Hawaiian Punch

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Executive Summary:

Case is basically about U.S based company which is dealing in food and beverage market, providing fresh juices to consumers. Company is owned by Cadbury Schweppes America Beverage. Business is enjoying leadership position as it has 94% brand awareness rate among US consumers. Problem starts arising when overall market share of fruit juices starts declining due to major shifts in consumer tastes as now consumers are attracted more by carbonated drinks as Pepsi, Coca Cola etc. Hawaiian was unable to detect this shift and as a result, leadership position of company is under threat due to lack of innovation and irresponsiveness towards changed market taste. The US fruit juice and drinks category already accounts for only 4.7% so further decrease in market share has become a major threat for company’s leadership position as well as revenues. Another problem occurs when new forms of media including internet have been introduced while company is still relying over traditional sources such as T.V and Radio. Positioning of company’s product is also not clear as after integration effort of three independent units (Dr. Pepper/Seven Up, Snapple Beverage, and Mott’s) into one portfolio forming Cadbury Schweppes America Beverages, brand positioning has been confused and unclear.   In July 2004, Kate Hoedbeck has been appointed as new marketing director who is the protagonist of this case study as he is responsible for initializing the revitalization effort to bring the company back to strong leadership position. Three major decisions are to be taken including positioning, innovation and advertisement. Company has to seek a solution that can solve the problems without compromising over strengths of organization.    

Hawaiian Punch Company Introduction:

Company was established back in 1934 when Ralph Harrison started business by blend of fruits including pineapple, papaya and guava. In 1946, company was bought and renamed as Pacific Hawaiian Company. Its fruit drinks started becoming popular among consumers and in 1955 it became a national brand. Successful series of brands like Punchy, Mascot won the hearts of consumers. Over next 30 years, company was bought by RJ Reynolds, new flavors were introduced, and strong distribution network was established. In 2004, Cadbury Schweppes three business units were integrated into one portfolio, at that time Hawaiian line consisted of 11 flavors with varying sizes including one gallon, 20 ounce and 6.75 ounce.

Juice drink market composition:

Juice and drink hold a 4.7 % share as of 2004. Out of which, 54.9% is composed of 100% juice, juice drinks are at second number with 33.7%. Single served packages with 20 ounce accounts for 75% sales. Supermarkets consisted of 53% of sales, while trade sales held 18% based on volume.

Innovative distribution network:

Company has innovative distribution network based on two systems one Direct Store Delivery, other Finished Goods. Finished goods operates as follows: Cadbury Schweppes manufactures the juice drink, and then packages the product into 1-gallon, half gallon and 6.75 ounce single-serve pouches. After the packaging is complete, the product is then shipped to warehouses and distribution centers for delivery to supermarkets and other retail outlets for sale in the juice aisle of super markets. Direct Store Delivery operates as follows: a bottler that is outsourced from the organization buys the concentrates in which it is combined with sweeteners and water, packaged in bottles or cans and then sold to retailers.

Strengths, Weaknesses, Opportunities, Threats:

After analyzing the whole case, there are certain factors that can be give company competitive edge over rivals and help company to effectively capitalize the market opportunities. However, there are some weaknesses also that may impose threat to company survival in future.

Strengths:

• Named the number one fruit punch drink in the U.S.
•  Powerful brand awareness (94%)
• Uses two separate distribution methods to serve and sell the same product
• Fourth largest brand by volume
• Vitamin C content
• Only brand to employ two separate manufacturing, sales, and distribution networks to stock and serve the same beverage

Weaknesses:

• Flavor extension lacked awareness among households
• Traditional child-centered focus had been played down
• New policy banned advertising to children under age 8
• Punchy (mascot) no longer had prominence in advertising
• 77 percent of buyers only purchased one package size

Opportunities:

• Increase trials, repeat, frequency and quantity of purchases
• Counter competitor’s offers
• Build database and customer retention
• Reinforce brand image and strengthen brand relationships

Threats:

• Frequent buyer programs make consumers work too hard
• Difficult to judge promotional sales and could be unprofitable
• Attract best deal shoppers instead of long-term consumers
• Copy-cat promotion by competitor
• Negative impact on branding
• Competitors include Coca-Cola Company, PepsiCo, Inc. Kraft Food, Inc., Ocean Spray Cranberries, Inc., Sunny Delight Beverage Company, Welch’s, Inc., and Nestle
• The substitutes to fruit juice and juice drinks category included carbonated soft drinks, beer, milk, bottled water, coffee, tea, sports drinks, and powdered drinks.  

Problems:

• Lack of effective advertisement due to wrong proportion as major focus is upon radio
• Lack of innovation
• Confused positioning
• Expected financial losses due to customer dissatisfaction
• Low advertising budget
• Lack of segmentation        
• Threat to leadership position

Main issue:

Hawaiian Punch, a top selling fruit juice brand needs alteration to stay up to date and stay the leader in the current market but inconsistent positioning and low budget advertising are potential risks of losing the top position in the United States to competition. Main critical issues include: