Crescent

Pure
About PBD

Initially a manufacturer of orange juices and sparkling water

Competitors planning to launch all natural versions of their own sports and energy drinks in
the second half of 2015 (nation wide)
Capacity constraint for PBD -> soft launch of Crescent in three Western States in January 2014
(to achieve early mover advantages)
Under pressure to define product positioning within a limited time span in order to negotiate
with distributors and retailers and to hire advertisers
About Crescent

Founded by Peter Hooper in Crescent, Oregon in 2008

Contained organic, natural and herbal ingredients
• Guarana seed and ginseng instead of caffeine
• Sugar quotient was derived from organic, raw cane sugar

Helps to remain productive, that occurs after drinking soda or high fructose beverages
Promoted the drink at farmers’ market, local food shows and local retailers at Oregon
Distributed at 200 retail outlets (1000 cases per month) at $3.74 for an 8 ounce can
Acquired by PDB in July 2013
Positioning Options for Crescent Pure

Energy Drink
Sports Drink
Organic Drink
 Option 1 – Position as Energy Drink
Pros
•Customers viewed ‘energy’ as Crescent’s most
descriptive characteristic (informal survey)
•Price point $2.75, which was below industry
average of $2.99
•Potential market size - $8.5 billion in 2013 and $9.5
billion in 2014 (market growth of 40% between
2010 and 2012 and expected to be $13.5 billion by
2018) -> approx. 60% growth
•Crescent’s organic certification and minimal
caffeine content acted as a point of differentiation
when compared with competitors
Cons
•Fall in regular consumption of such drinks due to
negative media attention
•Competition – 85% collective market share in the
category occupied by top 4 players
•Only 32% of consumers over the age of 18 drank
energy drink in the past 6 months
•11% of whom were drinking fewer energy drink
that they had a year earlier due to heath and safety
reasons
•Some younger consumers noted that Crescent had
less energy than they had hoped
 Option 2 – Position as Sports Drink
Pros
• Market of $6.3 billion in 2012 and is expected to be
$9.58 by 2017 -> 52% growth
• 42% sports beverage drinkers considered sports drinks
to be ‘anytime beverage’ and not just associate them
with exercise
• Wider and regular consumer base as compared to
Energy drinks
• Consumer base – 62% between 18 and 24, 77%
between 12 and 17
Cons
• Price of $2.75 for 8-oz was above industry average of
$1 to $2 for 12-oz and 24-oz containers respectively
• Premium pricing strategy adopted by PBD earlier had
backfired
• Growth in market was only 9% between 2007 and
2012
• Concerns regarding rising childhood obesity resulted in
removing sports drinks from school vending machines
• Strong competition – 94% market share occupied by
the top 2 players
• Appealed mostly to younger consumers
• No demography of people of age group 12-17 in online
customer base of Crescent
 Option 3 – Position as Organic Drink
Pros
•Growing market opportunity for organic
drinks due to the consumers becoming
more and more health conscious
•Scope for premium pricing due to the
organic and energy ingredients
•Would attract larger consumer base
Cons
•Too much focus on health might cause to
lose other potential customer segment
•Would require higher advertising budget
(than $750,000) to communicate with the
large customer base
•Limited production capacity for mass
market
•Evaluating more number of distributors and
retailers which would require more time
Recommendation
To position Crescent as an Energy Drink
In 1 year time (2014) –
Total Cost to Company will be $42,75,120
Total Revenue generated will be $42,85,440
Net Profit generated will be $10,320
Breakeven volume will be 3447678

Price Crescent between $2.79 to $2.99 as PBD by pricing the product at $2.75 is leaving money
on the table
Also, at $2.75 pricing, retailers were not getting their margins as per the industry standards
Thank You
 Year 2014
Total Market size (in billion) $9.50

Advertising $7,50,000.00
Variable cost per can $1.02
Cans/case 24
Production capacity (cases) per month 12000
Total Cost of Production $35,25,120.00
Breakeven Cost to Company $42,75,120.00

Analysis
Selling Price for PDB to the distributors $1.24
Total Breakeven Volume 3447677
Break-even months 12
Total Sales (cans sold) 3456000
Total Revenue $42,85,440.00

Net Profit $10,320.00

 Taking into account, the industry averages

CP for distributor 1.24 Validating

Monthly CP for distributor 357120
Additional fixed monthly expenses 102000 Pricing of the
Total Cost for distributor
Cost per can
459120
1.59
Drink
Sell out price for distributor (@25% margin) 1.99

Sell in for retailer 1.99

Margin @ 40% 2.79

Retailers (@25%) 3.49