A Harvard case study of Crescent Pure under the guidance of Prof. Sameer Mathur as a part of a marketing internship

1. Harvard business school case
analysis – crescent pure

2. Crescent pure
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%
High demand among men as well as women

3. Portland drake beverages(pdb)
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. Production capacity constraints
restricted them 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
Energy Drink
Sports Drink
Organic Drink

6. Energy drink market
Pros
Projected market -$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
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

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

10. 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

11. 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

12. 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.

13. energy organic
Organic energy
drink

14. 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

15. 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

16. 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?
BREAK EVEN ANALYSIS

17. Disclaimer
Created by Aniketo Ghosh, Heritage Institute of Technology, Kolkata
during a marketing internship under Prof. Sameer Mathur, IIM –
Lucknow.