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Medium Profitability

Drinks Gone Flat

#Retail

Practice this intermediate profitability case interview question in the Retail sector. Includes detailed problem prompt, clarifying questions, structured framework, and expert recommendation. Part of ProHub's 835+ consulting case library.

ProHub Comment

This case tests a candidate's ability to quickly segment data to identify root causes and think strategically about pricing and brand positioning. The key insight is recognizing that the Value Brand's aggressive price reduction from $0.60 to $0.40 per gallon is cannibalizing premium brands while generating insufficient revenue gains. Strong candidates will avoid getting bogged down in cost analysis and instead focus on the revenue equation (price × quantity).

Estimated Time 25 minutes
Difficulty Medium
Source NYU
10 / 100
The beverage department of a regional supermarket has seen a drop in revenue over the last year and has hired your firm to determine the cause of the decline and recommend ways to reverse the trend.

Clarifying Information

  1. Client is a leading regional grocer within the southeastern U.S.
  2. Competitive landscape has not changed in the last year
  3. Revenue decline is specifically within the beverage segment
  4. Client wants to find the cause of the declining revenue and recommendations for how to stop the decline
Mock Interview
Interviewer

The beverage department of a regional supermarket has seen a drop in revenue over the last year and has hired your firm to determine the cause of the decline and recommend ways to reverse the trend.

You

Thanks. Before analyzing, I'd like to clarify a few key questions...

Interviewer

Good question. Let me provide some background information...

You

Based on this, I suggest analyzing from these dimensions...

AI Score
Structure Analysis Communication Business Sense Quantitative
Practicing...
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Practice this case with AI Mock Interview

A regional supermarket’s beverage department revenue has declined despite volume growth. Analysis reveals the decline is isolated to sodas, driven specifically by the Value Brand which cut prices 33% while increasing volume from 25MM to 60MM gallons. Meanwhile, Brand A lost 40% of its volume at stable pricing. The recommendation is to adjust Value Brand pricing while improving differentiation across brands.

Key Insights:

  1. Root cause analysis requires systematic segmentation: first by product category (sodas declining while waters and others grew), then by brand within the declining segment
  2. Price elasticity and brand cannibalization are critical considerations—volume gains for Value Brand did not offset the margin loss from price reduction
  3. Strategic recommendations should address both pricing strategy and competitive positioning rather than focusing on cost-cutting
  4. Time management is essential; the case can be completed in under 15 minutes by staying high-level and only drilling down when relevant information is identified