal to wide range of customers
not feasible on $750,000 budget
• More distributors and retailers to be
evaluated – time won’t permit

8. Perceptual map of sports and energy drinks w.r.t.
hydration vs energy

9. Perceptual map of sports and energy drinks
w.r.t. nutrition vs taste

11. STRENGTHS
• Certified organic, less
sugar content.
• Herbal stimulation
provides energy boost
and mental focus
• Ecofriendly packaging
• Success in 3 states of
USA
WEAKNESSES
Higher in pricing
Low people awareness
about the new brand
Market competition

12. • 0ppetunity
• Growing sports drink
market
• Emerging diet and low
sugar sports drinks
industry
• Larger group of health
concious customers
• Threats
• Industry competitions
• Public disapproval of
new drinks
• Govt. rules and
regulations

13. STRATEGIES
• Usethird-party celebrity
endorsers for positioning and
appealing to the younger
generation
• Engage millennial through
communityoutreachand
university collaboration
• Combine efforts with favorable
global brands to raise awareness
• Increaseexposure and establish
affiliation with international
sporting brand through
sponsorship
• Receiveextensive and favorable
press coverage via traditional
and social media
• Numberof sales -before vs. After
• Media coverage, placements and
feedback -before vs. After
• Communityoutreach: sports
club, etc. -before vs. after
• Awareness of CrescentPure as a
brand and as a company
• Customer satisfaction towards
Crescent Purevia onlinesurveys
and Facebook polls
• Social media followers endorsers
-before vs. after
EVALUATION
• Partnership with Michelle Obama’s
‘Let’s Move!’ initiative
• Sponsorship of 2016Olympics in
Brazil
• Nationwide university initiative,
distribution of Crescent Pure
• Lululemon partnership targeting
nicheyoga community:sponsorship
byCrescent Pure, education on
healthy diet and exercise, etc
• Trial testing of products
• Launchof additional flavors
FUTURE
CONSIDERATIONS

14. Demographics of Crescent
online consumers Age
ranges
18–24 44%
25–34 36%
35–44 15%
45–54 3%
55+ 2%
Male 59%
Female 41%
College degree - 62%
Household income (median) ~
$42,500
Percentage of respondents
who described Crescent
Descriptor
Refreshing 35%
Healthy 22%
Affordable 29%
Functional 47%
Too sweet 9%
Suitable for teens 8%
Fun 19%
Natural 38%
Hydrating 29%
Crescent – customer perception

15. Feedback on crescent
Retailer Feedback
Their inventory of Crescent depleted
quickly
Popular among customers aged 18 to
30
Higher percentage of women
purchasers than anticipated
Stocks got depleted even when prices
where hike by 25%
Customer Feedback
Taste appeals to most consumers
Only 25% remained concerned about
lower amount of caffeine
Perceived well as a healthy alternative to
energy drinks
Good taste, healthy ingredients and
slight pick-me-up : consumer thumbs
up.

16. Reasons for such positioning
Consumers viewed “Energy” as Crescent’s most descriptive character
Positioning Crescent as and energy drink would reinforce existing perceptions from
Oregon
Contains healthy ingredients, low sugar, yet packs a punch – 80mg caffeine
Energy drinks contained artificial sweeteners and excessive levels of stimulants
Crescent, as an organic energy drink can be a healthier alternative to these energy drinks

17. Advantages of such
positioning
Avg pricing of energy drinks are $2.99 per 8
ounce can. Crescent, at $2.75 is a cheaper and
lucrative option
Energy drink market is booming, growing at
40% and customers are already looking for
healthier alternatives
Interest in Crescent’s natural ingredients
reflected focus on health and wellbeing, thus
transcended age groups and demographic
profile.
Can make inroads into the organic drink market
by brand extension

18. Cost Area Amount
Wholesale price / can $1.24
Cost price / can $1.02
Profit / can $0.22
Number of cans / case 24
Profit / case $5.28
Production of number of cases / month 12,000
Profit / month $63,360
Profit / year $760,320
Advertising costs $750,000
Net Profit $10,320
BREAK EVEN ANALYSIS

19. Disclaimer
Created by Raushan Raj, SLIET, Longowal during a marketing
internship under Prof. Sameer Mathur, IIM – Lucknow.