As you know` our new product – Raspberry Ginger Ale (SRGA) was introduced in January 1991 in the US. Our forecasts regarding the sales for the first year was 2 million cases and real sales for the first half - year (January-June) are 2 million cases – twice more than projected. That means that the SRGA has took its place in the consumer’s minds and the distribution performance through both bottlers and retailers is successful.
But the data comparison of performance (first 6 months of 1991 and 1990) of Schweppes ginger ale sales stayed on the same level while other Schweppes products had recorded an increase of 4 percents – the average growth rate of the industry. Also the consumer study results have shown that SRGA sales are mostly (70%) generated at the cost of competitors and only some portion (30%) at the cost of other CBNA products. That once again shows that the marketing performance of SRGA is successful and in the right direction.
As to the issue of cannibalization, this was predictable and represents the standard way of development - 26% of SRGA sales came at the cost of CBNA other Ginger Ales, though initially estimated only 20%. This data means that even compared to other CBNA Ginger Ales SRGA marketing, distribution as well as composition and taste is better. The other CBNA products sales are almost unaffected by introduction of SRGA as predicted.
For the current point Net Income from Schweppes Ginger Ales is increased by USD 440 000 (if we calculate the approximate income with SRGA and without it), if we take into the consideration that SRGA took only 3 percents of other Schweppes Ginger Ales. (See tables 1.a and 1.b) But taking into account the forecast of increasing sales of SGRA the total net income for Ginger Ales will increase ceteris paribus. Table 1.a
Taking into the consideration all above- mentioned in my opinion it is worth to continue producing SRGA because of the number of reasons: 1.
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