Black Fly Beverage Company Case Analysis
Critical Issue:
Black Fly Beverage Company is a small beverage company based in London Ontario. The company has achieved recent success in the selling and promoting of their first alcoholic beverage, the cranberry/blueberry vodka cooler. The immediate success of this product presents two critical issues that the company must address. These critical issues are:
• Black fly must expand its product mix in order to capture a larger market share in order to compete with larger established brands within the market place
• Black Fly must also address capacity issues that will arise with an increase in demand or introduction of a new flavor
Analysis
Current Situation
Black Fly’s cranberry-blueberry vodka cooler has been well received by consumers …show more content…
This packaged ready to freeze cooler would be a non-competing product to the already successful cranberry-blueberry vodka. An advantage to this product is that there is no other product similar to it out in the marketplace. The LCBO has also committed to sell 8,000 cases of the product over the four summer months, which would produce revenues of $277,200 (see exhibit 3). Over this four month period this option will produce an ROI of 15% (see exhibit 6). To produce “Spiked Ice” the company however will have to purchase expensive machinery costing $500,000 and spend an additional $40,000 on merchandising and product development. To cover these costs Black Fly would have to sell an additional 7,585 cases of “Spiked Ice” (see exhibit 4). This may prove difficult as this new product is very seasonal producing higher sales in the summer months and potentially smaller sales in the fall and winter months, a time in which the LCBO has not committed to sell this product at this time. Another disadvantage to this option is the space that this new machinery would occupy in the already small warehouse. Black Fly’s current facilities cannot produce “Spiked Ice” and the original vodka simultaneously which would result in Black Fly loosing monthly revenues of $23,641 (see exhibit
Black Fly Beverage Company is a small beverage company based in London Ontario. The company has achieved recent success in the selling and promoting of their first alcoholic beverage, the cranberry/blueberry vodka cooler. The immediate success of this product presents two critical issues that the company must address. These critical issues are:
• Black fly must expand its product mix in order to capture a larger market share in order to compete with larger established brands within the market place
• Black Fly must also address capacity issues that will arise with an increase in demand or introduction of a new flavor
Analysis
Current Situation
Black Fly’s cranberry-blueberry vodka cooler has been well received by consumers …show more content…
This packaged ready to freeze cooler would be a non-competing product to the already successful cranberry-blueberry vodka. An advantage to this product is that there is no other product similar to it out in the marketplace. The LCBO has also committed to sell 8,000 cases of the product over the four summer months, which would produce revenues of $277,200 (see exhibit 3). Over this four month period this option will produce an ROI of 15% (see exhibit 6). To produce “Spiked Ice” the company however will have to purchase expensive machinery costing $500,000 and spend an additional $40,000 on merchandising and product development. To cover these costs Black Fly would have to sell an additional 7,585 cases of “Spiked Ice” (see exhibit 4). This may prove difficult as this new product is very seasonal producing higher sales in the summer months and potentially smaller sales in the fall and winter months, a time in which the LCBO has not committed to sell this product at this time. Another disadvantage to this option is the space that this new machinery would occupy in the already small warehouse. Black Fly’s current facilities cannot produce “Spiked Ice” and the original vodka simultaneously which would result in Black Fly loosing monthly revenues of $23,641 (see exhibit