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Juice Penetration In Mexico

Essay by 24  •  November 6, 2010  •  2,838 Words (12 Pages)  •  1,056 Views

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Executive Summary

Comet is a national producer of lightly carbonated juice blends within the US. Currently Comet has considered expanding its market on an international level, with entry into Mexico. The following data provides a brief insight into how lucrative entry into this market could be.

* The soft drink and juice industry reports a 5% growth for 2006 with over $20 billion dollars value for the industry

* Currently Latin Americans spend 75% of their income on food and drink compared to 15% in the US

* Mexicans are the second largest per capita consumers of soft drinks in the world

* US firms hold 80% of the market for fruit juices

Given this data Comet feels that an opportunity within Mexico does truly exist. The initial plan is to introduce a flavor such as lime that Mexicans are already familiar with; however cranberry juice would be blended to add interest and curiosity. Middle to upper class, health conscious, urban dwelling young adults would be targeted. This would be done through the use of a solid distribution network among a limited number of major cities within Mexico.

Introduction

Comet is a US producer of ready to consume lightly carbonated fruit juice beverages. Within the US, three lines of lightly carbonated juice blends exist. These blends include orange-pineapple, lime-cranberry, and raspberry-mango. We have had a high level of national success with our product and are looking to expand on an international level. We chose Mexico for our country of penetration because of existing trade agreements and a large demand for high quality juice blend products such as ours.

Situational Analysis

The company consists of five regional bottling facilities throughout the US. One of these bottling facilities is located in the suburban Dallas area, making it a prime location for export into Mexico. The other facilities are located in the suburban areas of Chicago, Los Angeles, New York, and Atlanta. Between these facilities we employ approximately 1700 employees. In addition to this we generated $50 million in profits in 2004. Currently we see opportunity within the international market of Mexico, because of the high popularity of our brand within the US Hispanic community. Trade agreements under the North American Free Trade (NAFTA) also make exporting more cost effective than in the past. Several distributors have approached us in regards to our product, which has helped us to further realize that profits exist out side of the US borders.

SWOT Analysis

SRENGTHS WEAKNESSES

* Strong existing national brand within the US especially among the Hispanic population* Dallas facility is within close proximity to US/Mexican border* Known demand for similar products exists within Mexico * No experience in International market entry* No familiarity with Mexican distributors* May have to educate consumer in regards to new flavors

OPPORTUNITIES THREATS

* Huge growth in Mexican juice market* Large youthful population* Growing middle class within Mexico* Diabetes within Mexico is forcing changes in drink consumption * Several US brands already exist within the Mexican Market* Mexican consumers are very loyal and hard to convert* Unfamiliar with market

Market Analysis Objective

A decision needs to be made to determine if entry into Mexican market is feasible. If a decision is made to enter the market a choice of distribution channels must also be made.

Product Overview

Description: Comet is a lightly carbonated lime and cranberry flavored juice drink. It fits into a hybrid category because it is carbonated and contains real fruit juice and not just flavoring. There are relatively few products like this that currently exist in the market. The drink is not considered low calorie, but does contain less calories than the traditional soft drinks and juices currently available. The flavor combination of lime and cranberry offers a taste that stands out among other beverages.

Current Marketing Mix: The pricing of our product within the current market would be considered on the high end. This is primarily due to the uniqueness and demand for the product. Packaging of the product is done through the use of 8 ounces non-returnable plastic bottles that contain colorful eye-catching graphics. The product can be purchased individually or in four pack cartons. The promotion of the product has mainly consisted of trial offer specials and point of purchase displays.

Advantages and Disadvantages of Product: The uniqueness of the product creates both advantages and disadvantages. Many people have never tried a product such as this. Initially this may cause some people not to try it. In order to combat this situation from happening, we found that by offering a lower introductory price consumers were more apt to try and enjoy the product. Some education or sampling may be needed to help increase the awareness of the product. Cost is at a define advantage due to the economies of scale that have been created through the use of our five facilities. A strong popularity among different cultures and income levels also exists with our product. We think that this will be an advantage if we decide to enter the Mexican market.

Assessment of Foreign Market

Location: Mexico

Demographics of Mexican Population

Population of Mexico: A July 2004 estimate places Mexico's population at 104,959,594.

Income distribution: Per cap income is one-fourth that

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