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Medium Profitability

Coconut Water

#Beverages #Consumer Goods #Food & Drink #Beverage #Sustainability
ProHub Comment

This is a structured profitability case requiring candidates to build a forward-looking P&L model by incorporating multiple changes: price increase ($0.50), volume growth (5%), COGS per unit increase (10%), and incremental marketing spend ($2M). The solution path is methodical—calculate new revenue from updated price and volume, compute new total COGS accounting for the per-unit increase and volume growth, subtract new SG&A, and compare the profit change of $4M improvement ($16M vs $12M baseline).

Estimated Time 15 minutes
Difficulty Medium
Source PeterK
50 / 100
CocoPure, a major coconut water manufacturer, would like to shift its packaging from plastic bottles to carton boxes. This move towards sustainability has strong support among customers. What annual profits should our client expect after the launch of the new packaging?

Clarifying Information

  1. CocoPure sold 20M units of coconut water in 2023
  2. Exhibit 1. CocoPure’s Economics in 2023, M USD
  3. With an improved brand image, CocoPure plans to increase their unit price by 50 cents
  4. Due to a strong trend towards sustainability, the team expects a 5% increase in volume sold
  5. The launch of more expensive packaging will cause the COGS per unit to rise by 10%
  6. The team expects an additional $2M/year in marketing expenses to boost the awareness of this move and the new company image