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Crescent Pure Case Study
Crescent Pure, founded in 2008 by Peter Hooper, offers an organic energy drink with 80mg of caffeine and lower sugar content, achieving high demand and quick depletion of stock. Portland Drake Beverages acquired Crescent in 2013, aiming to position it within the functional beverage market while facing production capacity constraints and market competition. The document outlines potential market challenges and insights regarding consumer demographics and preferences for energy drinks, sports drinks, and organic beverages, indicating a promising yet competitive landscape for Crescent's growth.
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Crescent Pure Case Study
- 1. Harvard business schoolcase analysis – crescent pure
- 2. Crescent pure Peter Hooperfounded 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% High demand among men as well as women
- 3. Portland drake beverages(pdb) Manufacturerof 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. Production capacity constraints restrictedthem to a soft launch in 3 states in January 2014 Major beverage companies to launch organic energy drinks in 2nd half of 2015 PDB wanted to enter that market early Advertising budget - $750,000 Product positioning to be defined by 1st, October 2014. Important factors
- 5. Market positioning options EnergyDrink Sports Drink Organic Drink
- 6. Energy drink market Pros Projectedmarket -$8.5 billion, growing at 40%, to reach $13.5 billion by 2018 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 Cons 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
- 7. Sports drink market Pros Marketrevenue -$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
- 8. Perceptual map ofsports and energy drinks w.r.t. hydration vs energy
- 9. Perceptual map ofsports and energy drinks w.r.t. nutrition vs taste
- 10. organic drink market Pros Growingmarket 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
- 11. Demographics of Crescent onlineconsumers 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
- 12. Feedback on crescent RetailerFeedback 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.
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- 14. Reasons for suchpositioning 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
- 15. Advantages of suchpositioning 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
- 16. Cost Area Amount Wholesaleprice / 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? BREAK EVEN ANALYSIS
- 17. Disclaimer Created by AniketoGhosh, Heritage Institute of Technology, Kolkata during a marketing internship under Prof. Sameer Mathur, IIM – Lucknow.