Course: MKG631 AB Strategic Marketing

Instructor: Mark Parker

Class Study Summary 1: Multinational Beverages

Situation Overview:

In September 2019, a marketing director at Multinational Beverage Inc. (MBI), Randa Boctor,

read the latest data report and found that one of the company’s products—Fresh Squeeze brand

of orange juice—was experiencing a decline in its sales, third straight quarter. Her examination

of the report showed that “to boost their sales and market share, Fresh Squeeze’s competitors

were offering retailers and grocery consumers prices far below what was profitable for MBI”

(Multinational Beverage Inc.: An Orange Juice Dilemma). She further “suspected [that] these

competitors were sourcing their oranges from outside of Florida, [...] home to its production for

the past 50 years” (Multinational Beverage Inc.: An Orange Juice Dilemma).

Due to the orange juice industry’s development during and after World War II, Fresh Squeeze

was able to develop and expand its distribution methods which included … “refrigerated train

cars, shipping boxes, and trucks” (Multinational Beverage Inc.: An Orange Juice Dilemma). This

vast distribution network, in turn, allowed Fresh Squeeze to gain … “advantage over its

competitors, who were able to sell only in states they could feasibly deliver their product to

before the juice expired. Selling more cartons also allowed Fresh Squeeze to develop economies

of scale, lowering production costs in the Florida production plant and keeping a larger profit

margin to reinvest in the business” (Multinational Beverage Inc.: An Orange Juice Dilemma).

In 1985, MBI acquired Fresh Squeeze. This acquisition was … “intended to expand [MBI’s]

beverage portfolio and take Fresh Squeeze orange juice to new markets” (Multinational

Beverage Inc.: An Orange Juice Dilemma). Further, this acquisition resulted in Fresh Squeeze

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Course: MKG631 AB Strategic Marketing
Instructor: Mark Parker
Report by: Olivia Singh

becoming a public company, upping its sales to … “over US$1 billion annually by 2000 [...]”

(Multinational Beverage Inc.: An Orange Juice Dilemma).

Fresh Squeeze earned $733 million in net sales and $41 million in net income [...] in 2018

(Multinational Beverage Inc.: An Orange Juice Dilemma). The company’s manufacturing plant

in Florida … “processed over 50 million boxes of oranges to supply to the North American

market, making it one of the largest single buyers of Florida oranges” (Multinational Beverage

Inc.: An Orange Juice Dilemma).

Despite the decline in sales, Fresh Squeeze orange juice … “maintained a leading 40 per cent

market share in the North American orange juice industry” (Multinational Beverage Inc.: An

Orange Juice Dilemma).

However, it did have three key competitors to beat: Purest Taste Orange Juice, grocery retailer

private-label brands, and health-focused market entrants (Multinational Beverage Inc.: An

Orange Juice Dilemma).

Problem Identification:

1. Increase in health-conscious consumers: A company similar to Fresh Squeeze, Purest

Taste Orange Juice, marketed its product in a manner that puts emphasis on … “its

natural formula in order to appeal to the rising number of health-conscious consumers”

(Multinational Beverage Inc.: An Orange Juice Dilemma).

2. Grocery retailer private-label brands: Research shows that “over the past five years,

private-label brands had grown 41 per cent in the United States, compared to national

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Course: MKG631 AB Strategic Marketing
Instructor: Mark Parker
Report by: Olivia Singh

brands’ growth of only 7.4 per cent” (Multinational Beverage Inc.: An Orange Juice

Dilemma). In the orange juice industry, in particular, these brands have had success in

retaining … “35 per cent of market share” (Multinational Beverage Inc.: An Orange Juice

Dilemma).

3. Smaller Entrants: Here, as with the Purest Taste Orange Juice, we see an emphasis on

marketing products that address health-conscious consumers’ concerns about … “sugar

content of orange juice” (Multinational Beverage Inc.: An Orange Juice Dilemma),

allowing for the alternatives to thrive (Multinational Beverage Inc.: An Orange Juice

Dilemma).

4. Environmental threat: Severe weather events make it very hard for the oranges to be

consistently produced affecting their pricing with an upward swing of 43 per cent. This,

in turn, harms the orange juice industry’s profitability.

5. Parasitic threat: Since 2005, the spread of citrus greening, a bacterial disease, has made it

hard for the oranges to be produced in a proper manner, bringing down their production

to 55 per cent from pre-citrus greening level.

Consumer trends showcase that every generation after the Silent Generation (72 and older)

prioritizes health and wellness. They do so in the following ways:

➢ Baby Boomers (Ages 53-71) prioritize their health and wellness as they age, through

purchases of added vitamins and supplements.

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Course: MKG631 AB Strategic Marketing
Instructor: Mark Parker
Report by: Olivia Singh

➢ Generation X (Ages 37-52) shoppers purchased grocery items containing all-natural

ingredients; items containing probiotics; and products having no hormones, antibiotics,

and gluten.

➢ Millennials (Ages 22-36) checked product labels or packaging before buying to ensure

they made healthy choices for themselves and their families. Compared to boomers,

millennials tended to use mobile technology to compare prices and find discounts while

they shopped. In addition to being increasingly price-conscious, millennials were health-

conscious as well.

➢ Generation Z (Ages 18-21) had a preference for internationally sourced products and

shopped for groceries online to save time. They reported valuing recommendations from

friends and family, in addition to being … “swayed by social media influencers''

(Multinational Beverage Inc.: An Orange Juice Dilemma). Similar to millennials,

Generation Z shoppers were health-conscious and organic products made up for more

than one-third of their total purchase (Multinational Beverage Inc.: An Orange Juice

Dilemma).

Decision:

1. Doing more research on an alternative that could reduce and/or replace the sugar content

in the production of the orange juice.

2. Allocate more budget to marketing Fresh Squeeze in a manner that would appeal to the

ever-increasing health-conscious consumers.

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Course: MKG631 AB Strategic Marketing
Instructor: Mark Parker
Report by: Olivia Singh

At present:

Cost of sales = 575

SG&A Expense = 73

Even if 10% of the COGS (57.5) is moved to the SG&A expenses, it would help

● Rebrand the company as the budget to do market research and branding would now be

130.5