Apple juice
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Apple Juice. Justin Morgan. Overview. Apple Juice had total sales of $616,309,900.00 in 2007 Private label excels in Apple Juice. Wal-Mart and Kroger brands had the most SKU’s and were also the Private Label brand retailers. Audited Stores. The Retailers are in control

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Apple Juice

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Apple juice

Apple Juice

Justin Morgan


Overview

Overview

  • Apple Juice had total sales of $616,309,900.00 in 2007

  • Private label excels in Apple Juice.

    • Wal-Mart and Kroger brands had the most SKU’s and were also the Private Label brand retailers.


Audited stores

Audited Stores

The Retailers are in control

  • (2) Wal-Mart Supercenters

  • (1) Wal-Mart Neighborhood Market

  • (1) Kroger

  • (1) Walgreens

  • (1) Harp’s


Demographics

Demographics

  • Households with an income between $30,000 and $70,000 with kids less than 6 years old consumed the most apple juice.

  • Lucky leaf really excelled with incomesunder $20,000 in 2003.


Category role

Category Role

  • Apple Juice had a penetration percentage of 41% in 2007 with sales volume over 600 million dollars a year as a category.

  • Apple Juice maintains margins anywhere from 20% up to 50%.

    • Welch’s has the highest estimated gross margins.

  • According to Blattberg’s Category role I think Apple Juice falls in between a Cash Machine and Maintain.


Category assessment

Category assessment

  • I audited 6 stores.

    • (2) Wal-Mart Supercenters

    • (1) Wal-Mart Neighborhood Market

    • (1) Kroger

    • (1) Walgreens

    • (1) Harp’s

  • Great Value dominatedthe facings in Wal-Mart

  • Nestlé's Juicy Juice was found in the most stores

    • Was found in 4 of the 7 stores audited


Category assessment1

Category Assessment

  • Gross margins for the retailers

    • Kroger – 34%

    • Wal-Mart Neighborhood Market – 35%

    • Wal-Mart Supercenter (Hwy 107) – 40%

    • Wal-Mart Supercenter (McCain) – 31%

    • Walgreens – 41%

    • Harps – 30%


Apple juice

Share of Display Space and SKU’s


Display space

Display Space

  • Wal-Mart definitely had the greatest displace space and used their private label to flood the category.

    • Wal-Mart used up to 60% of their displace space for Great Value

  • Harp’s also had a great deal of displace space but nothing compared to Wal-Mart.

    • Harp’s actually carried a larger % of Knouse Manufactured Apple Juice because of Wal-Mart’s pride in Great Value. Harp’s displayed 43% Knouse manufactured Apple Juice.


Gross margins

Gross Margins

  • The top 5 gross margin for suppliers are

    • Welch’s- 56%

    • American Brands – 47%

    • Wal-Mart – 47%

    • Walgreens – 46%

    • Knouse – 37%

  • These are not bad gross margins for any food category.


Apple juice

Gross Margins


Category strategy

Category Strategy

  • The retailer’s are in control of the Apple Juice category.

    • With Great Value controlling the largest retailers sales in the category private label has become very strong. Even Kroger has a strong private label push.

  • Harp’s pushes the national brands in the Apple Juice category and is maintaining fair margins, up to 40%, doing so.

    • Treetop and Musselman’s are their two stronger manufacturer brands with close to 40% gross margins.

  • It seems as if Apple Juice has a large entrance of private label because even Walgreens has created a private label brand.

    • This private label has upwards of plus 40% gross margins.


Private label capabilities

Private Label Capabilities

  • With Wal-Mart already having over 40 facings of Great Value in some stores I don’t see their being much room for private label expansion within the largest retailer in the world.

  • It appears, looking at the gross margins, that any retailer could come into private labeling Apple Juice and be profitable doing so. So I definitely think there is opportunity in doing so.

  • The Ad Hoc Demographic trial came back with little increase and decrease between 2003 and 2007 across the board with private label.


Recommendations

Recommendations

  • I don’t think you have to enter private label right away to make a reasonable profit in this category. Harp’s for example is pushing manufacturer brands is has profit margins over 35%, even though these are not quite as high as some private labels. This is still a reasonable profit margin.

  • There is definitely profit and revenue to be gained by going to private label.


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