Multinational Beverage Inc An Orange Juice Dilemma Case Solution

2. Causes

The marketing director thought that the company’s competitors were sourcing its oranges outside of Florida. The increasing severity of weather due to climate change and the spread of citrus greening disease have also been one of the most important factors deteriorating the sales. Moreover, a lot of new competitors have entered the industry due to which their market share has decreased. Major competitors were: Purest Taste Orange Juice, private-label brands of grocery retailers, and health focused market players. Additionally, catering to the demands of the five generations in North America is also another cause of distress for the brand.

3. Reviewing Alternatives        

i. Relocating the production to Brazil

One of the alternatives in order to compete with other players is to relocate the operations to Brazil. This might allow them to achieve the same cost savings as of their competitors.

Pros

If Fresh Squeeze moved to Brazil, they would save $7 million each year in costs of leasing and wage expenses. Brazil also had cheaper oranges costing $60 per tonne. Combined, these would allow Fresh Squeeze to match the price of Purest’s wholesale price. Moreover, the weather in Florida is not suitable for sustainable production of Oranges. One day or the other, they are going to have to relocate.

Cons

In a recent report published by the European Union which had brought forward claims of poor labor practices in Brazil. These practices were large scale underpayment and putting employers in contract that would drown them in debts. Moreover, Brazil used many pesticides that were banned in the US due to environmental and health issues. These posed a challenge to the brand image of Fresh Squeeze. Moreover, there were also the costs of $3 million it would take to wind down the facilities at Sarasota. There would also be a freighting cost of $0.60 per carton to ship the orange juice from Brazil to the US. Refer to Exhibit 01.

2. Increase Trade Spending

Pros

This would allow their products to be put on sale more often and retailers giving lower prices to consumers to compete with purest. An increase in 10 percent on trade spending would result in an increase of 0.5 percent market share. (Exhibit 02)

Cons

This means incurring “direct costs” to achieve higher market share. Moreover, these costs would not provide a long-term sustainable solution to the problem because other competitors can do the same and this would probably result in an unhealthy competition among the market players.

3. Brand Repositioning

Pros

This would give the brand a more premium image. Three new products could be introduced and this could increase the profits by 15-25%.