Utilize the data below to answer the followingquestion:
Ready-to-Drink (RTD) Coffee Market
Overall RTD Market | $ 2.5 billion |
Starbucks Share | $875 million 35% share |
Dunkin Doughnuts Share | $150 million 6% share |
Current Cold Brew RTD Share (multiple brands) Predicted Market Size of RTD Cold Brew | $50 million (2%) $200 million (8%) |
Coca-Cola and Dunkin’ Doughnuts have a strategic alliance todistribute Dunkin branded coffee to consumers via convenience,discount and grocery stores. Both are highly interested in thegrowing cold brew market. Coke also is interested in testingexpansion of its Peak Gold brand into the cold brew coffee market.Coke is testing ready-to-drink cold brew with both brand partnersin US southern markets to determine what path to take in northernmarkets for a spring launch. They are testing Peak Gold and aDunkin’ Doughnuts RTD cold brew, both in 3 flavors. (Black/EspressoCold Brew, Café Mocha Cold Brew, and Vanilla Almond). Coke onlywants to introduce cold brew coffee in one brand to optimizedistribution capability, and they believe the market will only growto a total of $200 million (4x current, 300% growth.) Therefore, attheir estimated share, it would only justify one brand entry intothe market.
Both Coke and Dunkin’ are concerned about cannibalization of thecurrent 4-flavor lineup of Dunkin’ Iced Coffee distributed by Cokewith this introduction.
Test results showed Dunkin’ to get an impressive 25% out of thepredicted $200 million growing RTD cold brew market, but 75 % ofthat volume was cannibalization of the current Dunkin’ RTD line. Inthe Peak Gold test market, they got 10 % of the RTD cold brewmarket, but did not cannibalize any Dunkin’ Brand. Project testresults and estimate the volume of “net new business†(revenue lesscannibalization) that would be earned in the rollout of each brand.Which brand provides the greater “net new business†and how muchvolume is predicted?
Group of answer choices
a.Peak Gold at $20 million net new business.
b.Peak Gold, at $25 million net new business.
c.Information is inadequate to choose an optimal brand.
d.Dunkin’ Doughnuts Brand, with $50 million net newbusiness.
e.Dunkin’ Doughnuts Brand, with $12.5 million net newbusiness
